Digital transformation of the financial industry: The substance and trends

Digital transformation (digitization) of the financial industry is the reason behind the deep change in the models of interaction between actors in the financial market. However, a generally accepted interpretation of digitalization has not yet been proposed.The paper discusses the distinctive features of the financial industry digitalization and uses them as a basis for offering a unified description of the nature of this transformation. The methodological framework is the notion of three types of innovation - technology, organization, and product. The research methods used in the article are analysis and synthesis. The paper demonstrates how the types of innovation determine the nature of the digital transformation of the financial industry and how they are manifested in various digital financial products. Digital transformation of finance includes two aspects: (a) Fintech revolution, i.e. technological companies entering the financial market, and (b) adoption of innovative digital technologies by traditional financial companies. We propose the 4U model to describe the marketing aspect of the financial industry digital transformation and introduce the concept of flexible finance as a way to provide financial services that suggest lower liability of financial institutions. The research results show that, firstly, digital transformation of the financial industry is not limited to the technological aspect but also includes organizational and product-related elements. Secondly, the trends in the financial industry digitalization are similar to those in the digital transformation of the global economy.