The Risks in Digital Transformation of Banking Sector

Abstract

Digital transformation, or digitalization of operations, is one of the key challenges of modern banking and is
defined as the use of digital technologies in order to change the business model and provide new sources of income.
Benefits of digitization as a strategic business orientation have been recognized by many industries, including the
banking sector. Pressure on traditional banks in terms of developing a new business model and market access, through
the process of digital transformation, arises from the growing need to eliminate spatial and temporal constraints when
it comes to the availability of banking products and services to customers. Contrary to the positive effects of the
implementation of the digital strategy on the long-term performance of banks, a new set of risks to which banks are
exposed are emerging from the transformation of banking operations. The paper presents a new methodological
framework for risk management in the digital transformation of the banking sector. Also, the results of the quantitative
analysis of the correlation of investments in the information infrastructure and the allocation of capital requirements
for certain types of risks were presented on the sample of selected banks in the banking sector of Serbia, using the
P??rson correlation coefficient.