Sources of Financing for the Digital Transformation of the Financial System: International Experience and Realities of Ukraine

Abstract

This study presents a comprehensive analysis of financing sources for the digital transformation of financial systems, drawing on global experience and the contemporary realities of Ukraine. The research seeks to systematize international practices in mobilizing resources for digital transformation, identify the advantages and limitations of key financing models - budget-oriented, public-private partnership, venture-innovation, international-grant, and self-financing - and evaluate their alignment with Ukraine’s current challenges to substantiate an optimal resource strategy for digitizing the national financial system. The methodological framework integrates a multi-method approach, combining comparative analysis of international practices, systematic assessment of financing models, case study methodology, and institutional analysis of regulatory frameworks. The study blends theoretical foundations with empirical evidence derived from diverse national experiences in financial sector digital transformation. Findings indicate that hybrid approaches—integrating multiple financing mechanisms - consistently demonstrate superior effectiveness, as illustrated by successful examples from developed economies. The results hold practical value for formulating national digitization strategies, shaping government policies, designing public-private partnership initiatives, establishing frameworks for international cooperation, and creating regulatory environments conducive to innovation. They are particularly relevant for developing economies, post-conflict states, and EU candidate countries. The study concludes that no universal financing model is optimal under all economic conditions, underscoring the need for context-specific hybrid approaches. For Ukraine, the most promising model combines sustained international financing with elements of public-private partnership and self-financing. Critical success factors include the adoption of a long-term digital development strategy, effective stakeholder coordination, investment in human capital, robust cybersecurity measures, and the establishment of a supportive regulatory framework.