DIGITALIZATION OF FINANCE AND THE EVOLUTION OF BANKING REGULATION: INSTITUTIONAL REVERSAL FROM THE GLASS-STEAGALL MODEL TO PLATFORM-BASED BANKING

Abstract

The article substantiates the theoretical interpretation of the digitalization of finance as a driver of institutional transformation in banking regulation. It is argued that the regulatory logic embedded in the Glass-Steagall model, based on functional separation, is being gradually replaced by a model of technological convergence grounded in platform-based banking. The study demonstrates that financial innovations, fintech expansion, and artificial intelligence technologies reshape not only the efficiency parameters of financial intermediation but its structural architecture, leading to an institutional reversal. The contradiction between regulatory fragmentation and digital integration is identified as a core driver of transformation in the financial system. It is shown that platform-based banking integrates functions historically separated by regulatory design, thereby reproducing systemic risks in a new digital form. Attention is paid to the implications for financial stability, regulatory policy, and risk distribution, including the transition from activity-based regulation to ecosystem-based governance. The paper examines the role of digital finance in transforming investment activity and strategies, including the logic of out-investing, and its impact on sustainable development through ESG integration and green transition financing. It is concluded that the future of the banking sector is determined by competition among financial architectures, in which control over digital platforms becomes a key source of systemic economic power.