A Methodological Framework for Assessing a Bank's Competitive Position in Retail Banking

Abstract

The rapid development of retail banking in the context of economic digitalization is accompanied by a transformation of competitive dynamics, the growing influence of fintech companies, and the increasing importance of digital customer interaction channels. This necessitates the improvement of approaches to assessing banks' competitive positions, taking into account not only financial indicators but also behavioral and technology-driven parameters. Purpose. The purpose of the article is to develop and empirically validate an integrated economic-mathematical model for assessing a bank's competitive position in retail banking under conditions of digital transformation, based on the aggregation of financial-resource indicators, digital competitiveness metrics, and financial stability and risk parameters into a unified integral index. Methods. The study is based on a systemic approach, functional decomposition, and the methodology of composite indicators in line with OECD guidelines. To ensure comparability of heterogeneous variables, a normalization procedure based on the reference point method was applied. Indicator aggregation was performed using a linear model with equal weights, ensuring methodological neutrality and consistency of integration. Results. The study proposes the Retail Banking Competitiveness Index (RBCI), which integrates three sub-indices: financial-resource (FRI), digital competitiveness (DCI), and financial stability and risk (SRI). Unlike conventional approaches, the model incorporates behavioral and customer-oriented digital metrics, including user experience indicators and transactional activity measures. Empirical testing for the TOP-10 Ukrainian banks (ranked by total assets) reveals significant discrepancies between financial and digital dimensions of competitive position and identifies structural imbalances in banking business models. Conclusions. The integration of digital indicators provides a more comprehensive and accurate representation of a bank's competitive position in the retail segment. The proposed approach enables the identification of structural imbalances in business models and can be applied in strategic planning, performance monitoring, and the assessment of digital transformation in banking.