RISK MANAGEMENT PRINCIPLES OF E-BANKING, CHALLENGES OF THE MACEDONIA’S BANKING SECTOR

Abstract

The paper deals with the challenges that the banking sector is faced as a consequence of the latest developments of the information communication technology (ICT). The possibility of making numerous transactions with just one click, the facilitated access of the clients to the internet, the reckless pace and the new way of living especially due to the Covid-19 pandemic, accelerated further the development and the implementation of electronic banking (e-banking). In this regard, the goal of the paper is to explore the bankers? perception based on the advantages and the risks that are associated with e-banking. The main research instrument used was questionnaire. Analytic and field research on internet was also used for preparation of the paper. The questionnaire aimed at assessing the Macedonian bankers? perception of the advantages and the associated risks of e-banking, the level of development and application of e-banking risk management practices in the Macedonian commercial banks and their compliance with the proposed principles of the Basel Committee on Banking Supervision (BCBS). In fact, special attention is paid to the Macedonian commercial banks? perception and implementation on the risk management principles of e-banking. Additionally, further research is made to check whether there is an appropriate regulation by the National Bank of the Republic of North Macedonia (NBRNM) for risk management in terms of e-banking. The rapid development of e-banking brings about benefits, but also generates risks. Risks in the e-banking should be timely identified, controlled, and properly managed by banking institutions. From the conducted research it can unequivocally be concluded that all Macedonian banks in their business operations have established special practices (responsibilities, policies and controls) for e-banking risk management. Macedonian banks adopt methods and proactive strategic approaches to build strong teams and introduce efficient risk management processes in the e-banking. Results indicate that the Macedonian legislation follows the risk management principles of e-banking of the Basel Committee. The technological complexity of the activities related to e-banking, as well as their rapid expansion particularly, as was also identified by Macedonian banks, affect, and especially intensify operational and reputational risks.