The banking sector is rapidly changing because of the fast development of digital financial technologies. In previous decades, technologies were used only for making routine activities easier and facilitating the process of transactions. However, nowadays, the use of digital innovations by banks becomes much more complex and purposeful. The modern bank actively integrates different kinds of technologies, including artificial intelligence, cloud computing, blockchain, various fintech platforms, biometrics, predictive analytics, and open banking solutions. Moreover, today these technologies play a significant role in enhancing the work and performance of financial institutions. Consequently, the efficient work of a banking system is becoming increasingly dependent on how well it uses digital innovations. The current research aims at discovering the key determinants which impact the effectiveness of using digital financial technologies by banking systems. The concept of efficiency used in this paper does not imply only the reduction of operating expenses and acceleration of transactions processes. It should be considered from a wider perspective taking into account the possibility of creating flexible technological systems by banks, protection of customer data, ensuring safe operation, cooperation with fintech companies, and flexibility in case of changes in the market situation. In summary, some of the critical factors that contribute to the success of digital transformation include an adequate digital infrastructure, effective cybersecurity system, superior analysis capabilities, favorable regulations, and digital services tailored towards the needs of customers. It emerges from the results of the study that banks that have achieved greater levels of digitization are capable of improving their performance in several aspects. Some of the areas where these banks can do better than others include offering better and faster services, improving their interaction with clients, better risk management approaches, and increased competitiveness. It should be noted that the application of digital financial technologies has transformed the conventional business model adopted by banks. This study, therefore, offers insights into the significance of the process of digital transformation among banks.