The purpose of the article is to characterize the current state of the national banking sector, as well as to identify prospects for its further development.

The methodology of the research – in the course of the study, such methods as the study of literary sources and generalization, abstraction, statistical analysis were used.

The practical importance of the research lies in the fact that this study can be useful for specialists working and conducting research in this area, as well as play a positive role in enriching their practical knowledge.

The results of the research - as a result of the study, such conclusions were made that the banking sector of Azerbaijan faces problems such as low capitalization, instability of the banking sector due to external and internal factors, problems of an institutional nature, high concentration. Some measures were taken to develop the national banking sector. The state of the banking sector of Azerbaijan was examined, some indicators of the banking system and the economy as a whole were analyzed, a number of measures were taken.

The originality and scientific novelty of the research is that a number of measures are shown that can contribute to the future development of the banking sector.

Keywords: banking system, digitalization, prospects, money transfers, digital payments.