Digital transformation in banking industry: a 3-level approach

Abstract

Purpose: The purpose of this survey is twofold. It explores the changes in banking services provided to bank customers and in the relationship between employees and customers due to the digital transformation, which affects all the procedures. The second is the digital disruption caused to the banking profession due to this digital transformation in banks by the reduced staff working in traditional banks and the need for specialized staff with knowledge of the digital bank and its functions.
Methodology: Two primary analyses, one by collecting qualitative data through interviews with bank executives and another by collecting quantitative data through structured questionnaires from bank customers. A primary survey was conducted on 237 banking customers from Greece, Latvia, and the USA. Customers were selected randomly, and information was collected through an interview survey using a structured questionnaire. Principal component analysis (PCA) was conducted to identify the main factors affecting customers’ attitudes toward using digital services and applications in the banking sector. Cluster analysis was performed to classify them into groups with similar behavior, whilst discriminant analysis was conducted to check cluster predictability.
Findings: The results indicate that customer relationships have become less personalized and more automated. The majority of the sample considers digital banking services to be accessible while being more convenient and reliable than traditional banking. Most of the sample consider digital banking services to be easy to access and use, while at the same time, they are considered more convenient and reliable than traditional banking. The public shows confidence in digital banking and does not consider it particularly expensive compared to traditional banking services.
Research limitations/implications: The sample size is relatively small and may not be adequate to represent the whole population as the sample may simply differ from the population. This preliminary research could not be considered indicative of the generalization of results. The sample of respondents is only from three countries. Enlargement and reopening of the investigation in future years will record executives' views more accurately to provide safer conclusions. An understanding of the service dimensions and relative importance of the service attributes of digital banking services is of critical importance to banks.
Practical implications: The banking institutions should consider the study's conclusions. Emphasis should be placed on customers' importance to the security and quality of digital transactions. Important advantages of digital banking services are 24-hour support, better time usage, and simplified procedures. However, most respondents consider their personal contact with banking staff necessary, useful, and efficient. The above conclusions should be studied by policymakers in banking institutions in the sense that customers' concerns and expectations should be taken seriously in relation to digital banking services.
Social implications: Identifying key customer segments enables banks to enhance customer experiences. The fact that many respondents consider the interpersonal relationship with bank employees something generally useful should be a starting point for those in charge of seeking a golden intersection between digital and traditional banking to prevent a breach between the new banking reality and the real needs of their customers. Moreover, this should be an important reminder for the banking industry's designers of the different approaches for different customer communities.
Originality: The originality of the paper derives from the three-level approach as it explores how digital transformation affects banks (new business models), customers (preferred services), and employees (forms of employment). The other dimension of the originality is that it identifies the factors that affect customers' attitudes towards digital banking and classifies the customers into groups according to their similar behavior patterns, demographic characteristics, and other factors with a sample from three countries: Greece, Latvia, and the USA.