In the ever-changing landscape of the banking industry, digital transformation has become a major challenge. Banks are transitioning towards digitalisation by utilising information and digital technologies while reducing their branch networks. This paper investigates the relationship between technological innovation and banking customers' perception and satisfaction. By analysing a comprehensive consumer finance survey, we assess how the digital transformation of banks is perceived by customers and its impact on their satisfaction. Our results demonstrate that customer perceptions of a bank's digital innovativeness are positively associated with effective digital transformation. Customers tend to be more satisfied with banks that have a higher degree of digitalisation. Furthermore, our findings reveal that customers view banks as more innovative when the reduction in bank branches since the pandemic has been more intense. These insights shed light on the technological transformation of banks and its influence on their customers, providing valuable information for banks seeking to navigate the digital landscape and improve customer satisfaction.
Policy Implications
- Policymakers and regulatory bodies may want to encourage banks to invest in and promote digital innovation. When customers perceive banks as innovative in their digital services, it positively affects their perception of the bank's overall digital transformation. This could involve creating incentives or providing support for research and development in digital banking technologies.
- Financial regulators should control the pace of the technological change in the banking industry. They should be aware that a sudden process could potentially affect the financial inclusion of less digitally savvy customer segments.
- General policy implications emerge from the need to design policies focused on improving digital and financial education levels to ensure that all bank customers can benefit from the digitalisation process of the banking industry.
- Given the positive association between digitalisation and customer satisfaction, policymakers should support and facilitate the digitalisation efforts of banks. This could include measures such as reducing regulatory barriers to the adoption of digital technologies, promoting digital literacy among the population and providing access to digital infrastructure in underserved areas.
- While the de-branching process itself may not directly impact customer satisfaction, it is important for banks to continue monitoring and improving the overall customer experience. Regulatory bodies can establish frameworks for banks to assess and improve customer satisfaction in the digital era.
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