Digital innovation and de-branching in the banking industry: Customer perception and satisfaction

Abstract

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.