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The Effect of Banks' IT Investments on the Digitalization of their Customers

Author

Listed:
  • Santiago Carbó‐Valverde
  • Pedro J. Cuadros‐Solas
  • Francisco Rodríguez‐Fernández
  • EY

Abstract

Banks all over the world are investing in new banking technologies at a time when bank customers are progressively going digital in several dimensions of their economic and social interactions. Together with their existing perceptions of digital services, new banking technologies may path the way to accelerate the digitalization of bank customers, thereby achieving private and social efficiency gains. This paper exploits the fact that banks’ IT investments are mostly allocated to digital technologies to examine if such investments affect the digitalization of bank customers. The results show that banks’ IT investments have a significant positive impact on the adoption of financial digitalization by customers. Banks’ IT investments also increase the likelihood that bank customers undertake their financial transactions through digital channels rather than in the physical branch. This represents a change in the relationship banking channel. These findings shed light on the impact of banks’ IT investments on end‐users and not just on bank productivity and efficiency.

Suggested Citation

  • Santiago Carbó‐Valverde & Pedro J. Cuadros‐Solas & Francisco Rodríguez‐Fernández & EY, 2020. "The Effect of Banks' IT Investments on the Digitalization of their Customers," Global Policy, London School of Economics and Political Science, vol. 11(S1), pages 9-17, January.
    • Handle: RePEc:bla:glopol:v:11:y:2020:i:s1:p:9-17
    DOI: 10.1111/1758-5899.12749
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    Cited by:

    1. Santiago Carbo-Valverde & Pedro Cuadros-Solas & Francisco Rodríguez-Fernández, 2020. "A machine learning approach to the digitalization of bank customers: Evidence from random and causal forests," PLOS ONE, Public Library of Science, vol. 15(10), pages 1-39, October.
    2. Martín Fuentes, Natalia & Di Vito, Luca & Leite, João Matos, 2023. "Understanding the profitability gap between euro area and US global systemically important banks," Occasional Paper Series 327, European Central Bank.
    3. Krivosheya, Egor, 2020. "The role of financial innovations in consumer behavior in the Russian retail payments market," Technological Forecasting and Social Change, Elsevier, vol. 161(C).

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