The Digital Revolution: Structural transformation and changing demand of the banking industry

Abstract

Due to technological revolutions, the digitalization has drastically changed the conditions for all actors competing in the banking industry. As a result of new technological advances and digital innovations facilitating for private banking customers to become self-going, it is very important for all banks to be aware of what implications changing customer habits might have on their businesses. In terms of a growing customer group with high strategic relevance, focus in this thesis has been directed at young adults, who are believed to be key indicators of where the future banking industry is heading. The purpose of the study is to, in-depth, identify the pattern of how young banking customers in Sweden currently are valuing digital banking services and how their adoption of digital banking might impact the future of Swedish banks. In the conducted research, both qualitative and quantitative measures are adopted, with hopes of adequately covering necessary components of the given research question. Thus, both survey and interviews are carried out successfully within our quality requirement, through large samples and highly insightful interviewees. Conclusively, the results indicate a very large adoption of new digital banking services among young adults. The results further indicate a cannibalization effect in which most young customers tend to conduct much of their banking activities online through applications in their cell phones rather than through the traditional communication channels. In order to cope with the lowered personal contact, banks thus need to incorporate a more customer-centric digital strategy as well as to challenge their traditional comfort zones. Meanwhile, they also have to cope with the emergence of new non-traditional actors.