The Digitalization of the European Banking Industry: Some Evidence

Santiago Carbó-Valverde (), Pedro Cuadros-Solas (), Cristina Gonnella () and Francisco Rodríguez-Fernández ()
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Santiago Carbó-Valverde: University of Valencia
Cristina Gonnella: University of Pisa
Francisco Rodríguez-Fernández: Funcas
Authors registered in the RePEc Author Service: Santiago Carbo Valverde

Chapter Chapter 10 in New Challenges for the Banking Industry, 2023, pp 255-281 from Palgrave Macmillan

Abstract: Abstract The relevance of technology has increased for the banking industry. Improving banks’ technological skills is crucial to compete in a digital post-pandemic context. This chapter examines the digital transformation of the European banking industry by focusing on the annual banks’ expenses on information technology (IT). Using a representative sample of European banks from 2017 to 2021, we find that the ratio of IT expenses to total operating expenses and the ratio of IT expenses to total operating income have increased by 1.02 percentage points (+10.34%) and 0.95 percentage points (+15.82%), respectively. Moreover, becoming a high-IT bank is associated with some bank features. Less capitalized, riskier, more profitable, and less efficient and those banks that exhibit a lower growth of total assets spend more on IT. The chapter also reveals that banks are taking a step forward in critical IT areas such as artificial intelligence, blockchain, cloud computing, biometrics, and big data.

Keywords: Banks; Technology; Information technology (IT); Digitalization; Europe (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:pal:pmschp:978-3-031-32931-9_10

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DOI: 10.1007/978-3-031-32931-9_10

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