Abstract
The German banking industry is facing major challenges due to digitalization. The digital transformation is significantly influenced by technological progress, tighter regulation and low-interest phases. The market entry of fintechs and changing customer behaviour is also a reality. To meet the challenge of the digitalization and to to reduce costs, savings banks are increasingly turning to mergers, staff cuts and branch closures. The purpose of this research is to investigate the impact of digitalization on German savings banks. Through an explorative literature review, scientific sources and real KPIs of savings banks in Germany were used. The impact of digitalization on savings banks in the period 1999 – 2018 was investigated using the study situation and the analysis of key business figures. The aim is to answer whether the cost-cutting actions of savings banks are justified from an economic point of view based on the KPIs operating result, cost-income ratio and return on equity. In recent years, it has become clear that German banks lack a clear strategy. The results may be of interest to researchers dealing with the digital transformation of savings banks in Germany.
Highlights
The German banking industry is facing major the uncertainty is reflected not least in the financial challenges due to digitalization
The aim is to answer whether the cost-cutting actions of savings banks are justified from an economic point of view based on the key performance indicators (KPIs) operating result, cost-income ratio and return on equity
The possible course structure makes the German banking system unique, only the Austrian banking system has a similar structure in Europe (Behr & Schmidt, 2015; Frank et al, 2014; Komorowski, 2020)
Summary
The German banking industry is facing major the uncertainty is reflected not least in the financial challenges due to digitalization. To meet the challenge of the digitalization and to to reduce costs, savings banks are increasingly turning to mergers, staff cuts been recorded. The latter is often interpreted in the research literature to measure economic uncertainty (Michelsen et al, 2020). Some banks that were already on shaky ground investigate the impact of digitalization on German savings before the crisis may not survive the pandemic. Digitalization is a priority in order to be able to ensure that we can catch up in terms of "digital skills" and not miss the boat To realize their ambitions, savings banks are well advised to create the necessary internal conditions for digital transformation. A higher level of automation can reduce costs and open up further data sources (Damaschke & Giebe, 2020)
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