Banks are usually early adopters of IT opportunities. This is true not only for the back office, where modern technologies have long been used (such as for processing payments), but also for the front-end. One example is automated teller machines (ATMs), one of the earliest IT applications in banking. These devices replaced repetitive tasks of bank employees in cash withdrawals and account balance checks. They made it easier for customers to use standard banking services, while making banks more efficient. Since the first ATM was installed in London in 1967, they have become standard equipment in branches. In Europe, their number has grown to three ATMs per bank branch in 2017, from one ATM per four bank branches in 1987. Bank employees, relieved of routine cash-handling tasks, were able to offer other services such as relationship banking (i.e. meeting customers’ individual needs) and other bank services such as credit cards, loans and investment products. https://www.linkedin.com/pulse/27-authentic-examples-ai-implementation-fintech-nasser-sami-qtxee/
Online banking is another example of banks adopting client-facing new IT. Starting in the late 1990s, the use of the Internet as a medium for banking services has grown significantly. Direct or Internet banks emerged with very few or no physical branches. Virtually all banks began to provide online banking services. In 2018, more than half of the adult population in the European Union used Internet banking to check their account balance or transfer funds. In some countries, such as Denmark, Internet banking penetration rates are particularly high (90%). In Germany, 59% of individuals used Internet banking in 2018, up from only 35% in 2007. For customers who have little time to visit a branch, online banking has become the main tool for standard services. Mobile banking in Germany was used by 7% of respondents. User Non-user User Potential user Banking app Non-user Mobile payment Source: Postbank Digital Study (2018), Deutsche Bank Research AI Implementation in Banking 8-Credit Scoring-Insurance Policy-Client-Facilitating Chatbots-Know Your Customer-Client Centricity-Capital Optimization-Modeling-Modeling Detection-Operations and Portfolio Management-Portfolio Management-Portfolio Management Technology-Macroprudential Surveillance-Data Quality Assurance-Supervisory Technology Source: FSB (2017), Deutsche Bank Research.
The way bank clients access the internet has also changed. Germans, for example, are increasingly using their mobile devices for internet banking, and some 40% of them have a banking app on their mobile phone. In addition, one-fifth of them also use their apps for mobile payment services. It is especially popular among younger, more educated and internet-savvy individuals. With banks and their customers meeting on virtual platforms and people using online services anytime, banking is becoming less and less branch dependent.
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