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New developed and implemented technologies change the way people behave and interact in their everyday life. They are changing the business world strategic context, by altering customers' behavior and expectations , business conduct and structure of competition, so the banking industry is no exception at all. Most people in the banking sector agree that digital banking is the wave of the future. " Digital banking " often gets confused with mobile banking and online banking, because all these involve digital applications, in one form or another. Digital Banking is an urgency, not an academic question, and nowadays digital change goes beyond banking. Digital banking is the incorporation of new and developing technologies throughout a financial services entity, in concert with associated changes in internal and external corporate and personnel relationships, to provide enhanced customer services and experiences effectively and efficiently. The migration to a digital banking world will not be smooth and will lead to further fragmentation in the financial service markets. Banks must undergo a deeper modification of their business, culture, and IT, and above all, will need put innovation at its core and use data to create new business, revenue and customer engagement.
International Conference Proceedings ISTI-2016
Digital Banking the Wave of the Future
Anni DASHO1, Elvin MEKA2, Genci SHARKO3, Indrit BAHOLLI4
1European University of Tirana, Economic and IT Faculty, Tirana, Albania.
2European University of Tirana, Economic and IT Faculty, Tirana, Albania.
3Polytechnic University of Tirana, Electrical Engineering Faculty, Tirana, Albania.
4European University of Tirana, Economic and IT Faculty, Tirana, Albania.;;;
New developed and implemented technologies change the way people behave and interact in their everyday
life. They are changing the business world strategic context, by altering customers’ behavior and expecta-
tions, business conduct and structure of competition, so the banking industry is no exception at all. Most
people in the banking sector agree that digital banking is the wave of the future.
“Digital banking” often gets confused with mobile banking and online banking, because all these involve
digital applications, in one form or another. Digital Banking is an urgency, not an academic question, and
nowadays digital change goes beyond banking. Digital banking is the incorporation of new and developing
technologies throughout a financial services entity, in concert with associated changes in internal and ex-
ternal corporate and personnel relationships, to provide enhanced customer services and experiences effec-
tively and efficiently.
The migration to a digital banking world will not be smooth and will lead to further fragmentation in the
financial service markets. Banks must undergo a deeper modification of their business, culture, and IT, and
above all, will need put innovation at its core and use data to create new business, revenue and customer
Keywords: Digital Banking, Digital Applications, Digitization, Digitalization, Financial Service Market.
1. Introduction
When I go to Silicon Valley…they all want to eat our lunch. Every single one of them is go-
ing to try!” Such iconic wording, anxiously articulated by Mr. James Dimon, CEO of JP
Morgan Chase at the US investors day some two years ago, summarizes the biggest challenge
the entire banking industry, be it commercial or investment one, is currently facing in the
course of everyday business.
The challenge has a name: DIGITAL REVOLUTION and it is pretty much complex for banks,
in the sense that they have to “fight” in two fronts: the digitization and the digitalization. If
the former front is intuitively understood, perceived and consequently translated into well-
defined operational strategies, many years ago with the proliferation of internet, the latter one
is far more arduous, long-lasting and risky, up to the point of business survival.
There are two aspects to the digital business evolution:
Digitization, which is an optimization opportunity and it uses digital means to make
more efficient and effective and optimize existing resources and processes, and this ap-
proach can bring cost-reduction and increase agility,
Digitalization, is a business opportunity and it uses digital assets and capabilities to create
new services that are valuable to the customers, which can bring differentiation, business
innovation, and new revenues.
International Conference Proceedings ISTI-2016
Digitization Digitalization
Record Differentiation Innovation
Standardization Unique Processes Next competitive ad-
Operational efficiency Current competitive advantage
Common Ideas Better Ideas New Ideas
Digitalization creates new value based on digital assets and capabilities. Most banks are
working on the first aspect, but have the opportunity to further develop the second one as
well. Indeed, digitalization goes beyond simply substituting analog or physical resources with
their digital counterparts. Digitalization captures the notion of digital evolution to change
business models and the relationship between customer value and company revenue.
But why are banks increasingly and incessantly turning digital? There are numerous reasons
which could give some explanations for this behaviour, but probably the most important and
influencing elements, causing a deep impact on the digital transformation of financial ser-
vices are the following trends:
The development of new technologies
The swift development of new technologies, Internet, smartphones and tablets, in less than 10
years, along with the challenge of new entrants (operating digital-only products and services)
and new models, adds a new dimension to the changing role of banking.
Technology companies and start-ups rapidly expand their activities to financial services, con-
tinually innovating and competing or collaborating with banks and other financial institu-
tions in various segments of the financial markets or in activities that do not specifically re-
quire a banking licence. This contributes to pushing banks to rethink the way they operate.
The change of customer expectations
The change is also coming from new customer expectations. Today’s customers are not the
same as they were ten years ago. Their expectations towards products and services have
changed in just a few years. Digital consumers belong to the digital native generation, born
and raised with Internet: the generation born between 1977 and 1994 considered remarkable
technology wise, exposed to technology since early childhood and impervious to most tradi-
tional marketing; and the generation born in the mid-90s to early ‘00s, accustomed to a media
and online environment in which options are virtually limitless.
Both generations are extremely connected and rely heavily on smartphones/apps and even
wearables to enjoy the best customer-experience or benefit from the most popular content.
They adapt quickly to new changes and continually seek information or advice on the Internet
or social networks. These digital consumers demand more choices, immediate availability
and direct access to ready-to-use information and services. They expect fast, safe and simple
banking products and services. They want banks to provide more than mere transactional ser-
vices and expect them to understand their needs and to act as trusted advisers.
International Conference Proceedings ISTI-2016
2. The digital challenge for banks
Nowadays the migration to the digital banking area will not be easy and will lead to financial
service markets fragmentation. Banks in Albania and all around the world will be required to
implement in their system modern solutions, including multichannel customer experience
platforms, advanced analytics for CRM and marketing, and open platforms for appstores and
APIs ready to achieve the openness and agility necessary to grow up and expand in the digital
Growing up and expanding into the Digital world Banking System Beyond must undertake
intensive modifications of their business culture on IT area, in particular, a typical digital
bank need to implement innovation at its core and use data to create better customer engage-
ment, increase of revenues and solutions for new business to be implemented.
It’s evident nowadays that the concept of “around the world including even Albanian Bank-
ing System need to be consider as digital Journey to be developed and implemented at higher
velocities meeting the digital age challenges and not as destination to be reached out only.
Digital Banking revolution need not only to be limited at Retail Banking and all private and
commercial banking system need to benefit from similar strategies and principles implement-
ing typical tools, to implement a better customer engagement in the new digital age.
To be ready and approach the new digital age banking system will need to deal effectively
and successfully with the digitalization, as the wave of the future following four identified
digital strategies, which will allow the banking sector to gain market share and control costs:
Launch a digital brand that’s separate from a bank’s existing brand, allowing the bank to
separate its digital offerings from the rest of its services and provide an entirely different
experience and pricing structure to its online customers.
Modernize the digital experience so it more closely resembles all the other digital experi-
ences the bank’s customers are having.
Add new digital capabilities that go beyond Internet banking and mobile banking to de-
liver new types of digital assets.
Eliminate paper and create a set of digital processes in order to compete in a digital
FinTechs with their innovative business models like crowdfunding, P2P, P2P and B2B, along
with disruptive technologies are seriously questioning the banking business model, notwith-
standing the fact that it has been for banks which have been pioneering the use of computers
and information technology. They are attacking banking industry at almost every vital point
of their value chain (loan-making timing, payments, capital requirements, etc.) The attack is
hugely asymmetric, as fintechs are not regulated like banks, but allowed to compete by using
similar principles, devices and mechanisms, but with totally different approach.
However, risk and reward walk side by side, and banks could reap considerable profits, if
they adapt swiftly to the actual trend. As McKinsey suggests it in a recent research… that
digital laggards could see up to 35 percent of net profit eroded, while winners may realize a
profit upside of 40 percent or more”. But to reach that, banks must get familiar with the fact
that digitalization at banks and within banking industry is not a choice, or even an option: it is
an existential decision, paradoxically made out of banks’ will. Put in other words, digital
banking is a do-or-die challenge for banks and digital innovation resisting institutions will be
soon technically doomed, as key stakeholders, including investors, clients, markets, etc., will
International Conference Proceedings ISTI-2016
hit back against their “conservatism”. Additionally, banks have to admit that they are con-
ducting business in the era of the Fourth Industrial Revolution (digital revolution) and it will
impact the current banking business model, like previous revolutions and innovations used to
do throughout history, by employing the very same mechanism and principle of creative de-
3. Albanian Banking System even more digital
Banking Sector in Albania have done a lot of efforts to provide their complex digital channels
offerings where simplicity is needed to engage more and more Albanian online impatient
shoppers. Albanian Consumers have benefited all the time from the possibilities of comfort
web and mobile banking possibilities, pretending at the same time to achieve these services
as free add-ons to their checking account.
Nowadays the number of Albanian consumers preferring to search online for banking prod-
ucts and providers is increased almost 15%, even though most of them still go to the bank
branches to complete their transactions as per their old habits. A great effort is needed to at-
tract and engage online Albanian customers, with overall sales growth increasingly affected
by the success of this effort.
Generally even in Albania it has been evident a growing trend of electronic money flow for
phone credit recharges as per whole local providers Vodafone-Telecom Albania-Eagle Mo-
bile and Plus Companies, payments of TV Private Programs fees, fines, bills, taxes, utilities
which has led to a reduction of cash, by channeling through electronic channels some ALL
150-200milions, within a couple of years and with a growing number of transactions.
The Albanian market has a unique opportunity, by combining very little legacy of old tech-
nologies, together with plain vanilla banking system products. Albania like Europe and the all
around the World is embracing this digital revolution by opening new opportunities for eve-
ryone at the Albanian Banking System and their clients. In this context, the Albanian Gov-
ernment has strongly committed to support and promote digital initiatives as a powerful tool
for modernizing the governance increasing knowledge and openness of our society spurring
economic development and enriching citizens.
What about the situation of Digital Banking in Albania, where we are and what will be the
near future strategy of implementing such a digital revolutionary portfolio project? The glob-
al momentum is somehow delayed, as there are not much initiatives in this area. We see an
increase of customers’ demand for quality, mobility and an increase in price sensitivity. Also
the percentage of people that have access to internet, either from home or from their mobiles
is increased rapidly especially from mobiles. On the positive side, it looks like the Albanian
market has a unique opportunity, by combining very little legacy of old technologies, togeth-
er with plain vanilla banking products and services. This situation allows for projects in Al-
bania especially those related to digital area to be significantly simpler and less expensive,
which cost honestly billions in matured markets.
In most of the biggest Banks as Raiffeisen, BKT, Societe Generale, Intesa Sanpaolo, Pro-
credit, Tirana Bank, Credins etc… the digital transformation is becoming a strategic direction
for all of them through implementation of Digital Banking Projects. Most of the new initia-
tives and budget dedicated go on to this direction, and based on their digital strategies some
of the largest banks are undertaking important investments in parallel, in the same area.
International Conference Proceedings ISTI-2016
The radical modernization of electronic channels is still not visible in a large scale, and we
see some important trends in branch transformation, including technologies that allow for ac-
cessing banking services via self-service devices, and the modernization of supporting pro-
cesses, is still a long way to go. In the meantime the initiatives of digital signature with iden-
tity cards shows clear potential, but further investments in the regulatory framework, an in-
crease awareness and education of judicial system are a must along with imminent opening of
digital signature to other competitors, which could result in lower cost.
Promoting the cooperation between banking operators, financial institutions and service pro-
viders has brought the need to improve the systems and filling some gaps in the legal frame-
work, in order to create appropriate ground for using new payment instruments for citizens,
but also for service providers and the banking system, to reduce operational costs and reduce
the use of cash. The Albanian Government strongly supported and promoted the digital initia-
tives and projects, as the most powerful tool for modernizing governance, increasing
knowledge and openness of our society, incenting economic development and enriching the
citizen’s services. However the increasing number of digital services requires further adjust-
ments overcoming the old method of work, beating the mentality of using booklets, but a l-
ways establishing strict security and procedural rules in order to facilitate citizens life, reduce
the service cost, as well as ensuring full security in digital systems.
Some banks in Albania as I mentioned before are working to integrate the services of authen-
tication and electronic signature into banking services, where Raiffeisen Bank and Societe
Generale have commenced pilot programs in this regard, and Raiffeisen Bank is piloting
since January 2016, the authentication service at one of its main branches in Tirana, aiming to
identify its customers that carry out external bank transfers, by reading the ID card with bio-
metric reader, and Societe Generale in Albania is working to integrate the electronic signature
service with its services mainly for opening new deposits, where the identification and con-
tract signing for opening the deposit is made electronically. Also some efforts are made to in-
tegrate the authentication service with bank’s services.
4. Conclusions
As we discussed and commented the banking sector system was mostly focused on transac-
tions and handling money and today, banking has moved from transactions to experiences,
which are based on data managing - the more insight you glean from the data, the better your
ability to deliver engaging client experiences,” notes Muralitharan. We think of digital not as
a channel, but as the new way of banking, and digital bank not only includes extensive guid-
ance and background on the digital revolution in banking and tracks the innovations and how
the mobile internet is changing the dynamics of consumer and corporate relationships with
their banks.
The implication is that banks must become digitized, and that is a challenge as becoming a
Digital Bank demands new services focused upon 21st-century technologies and these busi-
nesses both giants and startups are assertively entering the financial sector, leveraging
technology and delivering continuous innovation to frequently upgrade their arsenal and to
compete or collaborate with banks and other financial institutions in unregulated seg-
ments of the financial market or activities that do not require a banking licence. Financial in-
stitutions must make a business transformation, investing in progressive renovation of their
legacy systems to provide the digital services demanded by the emerging generation, while
still mitigating reputational and regulatory risk.
International Conference Proceedings ISTI-2016
Banks in Albania and all around the world will become more and more digital, and this is a
matter of time, as customers, competitors, regulatory agencies and especially Governments
push in this direction, the promise of anytime, anywhere banking with transparency and con-
venience will ultimately bring together today’s branch-based traditional players with the no-
frills offers of direct banks and innovative financial technology players.
[1] C. Skinner, “Digital Bank-Strategies to succeed to a digital bank. 2013.
[2] TEMENOS-White Paper, “The rise of Digital Banking2015.
[3] AT Kearney, “Banking in a Digital World”, 2013.
[4] ATKerney and EFMA. (2014). Going Digital: The Banking Transformation Road Map.
[5] Corporate Banking Customer Satisfaction Survey, Finextra, October 10, 2010,
[6] Global CFO Study The New Value Integrator, IBM, 2010.
[7] Global CIO Study The Essential CIO, IBM, 2011
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Digital Bank-Strategies to succeed to a digital bank
  • C Skinner
C. Skinner, "Digital Bank-Strategies to succeed to a digital bank". 2013.
The rise of Digital Banking
  • Temenos-White
  • Paper
TEMENOS-White Paper, "The rise of Digital Banking" 2015.
Banking in a Digital World
  • At
  • Kearney
AT Kearney, "Banking in a Digital World", 2013.
Going Digital: The Banking Transformation Road Map
  • Efma Atkerney
ATKerney and EFMA. (2014). Going Digital: The Banking Transformation Road Map.