INFLUENCE OF DIGITALIZATION ON FINANCIAL INSTITUTIONS
Abstract
The integration of digital technology within financial institutions has caused a profound transformation in the financial landscape. The objective of this article is to breakdown digitalization impacts on these organizations discussing their past, present and potential effects. Beginning with a historical overview, it explores the evolution of technology in banking, highlighting the pivotal role of online platforms, mobile applications, and digital wallets. Thereafter, it looks at all the merits that are associated with digitalization which include heightened efficiency, cost reductions, and the enhancement of customer experiences. Methodologically, the article conducts an analysis of the benefits and challenges, utilizing a comprehensive review of industry literature, case studies, and expert insights to provide a thorough understanding of the subject. In addition, the article discusses how financial institutions are adopting strategies like forging partnerships with fintech entities, developing user-friendly mobile applications, and integrating blockchain technology. The industry’s position is manifested through its use of these strategies that ensure it utilizes technology in order to remain competitive and relevant in a rapidly evolving landscape. With digitalisation, the paradigm shift is leading the financial institution into a more customer-centric model with a primary focus on offering personalized, convenient, and accessible services. Customer-centric innovations, facilitated by data analytics, mobile banking applications, AI-driven interfaces, and contactless payment solutions, have not only disrupted traditional banking models but have also given rise to a surge in online-only banks. These digital-focused entities have challenged the traditional brick-and-mortar institutions, transforming the dynamics of the industry. Results highlight the imperative for financial institutions to strike a harmonious balance between technological innovation and personalized customer-centric services. Scientifically novel, this article provides a holistic understanding of the digital transformation's impacts. The practical significance lies in navigating these changes adeptly, determining industry leaders who will spearhead the emergence of a digitalized customer-oriented financial future.
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