Barriers to Digitalisation in the Financial Services – An empirical Study of the German Banking Industry

The banking sector is confronted with today’s ever-increasing digitalisation. In this digital change process, banks are facing disruptive innovation that requires the adaptation of almost all cooperative processes. Digital transformation in the financial services is associated with barriers that seem to hinder smooth implementation of digital approaches. In this context, innovative developments, namely FinTech(s), are challenging existing banking business models and literally forcing them to rethink existing structures. In particular, the all-encompassing transformation of existing business models that have been in place for decades represents a major challenge for companies and their executives. This issue has not been adequately addressed in the current academic literature. The main purpose of the study is to qualitatively identify the perceived barriers to digital transformation in the cooperative and savings bank sector from a managerial point of view. The methodology is based on an approach using a combination of contextual interviews with German board members of banks, inductive content analysis, and the exploration of best-practice approaches. The findings reveal multiple barriers that are characterised by several sub-barriers of varying importance for the digital transformation of banks. Furthermore, the study aims to provide a quantification and analysis of implementation barriers that arise in the context of bank digitalisation. Applying exploratory factor analysis and structural equation modelling, the study quantifies a variety of barriers and tests their influence on the degree of digitalisation of banks. In this way, the study promotes the understanding and perception of managers on the topic of barriers to digitalisation.