3. Impacts of Digitalization on Banks and Banking

Technological development is changing society, economics, banks, and banking. The change in technology at first directed banking transactions from branches, which were conventional distribution channels, towards toward automated teller machines (ATM), telephone, internet Internet banking, and mobile devices later on and diversified distribution channels. This change did not cease and cloud-based applications, big data, and the concept of big data reading comprehension gained importance in a course of time. In addition to that, Cryptocurrencies have taken to the stage of everyday life. Development in the digital communication enabled the communication with people all over the world. Digital banking had taken the shape of a distribution channel in at the beginning, which had provided ease of access and cost advantage along with productivity growth by enabling banking services to be rendered without the branch, i.e., staff. This situation increased the profitability of the banks by having the banking system getting ahead in the competition. Social media has become one of the innovations that technology brought forth. Blogs and channels such as Youtube YouTube have been a part of life. Banks do not only have to exist on social media for building a new service architecture and retaining customer mass but also they need to fulfill their targets of marketing and public relations. At the same time, social networks affect the banking. Social networks such as Twitter, Facebook, and Linkedin have intensified interactive communication on the internet Internet which led to the emergence of the new business models stemming from social media. Another change brought about by digitalization and technological developments was innovative, flexible, and adaptable financial solutions supplied by the ‘Fintech’ enterprises which seemed probable to transform banks and banking too. On the one hand, Fintech enterprises pose a threat to the sector, but on the other hand, the possibility that competitive advantage would be taken by creating new business platforms in cooperation with Fintech enterprises has been realized. These technological developments affected regulations and led to official regulations about open banking. Open banking allowed for permitted sharing of data via Application Programming Interfaces (API) and enabled Fintech enterprises to develop financial services. This change turns banks into platforms and enables the foundation of structures, which would give access to more competitive financial products and services with higher quality for banks in cooperation with Fintech enterprises. Banks may have to modify their products, business processes of services, and their organizational structures and architecture probably, to keep pace with the digital change. Banks are progressing as becoming institutions transforming data into information and marketing information, not money, anymore. The digital change is directing our bank bank-centered viewpoint towards toward a customer-oriented viewpoint in an ever ever-increasing pattern. Along with the fact that banks accommodated themselves to mobile technology, the major essential development is the establishment of digital banks rendering direct digital financial services in addition to the fact that banks are institutions rendering service only by use of the digital channels and regarding the digital platform as a service channel solely.