Relationship Banking and Information Technology: The Role of Artificial Intelligence and FinTech

Forthcoming in Risk Management

31 Pages Posted: 26 Oct 2017 Last revised: 2 Apr 2018

See all articles by Marko Jaksic

Marko Jaksic

University of Ljubljana - Faculty of Economics

Matej Marinc

University of Ljubljana - Faculty of Economics

Date Written: March 29, 2018

Abstract

Banks have no time for complacency. They need to reevaluate their competitive advantages in light of profound changes driven by advances in information technology (IT) and competitive pressure from FinTech companies. This article emphasizes that banks should not abolish relationship banking, which nurtures close contact with bank customers. A long-term orientation of relationship banking streamlines incentives and supports the long-term needs of bank customers. However, banks might be lured into transaction banking due to the presence of IT-driven economies of scale and competition from FinTech start-ups and IT companies. In this light, the article evaluates the role of distances, artificial intelligence, and behavioral biases. Implications for stability in banking are explored. We argue that relationship banking can overcome its drawbacks, but it needs to adjust to the new reality in order to survive.

Suggested Citation

Jaksic, Marko and Marinc, Matej, Relationship Banking and Information Technology: The Role of Artificial Intelligence and FinTech (March 29, 2018). Forthcoming in Risk Management. Available at SSRN: https://ssrn.com/abstract=3059426 or http://dx.doi.org/10.2139/ssrn.3059426

Marko Jaksic

University of Ljubljana - Faculty of Economics ( email )

Kardeljeva ploscad 17
Ljubljana, 1000
Slovenia

Matej Marinc (Contact Author)

University of Ljubljana - Faculty of Economics ( email )

Kardeljeva ploscad 17
Ljubljana, 1000
Slovenia

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