How Do Bank Customers Go Digital? A Machine Learning Approach

43 Pages Posted: 19 Jun 2018 Last revised: 4 Oct 2018

See all articles by Santiago Carbo-Valverde

Santiago Carbo-Valverde

Universitat de València

Pedro Cuadros-Solas

CUNEF Universidad

Francisco Rodriguez-Fernandez

University of Granada - Department of Economic Theory and History

Date Written: June 13, 2018

Abstract

This study examines the sequence of decisions that bank customers follow to adopt digital services and diversify the use of those services. The sequential approach relies on machine learning applied to an in-depth survey on consumer preferences for financial services. The results show that the adoption of digital banking services starts with information-based services (e.g. checking account balance), and it is then followed by transactional services (e.g. online or mobile money transfer). However, the diversification of the use of online channels is mainly explained by the consciousness about the range services available and the perception that they are safe. The findings also reveal that bank customers adopt non-bank payment services only once they are frequent and diversified digital bank customers. This suggests a certain degree of complementary between bank and non-bank digital channels. The matching learning technique based on random forest models is shown to outperform the forecasting accuracy of parametric econometric models.

Keywords: technology adoption, banks, machine learning

JEL Classification: G21, O33

Suggested Citation

Carbo-Valverde, Santiago and Cuadros-Solas, Pedro and Rodriguez-Fernandez, Francisco, How Do Bank Customers Go Digital? A Machine Learning Approach (June 13, 2018). Available at SSRN: https://ssrn.com/abstract=3195286 or http://dx.doi.org/10.2139/ssrn.3195286

Santiago Carbo-Valverde (Contact Author)

Universitat de València ( email )

Departamento de Analisis Economico
Facultad de Economia, Campus Tarongers
Valencia, Valencia 46022
Spain

Pedro Cuadros-Solas

CUNEF Universidad ( email )

C/ Pirineos, 55
Madrid, Madrid 28040
Spain

Francisco Rodriguez-Fernandez

University of Granada - Department of Economic Theory and History ( email )

Granada
Spain

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