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• Open access
• Published: 18 June 2021

Financial technology and the future of banking

• Daniel Broby   ORCID: orcid.org/0000-0001-5482-0766 1  

Financial Innovation volume  7 , Article number:  47 ( 2021 ) Cite this article

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This paper presents an analytical framework that describes the business model of banks. It draws on the classical theory of banking and the literature on digital transformation. It provides an explanation for existing trends and, by extending the theory of the banking firm, it illustrates how financial intermediation will be impacted by innovative financial technology applications. It further reviews the options that established banks will have to consider in order to mitigate the threat to their profitability. Deposit taking and lending are considered in the context of the challenge made from shadow banking and the all-digital banks. The paper contributes to an understanding of the future of banking, providing a framework for scholarly empirical investigation. In the discussion, four possible strategies are proposed for market participants, (1) customer retention, (2) customer acquisition, (3) banking as a service and (4) social media payment platforms. It is concluded that, in an increasingly digital world, trust will remain at the core of banking. That said, liquidity transformation will still have an important role to play. The nature of banking and financial services, however, will change dramatically.

Introduction

The bank of the future will have several different manifestations. This paper extends theory to explain the impact of financial technology and the Internet on the nature of banking. It provides an analytical framework for academic investigation, highlighting the trends that are shaping scholarly research into these dynamics. To do this, it re-examines the nature of financial intermediation and transactions. It explains how digital banking will be structurally, as well as physically, different from the banks described in the literature to date. It does this by extending the contribution of Klein ( 1971 ), on the theory of the banking firm. It presents suggested strategies for incumbent, and challenger banks, and how banking as a service and social media payment will reshape the competitive landscape.

The banking industry has been evolving since Banca Monte dei Paschi di Siena opened its doors in 1472. Its leveraged business model has proved very scalable over time, but it is now facing new challenges. Firstly, its book to capital ratios, as documented by Berger et al ( 1995 ), have been consistently falling since 1840. This trend continues as competition has increased. In the past decade, the industry has experienced declines in profitability as measured by return on tangible equity. This is partly the result of falling leverage and fee income and partly due to the net interest margin (connected to traditional lending activity). These trends accelerated following the 2008 financial crisis. At the same time, technology has made banks more competitive. Advances in digital technology are changing the very nature of banking. Banks are now distributing services via mobile technology. A prolonged period of very low interest rates is also having an impact. To sustain their profitability, Brei et al. ( 2020 ) note that many banks have increased their emphasis on fee-generating services.

As Fama ( 1980 ) explains, a bank is an intermediary. The Internet is, however, changing the way financial service providers conduct their role. It is fundamentally changing the nature of the banking. This in turn is changing the nature of banking services, and the way those services are delivered. As a consequence, in order to compete in the changing digital landscape, banks have to adapt. The banks of the future, both incumbents and challengers, need to address liquidity transformation, data, trust, competition, and the digitalization of financial services. Against this backdrop, incumbent banks are focused on reinventing themselves. The challenger banks are, however, starting with a blank canvas. The research questions that these dynamics pose need to be investigated within the context of the theory of banking, hence the need to revise the existing analytical framework.

Banks perform payment and transfer functions for an economy. The Internet can now facilitate and even perform these functions. It is changing the way that transactions are recorded on ledgers and is facilitating both public and private digital currencies. In the past, banks operated in a world of information asymmetry between themselves and their borrowers (clients), but this is changing. This differential gave one bank an advantage over another due to its knowledge about its clients. The digital transformation that financial technology brings reduces this advantage, as this information can be digitally analyzed.

Even the nature of deposits is being transformed. Banks in the future will have to accept deposits and process transactions made in digital form, either Central Bank Digital Currencies (CBDC) or cryptocurrencies. This presents a number of issues: (1) it changes the way financial services will be delivered, (2) it requires a discussion on resilience, security and competition in payments, (3) it provides a building block for better cross border money transfers and (4) it raises the question of private and public issuance of money. Braggion et al ( 2018 ) consider whether these represent a threat to financial stability.

The academic study of banking began with Edgeworth ( 1888 ). He postulated that it is based on probability. In this respect, the nature of the business model depends on the probability that a bank will not be called upon to meet all its liabilities at the same time. This allows banks to lend more than they have in deposits. Because of the resultant mismatch between long term assets and short-term liabilities, a bank’s capital structure is very sensitive to liquidity trade-offs. This is explained by Diamond and Rajan ( 2000 ). They explain that this makes a bank a’relationship lender’. In effect, they suggest a bank is an intermediary that has borrowed from other investors.

Diamond and Rajan ( 2000 ) argue a lender can negotiate repayment obligations and that a bank benefits from its knowledge of the customer. As shall be shown, the new generation of digital challenger banks do not have the same tradeoffs or knowledge of the customer. They operate more like a broker providing a platform for banking services. This suggests that there will be more than one type of bank in the future and several different payment protocols. It also suggests that banks will have to data mine customer information to improve their understanding of a client’s financial needs.

The key focus of Diamond and Rajan ( 2000 ), however, was to position a traditional bank is an intermediary. Gurley and Shaw ( 1956 ) describe how the customer relationship means a bank can borrow funds by way of deposits (liabilities) and subsequently use them to lend or invest (assets). In facilitating this mediation, they provide a service whereby they store money and provide a mechanism to transmit money. With improvements in financial technology, however, money can be stored digitally, lenders and investors can source funds directly over the internet, and money transfer can be done digitally.

A review of financial technology and banking literature is provided by Thakor ( 2020 ). He highlights that financial service companies are now being provided by non-deposit taking contenders. This paper addresses one of the four research questions raised by his review, namely how theories of financial intermediation can be modified to accommodate banks, shadow banks, and non-intermediated solutions.

To be a bank, an entity must be authorized to accept retail deposits. A challenger bank is, therefore, still a bank in the traditional sense. It does not, however, have the costs of a branch network. A peer-to-peer lender, meanwhile, does not have a deposit base and therefore acts more like a broker. This leads to the issue that this paper addresses, namely how the banks of the future will conduct their intermediation.

In order to understand what the bank of the future will look like, it is necessary to understand the nature of the aforementioned intermediation, and the way it is changing. In this respect, there are two key types of intermediation. These are (1) quantitative asset transformation and, (2) brokerage. The latter is a common model adopted by challenger banks. Figure  1 depicts how these two types of financial intermediation match savers with borrowers. To avoid nuanced distinction between these two types of intermediation, it is common to classify banks by the services they perform. These can be grouped as either private, investment, or commercial banking. The service sub-groupings include payments, settlements, fund management, trading, treasury management, brokerage, and other agency services.

How banks act as intermediaries between lenders and borrowers. This function call also be conducted by intermediaries as brokers, for example by shadow banks. Disintermediation occurs over the internet where peer-to-peer lenders match savers to lenders

Financial technology has the ability to disintermediate the banking sector. The competitive pressures this results in will shape the banks of the future. The channels that will facilitate this are shown in Fig.  2 , namely the Internet and/or mobile devices. Challengers can participate in this by, (1) directly matching borrows with savers over the Internet and, (2) distributing white labels products. The later enables banking as a service and avoids the aforementioned liquidity mismatch.

The strategic options banks have to match lenders with borrowers. The traditional and challenger banks are in the same space, competing for business. The distributed banks use the traditional and challenger banks to white label banking services. These banks compete with payment platforms on social media. The Internet heralds an era of banking as a service

There are also physical changes that are being made in the delivery of services. Bricks and mortar branches are in decline. Mobile banking, or m-banking as Liu et al ( 2020 ) describe it, is an increasingly important distribution channel. Robotics are increasingly being used to automate customer interaction. As explained by Vishnu et al ( 2017 ), these improve efficiency and the quality of execution. They allow for increased oversight and can be built on legacy systems as well as from a blank canvas. Application programming interfaces (APIs) are bringing the same type of functionality to m-banking. They can be used to authorize third party use of banking data. How banks evolve over time is important because, according to the OECD, the activity in the financial sector represents between 20 and 30 percent of developed countries Gross Domestic Product.

In summary, financial technology has evolved to a level where online banks and banking as a service are challenging incumbents and the nature of banking mediation. Banking is rapidly transforming because of changes in such technology. At the same time, the solving of the double spending problem, whereby digital money can be cryptographically protected, has led to the possibility that paper money will become redundant at some point in the future. A theoretical framework is required to understand this evolving landscape. This is discussed next.

The theory of the banking firm: a revision

In financial theory, as eloquently explained by Fama ( 1980 ), banking provides an accounting system for transactions and a portfolio system for the storage of assets. That will not change for the banks of the future. Fama ( 1980 ) explains that their activities, in an unregulated state, fulfil the Modigliani–Miller ( 1959 ) theorem of the irrelevance of the financing decision. In practice, traditional banks compete for deposits through the interest rate they offer. This makes the transactional element dependent on the resulting debits and credits that they process, essentially making banks into bookkeeping entities fulfilling the intermediation function. Since this is done in response to competitive forces, the general equilibrium is a passive one. As such, the banking business model is vulnerable to disruption, particularly by innovation in financial technology.

A bank is an idiosyncratic corporate entity due to its ability to generate credit by leveraging its balance sheet. That balance sheet has assets on one side and liabilities on the other, like any corporate entity. The assets consist of cash, lending, financial and fixed assets. On the other side of the balance sheet are its liabilities, deposits, and debt. In this respect, a bank’s equity and its liabilities are its source of funds, and its assets are its use of funds. This is explained by Klein ( 1971 ), who notes that a bank’s equity W , borrowed funds and its deposits B is equal to its total funds F . This is the same for incumbents and challengers. This can be depicted algebraically if we let incumbents be represented by Φ and challengers represented by Γ:

Klein ( 1971 ) further explains that a bank’s equity is therefore made up of its share capital and unimpaired reserves. The latter are held by a bank to protect the bank’s deposit clients. This part is also mandated by regulation, so as to protect customers and indeed the entire banking system from systemic failure. These protective measures include other prudential requirements to hold cash reserves or other liquid assets. As shall be shown, banking services can be performed over the Internet without these protections. Banking as a service, as this phenomenon known, is expected to increase in the future. This will change the nature of the protection available to clients. It will change the way banks transform assets, explained next.

A bank’s deposits are said to be a function of the proportion of total funds obtained through the issuance of the ith deposit type and its total funds F , represented by α i . Where deposits, represented by Bs , are made in the form of Bs (i  =  1 *s n) , they generate a rate of interest. It follows that Si Bs  =  B . As such,

Therefor it can be said that,

The importance of Eq. 3 is that the balance sheet can be leveraged by the issuance of loans. It should be noted, however, that not all loans are returned to the bank in whole or part. Non-performing loans reduce the asset side of a bank’s balance sheet and act as a constraint on capital, and therefore new lending. Clearly, this is not the case with banking as a service. In that model, loans are brokered. That said, with the traditional model, an advantage of financial technology is that it facilitates the data mining of clients’ accounts. Lending can therefore be more targeted to borrowers that are more likely to repay, thereby reducing non-performing loans. Pari passu, the incumbent bank of the future will therefore have a higher risk-adjusted return on capital. In practice, however, banking as a service will bring greater competition from challengers and possible further erosion of margins. Alternatively, some banks will proactively engage in partnerships and acquisitions to maintain their customer base and address the competition.

A bank must have reserves to meet the demand of customers demanding their deposits back. The amount of these reserves is a key function of banking regulation. The Basel Committee on Banking Supervision mandates a requirement to hold various tiers of capital, so that banks have sufficient reserves to protect depositors. The Committee also imposes a framework for mitigating excessive liquidity risk and maturity transformation, through a set Liquidity Coverage Ratio and Net Stable Funding Ratio.

Recent revisions of theory, because of financial technology advances, have altered our understanding of banking intermediation. This will impact the competitive landscape and therefor shape the nature of the bank of the future. In this respect, the threat to incumbent banks comes from peer-to-peer Internet lending platforms. These perform the brokerage function of financial intermediation without the use of the aforementioned banking balance sheet. Unlike regulated deposit takers, such lending platforms do not create assets and do not perform risk and asset transformation. That said, they are reliant on investors who do not always behave in a counter cyclical way.

Financial technology in banking is not new. It has been used to facilitate electronic markets since the 1980’s. Thakor ( 2020 ) refers to three waves of application of financial innovation in banking. The advent of institutional futures markets and the changing nature of financial contracts fundamentally changed the role of banks. In response to this, academics extended the concept of a bank into an entity that either fulfills the aforementioned functions of a broker or a qualitative asset transformer. In this respect, they connect the providers and users of capital without changing the nature of the transformation of the various claims to that capital. This transformation can be in the form risk transfer or the application of leverage. The nature of trading of financial assets, however, is changing. Price discovery can now be done over the Internet and that is moving liquidity from central marketplaces (like the stock exchange) to decentralized ones.

Alongside these trends, in considering what the bank of the future will look like, it is necessary to understand the unregulated lending market that competes with traditional banks. In this part of the lending market, there has been a rise in shadow banks. The literature on these entities is covered by Adrian and Ashcraft ( 2016 ). Shadow banks have taken substantial market share from the traditional banks. They fulfil the brokerage function of banks, but regulators have only partial oversight of their risk transformation or leverage. The rise of shadow banks has been facilitated by financial technology and the originate to distribute model documented by Bord and Santos ( 2012 ). They use alternative trading systems that function as electronic communication networks. These facilitate dark pools of liquidity whereby buyers and sellers of bonds and securities trade off-exchange. Since the credit crisis of 2008, total broker dealer assets have diverged from banking assets. This illustrates the changed lending environment.

In the disintermediated market, banking as a service providers must rely on their equity and what access to funding they can attract from their online network. Without this they are unable to drive lending growth. To explain this, let I represent the online network. Extending Klein ( 1971 ), further let Ψ represent banking as a service and their total funds by F . This state is depicted as,

Theoretically, it can be shown that,

Shadow banks, and those disintermediators who bypass the banking system, have an advantage in a world where technology is ubiquitous. This becomes more apparent when costs are considered. Buchak et al. ( 2018 ) point out that shadow banks finance their originations almost entirely through securitization and what they term the originate to distribute business model. Diversifying risk in this way is good for individual banks, as banking risks can be transferred away from traditional banking balance sheets to institutional balance sheets. That said, the rise of securitization has introduced systemic risk into the banking sector.

Thus, we can see that the nature of banking capital is changing and at the same time technology is replacing labor. Let A denote the number of transactions per account at a period in time, and C denote the total cost per account per time period of providing the services of the payment mechanism. Klein ( 1971 ) points out that, if capital and labor are assumed to be part of the traditional banking model, it can be observed that,

It can therefore be observed that the total service charge per account at a period in time, represented by S, has a linear and proportional relationship to bank account activity. This is another variable that financial technology can impact. According to Klein ( 1971 ) this can be summed up in the following way,

where d is the basic bank decision variable, the service charge per transaction. Once again, in an automated and digital environment, financial technology greatly reduces d for the challenger banks. Swankie and Broby ( 2019 ) examine the impact of Artificial Intelligence on the evaluation of banking risk and conclude that it improves such variables.

Meanwhile, the traditional banking model can be expressed as a product of the number of accounts, M , and the average size of an account, N . This suggests a banks implicit yield is it rate of interest on deposits adjusted by its operating loss in each time period. This yield is generated by payment and loan services. Let R 1 depict this. These can be expressed as a fraction of total demand deposits. This is depicted by Klein ( 1971 ), if one assumes activity per account is constant, as,

As a result, whether a bank is structured with traditional labor overheads or built digitally, is extremely relevant to its profitability. The capital and labor of tradition banks, depicted as Φ i , is greater than online networks, depicted as I i . As such, the later have an advantage. This can be shown as,

What Klein (1972) failed to highlight is that the banking inherently involves leverage. Diamond and Dybving (1983) show that leverage makes bank susceptible to run on their liquidity. The literature divides these between adverse shock events, as explained by Bernanke et al ( 1996 ) or moral hazard events as explained by Demirgu¨¸c-Kunt and Detragiache ( 2002 ). This leverage builds on the balance sheet mismatch of short-term assets with long term liabilities. As such, capital and liquidity are intrinsically linked to viability and solvency.

The way capital and liquidity are managed is through credit and default management. This is done at a bank level and a supervisory level. The Basel Committee on Banking Supervision applies capital and leverage ratios, and central banks manage interest rates and other counter-cyclical measures. The various iterations of the prudential regulation of banks have moved the microeconomic theory of banking from the modeling of risk to the modeling of imperfect information. As mentioned, shadow and disintermediated services do not fall under this form or prudential regulation.

The relationship between leverage and insolvency risk crucially depends on the degree of banks total funds F and their liability structure L . In this respect, the liability structure of traditional banks is also greater than online networks which do not have the same level of available funds, depicted as,

Diamond and Dybvig ( 1983 ) observe that this liability structure is intimately tied to a traditional bank’s assets. In this respect, a bank’s ability to finance its lending at low cost and its ability to achieve repayment are key to its avoidance of insolvency. Online networks and/or brokers do not have to finance their lending, simply source it. Similarly, as brokers they do not face capital loss in the event of a default. This disintermediates the bank through the use of a peer-to-peer environment. These lenders and borrowers are introduced in digital way over the internet. Regulators have taken notice and the digital broker advantage might not last forever. As a result, the future may well see greater cooperation between these competing parties. This also because banks have valuable operational experience compared to new entrants.

It should also be observed that bank lending is either secured or unsecured. Interest on an unsecured loan is typically higher than the interest on a secured loan. In this respect, incumbent banks have an advantage as their closeness to the customer allows them to better understand the security of the assets. Berger et al ( 2005 ) further differentiate lending into transaction lending, relationship lending and credit scoring.

The evolution of the business model in a digital world

As has been demonstrated, the bank of the future in its various manifestations will be a consequence of the evolution of the current banking business model. There has been considerable scholarly investigation into the uniqueness of this business model, but less so on its changing nature. Song and Thakor ( 2010 ) are helpful in this respect and suggest that there are three aspects to this evolution, namely competition, complementary and co-evolution. Although liquidity transformation is evolving, it remains central to a bank’s role.

All the dynamics mentioned are relevant to the economy. There is considerable evidence, as outlined by Levine ( 2001 ), that market liberalization has a causal impact on economic growth. The impact of technology on productivity should prove positive and enhance the functioning of the domestic financial system. Indeed, market liberalization has already reshaped banking by increasing competition. New fee based ancillary financial services have become widespread, as has the proprietorial use of balance sheets. Risk has been securitized and even packaged into trade-able products.

Challenger banks are developing in a complementary way with the incumbents. The latter have an advantage over new entrants because they have information on their customers. The liquidity insurance model, proposed by Diamond and Dybvig ( 1983 ), explains how such banks have informational advantages over exchange markets. That said, financial technology changes these dynamics. It if facilitating the processing of financial data by third parties, explained in greater detail in the section on Open Banking.

At the same time, financial technology is facilitating banking as a service. This is where financial services are delivered by a broker over the Internet without resort to the balance sheet. This includes roboadvisory asset management, peer to peer lending, and crowd funding. Its growth will be facilitated by Open Banking as it becomes more geographically adopted. Figure  3 illustrates how these business models are disintermediating the traditional banking role and matching burrowers and savers.

The traditional view of banks ecosystem between savers and borrowers, atop the Internet which is matching savers and borrowers directly in a peer-to-peer way. The Klein ( 1971 ) theory of the banking firm does not incorporate the mirrored dynamics, and as such needs to be extended to reflect the digital innovation that impacts both borrowers and severs in a peer-to-peer environment

Meanwhile, the banking sector is co-evolving alongside a shadow banking phenomenon. Lenders and borrowers are interacting, but outside of the banking sector. This is a concern for central banks and banking regulators, as the lending is taking place in an unregulated environment. Shadow banking has grown because of financial technology, market liberalization and excess liquidity in the asset management ecosystem. Pozsar and Singh ( 2011 ) detail the non-bank/bank intersection of shadow banking. They point out that shadow banking results in reverse maturity transformation. Incumbent banks have blurred the distinction between their use of traditional (M2) liabilities and market-based shadow banking (non-M2) liabilities. This impacts the inter-generational transfers that enable a bank to achieve interest rate smoothing.

Securitization has transformed the risk in the banking sector, transferring it to asset management institutions. These include structured investment vehicles, securities lenders, asset backed commercial paper investors, credit focused hedge and money market funds. This in turn has led to greater systemic risk, the result of the nature of the non-traded liabilities of securitized pooling arrangements. This increased risk manifested itself in the 2008 credit crisis.

Commercial pressures are also shaping the banking industry. The drive for cost efficiency has made incumbent banks address their personally costs. Bank branches have been closed as technology has evolved. Branches make it easier to withdraw or transfer deposits and challenger banks are not as easily able to attract new deposits. The banking sector is therefore looking for new point of customer contact, such as supermarkets, post offices and social media platforms. These structural issues are occurring at the same time as the retail high street is also evolving. Banks have had an aggressive roll out of automated telling machines and a reduction in branches and headcount. Online digital transactions have now become the norm in most developed countries.

The financing of banks is also evolving. Traditional banks have tended to fund illiquid assets with short term and unstable liquid liabilities. This is one of the key contributors to the rise to the credit crisis of 2008. The provision of liquidity as a last resort is central to the asset transformation process. In this respect, the banking sector experienced a shock in 2008 in what is termed the credit crisis. The aforementioned liquidity mismatch resulted in the system not being able to absorb all the risks associated with subprime lending. Central banks had to resort to quantitative easing as a result of the failure of overnight funding mechanisms. The image of the entire banking sector was tarnished, and the banks of the future will have to address this.

The future must learn from the mistakes of the past. The structural weakness of the banking business model cannot be solved. That said, the latest Basel rules introduce further risk mitigation, improved leverage ratios and increased levels of capital reserve. Another lesson of the credit crisis was that there should be greater emphasis on risk culture, governance, and oversight. The independence and performance of the board, the experience and the skill set of senior management are now a greater focus of regulators. Internal controls and data analysis are increasingly more robust and efficient, with a greater focus on a banks stable funding ratio.

Meanwhile, the very nature of money is changing. A digital wallet for crypto-currencies fulfills much the same storage and transmission functions of a bank; and crypto-currencies are increasing being used for payment. Meanwhile, in Sweden, stores have the right to refuse cash and the majority of transactions are card based. This move to credit and debit cards, and the solving of the double spending problem, whereby digital money can be crypto-graphically protected, has led to the possibility that paper money could be replaced at some point in the future. Whether this might be by replacement by a CBDC, or decentralized digital offering, is of secondary importance to the requirement of banks to adapt. Whether accommodating crytpo-currencies or CBDC’s, Kou et al. ( 2021 ) recommend that banks keep focused on alternative payment and money transferring technologies.

Central banks also have to adapt. To limit disintermediation, they have to ensure that the economic design of their sponsored digital currencies focus on access for banks, interest payment relative to bank policy rate, banking holding limits and convertibility with bank deposits. All these developments have implications for banks, particularly in respect of funding, the secure storage of deposits and how digital currency interacts with traditional fiat money.

Open banking

Against the backdrop of all these trends and changes, a new dynamic is shaping the future of the banking sector. This is termed Open Banking, already briefly mentioned. This new way of handling banking data protocols introduces a secure way to give financial service companies consensual access to a bank’s customer financial information. Figure  4 illustrates how this works. Although a fairly simple concept, the implications are important for the banking industry. Essentially, a bank customer gives a regulated API permission to securely access his/her banking website. That is then used by a banking as a service entity to make direct payments and/or download financial data in order to provide a solution. It heralds an era of customer centric banking.

How Open Banking operates. The customer generates data by using his bank account. A third party provider is authorized to access that data through an API request. The bank confirms digitally that the customer has authorized the exchange of data and then fulfills the request

Open Banking was a response to the documented inertia around individual’s willingness to change bank accounts. Following the Retail Banking Review in the UK, this was addressed by lawmakers through the European Union’s Payment Services Directive II. The legislation was designed to make it easier to change banks by allowing customers to delegate authority to transfer their financial data to other parties. As a result of this, a whole host of data centric applications were conceived. Open banking adds further momentum to reshaping the future of banking.

Open Banking has a number of quite revolutionary implications. It was started so customers could change banks easily, but it resulted in some secondary considerations which are going to change the future of banking itself. It gives a clear view of bank financing. It allows aggregation of finances in one place. It also allows can give access to attractive offerings by allowing price comparisons. Open Banking API’s build a secure online financial marketplace based on data. They also allow access to a larger market in a faster way but the third-party providers for the new entrants. Open Banking allows developers to build single solutions on an API addressing very specific problems, like for example, a cash flow based credit rating.

Romānova et al. ( 2018 ) undertook a questionnaire on the Payment Services Directive II. The results suggest that Open Banking will promote competitiveness, innovation, and new product development. The initiative is associated with low costs and customer satisfaction, but that some concerns about security, privacy and risk are present. These can be mitigated, to some extent, by secure protocols and layered permission access.

Discussion: strategic options

Faced with these disruptive trends, there are four strategic options for market participants to con- sider. There are (1) a defensive customer retention strategy for incumbents, (2) an aggressive customer acquisition strategy for challenger banks (3) a banking as a service strategy for new entrants, and (4) a payments strategy for social media platforms.

Each of these strategies has to be conducted in a competitive marketplace for money demand by potential customers. Figure  5 illustrates where the first three strategies lie on the tradeoff between money demand and interest rates. The payment strategy can’t be modeled based on the supply of money. In the figure, the market settles at a rate L 2 . The incumbent banks have the capacity to meet the largest supply of these loans. The challenger banks have a constrained function but due to a lower cost base can gain excess rent through higher rates of interest. The peer-to-peer bank as a service brokers must settle for the market rate and a constrained supply offering.

The money demand M by lenders on the y axis. Interest rates on the y axis are labeled as r I and r II . The challenger banks are represented by the line labeled Γ. They have a price and technology advantage and so can lend at higher interest rates. The brokers are represented by the line labeled Ω. They are price takers, accepting the interest rate determined by the market. The same is true for the incumbents, represented by the line labeled Φ but they have a greater market share due to their customer relationships. Note that payments strategy for social media platforms is not shown on this figure as it is not affected by interest rates

Figure  5 illustrates that having a niche strategy is not counterproductive. Liu et al ( 2020 ) found that banks performing niche activities exhibit higher profitability and have lower risk. The syndication market now means that a bank making a loan does not have to be the entity that services it. This means banks in the future can better shape their risk profile and manage their lending books accordingly.

An interesting question for central banks is what the future Deposit Supply function will look like. If all three forms: open banking, traditional banking and challenger banks develop together, will the bank of the future have the same Deposit Supply function? The Klein ( 1971 ) general formulation assumes that deposits are increasing functions of implicit and explicit yields. As such, the very nature of central bank directed monetary policy may have to be revisited, as alluded to in the earlier discussion on digital money.

The client retention strategy (incumbents)

The competitive pressures suggest that incumbent banks need to focus on customer retention. Reichheld and Kenny ( 1990 ) found that the best way to do this was to focus on the retention of branch deposit customers. Obviously, another way is to provide a unique digital experience that matches the challengers.

Incumbent banks have a competitive advantage based on the information they have about their customers. Allen ( 1990 ) argues that where risk aversion is observable, information markets are viable. In other words, both bank and customer benefit from this. The strategic issue for them, therefore, becomes the retention of these customers when faced with greater competition.

Open Banking changes the dynamics of the banking information advantage. Borgogno and Colangelo ( 2020 ) suggest that the access to account (XS2A) rule that it introduced will increase competition and reduce information asymmetry. XS2A requires banks to grant access to bank account data to authorized third payment service providers.

The incumbent banks have a high-cost base and legacy IT systems. This makes it harder for them to migrate to a digital world. There are, however, also benefits from financial technology for the incumbents. These include reduced cost and greater efficiency. Financial technology can also now support platforms that allow incumbent banks to sell NPL’s. These platforms do not require the ownership of assets, they act as consolidators. The use of technology to monitor the transactions make the processing cost efficient. The unique selling point of such platforms is their centralized point of contact which results in a reduction in information asymmetry.

Incumbent banks must adapt a number of areas they got to adapt in terms of their liquidity transformation. They have to adapt the way they handle data. They must get customers to trust them in a digital world and the way that they trust them in a bricks and mortar world. It is no coincidence. When you go into a bank branch that is a great big solid building great big facade and so forth that is done deliberately so that you trust that bank with your deposit.

The risk of having rising non-performing loans needs to be managed, so customer retention should be selective. One of the puzzles in banking is why customers are regularly denied credit, rather than simply being charged a higher price for it. This credit rationing is often alleviated by collateral, but finance theory suggests value is based on the discounted sum of future cash flows. As such, it is conceivable that the bank of the future will use financial technology to provide innovative credit allocation solutions. That said, the dual risks of moral hazard and information asymmetries from the adoption of such solutions must be addressed.

Customer retention is especially important as bank competition is intensifying, as is the digitalization of financial services. Customer retention requires innovation, and that innovation has been moving at a very fast rate. Until now, banks have traditionally been hesitant about technology. More recently, mergers and acquisitions have increased quite substantially, initiated by a need to address actual or perceived weaknesses in financial technology.

The client acquisition strategy (challengers)

As intermediaries, the challenger banks are the same as incumbent banks, but designed from the outset to be digital. This gives them a cost and efficiency advantage. Anagnostopoulos ( 2018 ) suggests that the difference between challenger and traditional banks is that the former address its customers problems more directly. The challenge for such banks is customer acquisition.

Open Banking is a major advantage to challenger banks as it facilitates the changing of accounts. There is widespread dissatisfaction with many incumbent banks. Open Banking makes it easier to change accounts and also easier to get a transaction history on the client.

Customer acquisition can be improved by building trust in a brand. Historically, a bank was physically built in a very robust manner, hence the heavy architecture and grand banking halls. This was done deliberately to engender a sense of confidence in the deposit taking institution. Pure internet banks are not able to do this. As such, they must employ different strategies to convey stability. To do this, some communicate their sustainability credentials, whilst others use generational values-based advertising. Customer acquisition in a banking context is traditionally done by offering more attractive rates of interest. This is illustrated in Fig.  5 by the intersect of traditional banks with the market rate of interest, depicted where the line Γ crosses L 2 . As a result of the relationship with banking yield, teaser rates and introductory rates are common. A customer acquisition strategy has risks, as consumers with good credit can game different challenger banks by frequently changing accounts.

Most customer acquisition, however, is done based on superior service offering. The functionality of challenger banking accounts is often superior to incumbents, largely because the latter are built on legacy databases that have inter-operability issues. Having an open platform of services is a popular customer acquisition technique. The unrestricted provision of third-party products is viewed more favorably than a restricted range of products.

The banking as a service strategy (new entrants)

Banking from a customer’s perspective is the provision of a service. Customers don’t care about the maturity transformation of banking balance sheets. Banking as a service can be performed without recourse to these balance sheets. Banking products are brokered, mostly by new entrants, to individuals as services that can be subscribed to or paid on a fee basis.

There are a number banking as a service solutions including pre-paid and credit cards, lending and leasing. The banking as a service brokers are effectively those that are aggregating services from others using open banking to enable banking as a service.

The rise of banking as a service needs to be understood as these compete directly with traditional banks. As explained, some of these do this through peer-to-peer lending over the internet, others by matching borrows and sellers, conducting mediation as a loan broker. Such entities do not transform assets and do not have banking licenses. They do not have a branch network and often don not have access to deposits. This means that they have no insurance protection and can be subject to interest rate controls.

The new genre of financial technology, banking as a service provider, conduct financial services transformation without access to central bank liquidity. In a distributed digital asset world, the assets are stored on a distributed ledger rather than a traditional banking ledger. Financial technology has automated credit evaluation, savings, investments, insurance, trading, banking payments and risk management. These banking as a service offering are only as secure as the technology on which they are built.

The social media payment strategy (disintermediators and disruptors)

An intermediation bank is a conceptual idea, one created solely on a social networking site. Social media has developed a market for online goods and services. Williams ( 2018 ) estimates that there are 2.46 billion social media users. These all make and receive payments of some kind. They demand security and functionality. Importantly, they have often more clients than most banks. As such, a strategy to monetize the payments infrastructure makes sense.

All social media platforms are rich repositories of data. Such platforms are used to buy and sell things and that requires payments. Some platforms are considering evolving their own digital payment, cutting out the banks as middlemen. These include Facebook’s Diem (formerly Libra), a digital currency, and similar developments at some of the biggest technology companies. The risk with social media payment platform is that there is systemic counter-party protection. Regulators need to address this. One way to do this would be to extend payment service insurance to such platforms.

Social media as a platform moves the payment relationship from a transaction to a customer experience. The ability to use consumer desires in combination with financial data has the potential to deliver a number of new revenue opportunities. These will compete directly with the banks of the future. This will have implications for (1) the money supply, (2) the market share of traditional banks and, (3) the services that payment providers offer.

Further research

Several recommendations for research derive from both the impact of disintermediation and the four proposed strategies that will shape banking in the future. The recommendations and suggestions are based on the mentioned papers and the conclusions drawn from them.

As discussed, the nature of intermediation is changing, and this has implications for the pricing of risk. The role of interest rates in banking will have to be further reviewed. In a decentralized world based on crypto currencies the central banks do not have the same control over the money supply, This suggest the quantity theory of money and the liquidity preference theory need to be revisited. As explained, the Internet reduces much of the friction costs of intermediation. Researchers should ask how this will impact maturity transformation. It is also fair to ask whether at some point in the future there will just be one big bank. This question has already been addressed in the literature but the Internet facilities the possibility. Diamond ( 1984 ) and Ramakrishnan and Thakor ( 1984 ) suggested the answer was due to diversification and its impact on reducing monitoring costs.

Attention should be given by academics to the changing nature of banking risk. How should regulators, for example, address the moral hazard posed by challenger banks with weak balance sheets? What about deposit insurance? Should it be priced to include unregulated entities? Also, what criteria do borrowers use to choose non-banking intermediaries? The changing risk environment also poses two interesting practical questions. What will an online bank run look like, and how can it be averted? How can you establish trust in digital services?

There are also research questions related to the nature of competition. What, for example, will be the nature of cross border competition in a decentralized world? Is the credit rationing that generates competition a static or dynamic phenomena online? What is the value of combining consumer utility with banking services?

Financial intermediaries, like banks, thrive in a world of deficits and surpluses supported by information asymmetries and disconnectedness. The connectivity of the internet changes this dynamic. In this respect, the view of Schumpeter ( 1911 ) on the role of financial intermediaries needs revisiting. Lenders and borrows can be connected peer to peer via the internet.

All the dynamics mentioned change the nature of moral hazard. This needs further investigation. There has been much scholarly research on the intrinsic riskiness of the mismatch between banking assets and liabilities. This mismatch not only results in potential insolvency for a single bank but potentially for the whole system. There has, for example, been much debate on the whether a bank can be too big to fail. As a result of the riskiness of the banking model, the banks of the future will be just a liable to fail as the banks of the past.

This paper presented a revision of the theory of banking in a digital world. In this respect, it built on the work of Klein ( 1971 ). It provided an overview of the changing nature of banking intermediation, a result of the Internet and new digital business models. It presented the traditional academic view of banking and how it is evolving. It showed how this is adapted to explain digital driven disintermediation.

It was shown that the banking industry is facing several documented challenges. Risk is being taken of balance sheet, securitized, and brokered. Financial technology is digitalizing service delivery. At the same time, the very nature of intermediation is being changed due to digital currency. It is argued that the bank of the future not only has to face these competitive issues, but that technology will enhance the delivery of banking services and reduce the cost of their delivery.

The paper further presented the importance of the Open Banking revolution and how that facilitates banking as a service. Open Banking is increasing client churn and driving banking as a service. That in turn is changing the way products are delivered.

Four strategies were proposed to navigate the evolving competitive landscape. These are for incumbents to address customer retention; for challengers to peruse a low-cost digital experience; for niche players to provide banking as a service; and for social media platforms to develop payment platforms. In all these scenarios, the banks of the future will have to have digital strategies for both payments and service delivery.

It was shown that both incumbents and challengers are dependent on capital availability and borrowers credit concerns. Nothing has changed in that respect. The risks remain credit and default risk. What is clear, however, is the bank has become intrinsically linked with technology. The Internet is changing the nature of mediation. It is allowing peer to peer matching of borrowers and savers. It is facilitating new payment protocols and digital currencies. Banks need to evolve and adapt to accommodate these. Most of these questions are empirical in nature. The aim of this paper, however, was to demonstrate that an understanding of the banking model is a prerequisite to understanding how to address these and how to develop hypotheses connected with them.

In conclusion, financial technology is changing the future of banking and the way banks intermediate. It is facilitating digital money and the online transmission of financial assets. It is making banks more customer enteric and more competitive. Scholarly investigation into banking has to adapt. That said, whatever the future, trust will remain at the core of banking. Similarly, deposits and lending will continue to attract regulatory oversight.

Availability of data and materials

Diagrams are my own and the code to reproduce them is available in the supplied Latex files.

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Research evolution in banking performance: a bibliometric analysis

• S. M. Shamsul Alam 1 ,
• Mohammad Abdul Matin Chowdhury   ORCID: orcid.org/0000-0001-6860-2305 1 &
• Dzuljastri Bin Abdul Razak 1  

Future Business Journal volume  7 , Article number:  66 ( 2021 ) Cite this article

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Banking performance has been regarded as a crucial factor of economic growth. Banks collect deposits from surplus and provide loans to the investors that contribute to the total economic growth. Recent development in the banking industry is channelling the funds and participating in economic activities directly. Hence, academic researchers are gradually showing their concern on banking performance and its effect on economic growth. Therefore, this study aims to explore the academic researchers on this particular academic research article. By extracting data from the web of Science online database, this study employed the bibliometrix package (biblioshiny) in the ‘R’ and VOSviewer tool to conduct performance and science mapping analyses. A total of 1308 research documents were analysed, and 36 documents were critically reviewed. The findings exhibited a recent growth in academic publications. Three major themes are mainly identified, efficiency measurement, corporate governance effect and impact on economic growth. Besides, the content analysis represents the most common analysis techniques used in the past studies, namely DEA and GMM. The findings of this study will be beneficial to both bank managers and owners to gauge a better understanding of banking performance. Meanwhile, academic researchers and students may find the findings and suggestions to study in the banking area.

Introduction

The financial services formed a significant contributory trademark in the overall economic growth by stimulating employment, offering vast avenues for investment and services to the consumers and the society [ 1 ]. Thus, economic development is led by economic growth whereby required capital is provided by the financial services [ 2 ]. Suggestively, capital creation by the financial services industry through accumulation and mobilisation of resources is considered the most crucial economic growth strategy component [ 3 ]. The banking system associates with creating funds by accumulating funds from surplus and channelling them to the investors as credit; those exhibit excellent ideas to generate a surplus in the economy but lack the capital to implement such ideas [ 4 , 5 ]. Accordingly, the banking system plays a vital role to pledge the leading role of finance in economic development and promoting stable and healthy financial and economic development [ 6 ].

Banking performance has been regarded as a crucial factor of economic growth [ 7 ]. Efficiency and productivity change measures are rapidly used to evaluate banking performance. Academic researchers have been focusing on the efficiency and productivity of banking institutions for a long period, while economic growth is carried out in the discussions. Discovering research activities on banking efficiency and productivity in economic growth enables researchers to identify the local and international input to this particular discipline. More so, it will enable researchers to identify the ‘hot spots’ discussed by academic researchers and find the research gaps [ 8 ]. Indeed, banking performance in standings is a broad scientific topic, and estimating research activities might not be useful. For instance, research activities in this area extended to several constituents such as methodological approaches, banking approaches. In the current study, banking efficiency and productivity are considered as banking performance that contributes to the economic growth of an economy. Therefore, the main objective of this study is to explore the research activities of banking performance to economic growth. The investigation of banking performance research activities will enable the researchers to find the present directions of the research area and thus speculates the future research suggestions. Besides, it will also enable to expound the depth of past research activities and themes on banking performance relating to the economic growth measurements.

The use of the bibliometric method is appropriate to demonstrate the research shape and activity, volume and growth in a specific discipline [ 9 ]. A bibliometric method is a quantitative application of bibliometric data [ 10 ]. It analyses a wide-ranging quantity of published research articles employing the statistical tool to identify trends and citations or/and co-citations of a certain theme by year, author, country, journal, theory, method, and research constituent [ 11 ]. Significantly, this technique further distinguishes key research themes and active researchers, countries and institutions for future research planning and funding [ 12 ]. Scholars apply this method for several reasons: to reveal emerging trends in published research articles and journal performance, cooperation patterns, and research elements, and to reconnoitre the intellectual edifice of an exact domain in the existing literature [ 9 , 13 ].

Minimal studies have used bibliometric analysis related to banks. For instance, Violeta and Gordana have employed bibliometric analysis to spot the trends of DEA application in banking [ 14 ]. Another study conducted by Ikra et al. applied the bibliometric method to Islamic banking efficiency [ 15 ]. By an extensive search on the Scopus, Web of Science and Google Scholar, no such study was found related to bibliometric analysis on banking performance to the economic growth. Nevertheless, this study will be the first attempt to conduct bibliometric methods on the banking performance to the economic growth that could be the basis for future studies.

The findings of this study unfolded several contributions to both policymakers, bank managers and academic researchers. Firstly, the findings would benefit the policymakers regarding the contribution and trends of banking performance. It would allow them to take necessary initiatives to promote and improve banking performance, thus economic development. Meanwhile, bank managers may utilise the findings to strengthen their banking operations by acknowledging key factors that contributed to the performance. Finally, academic researchers are enabled to detect the current trend and topics related to the banking area that leads to further studies.

Bibliometric analysis has achieved enormous popularity in social sciences research in the current years [ 9 , 16 , 17 , 18 ]. The popularity of bibliometric analysis is observed from the development, accessibility and availability of software, for instance, Leximancer, Gephi, VOSviewer, Biblioshiny and publication databases (Web of Science and Scopus). Further, the rapid growth of bibliometric analysis in scientific production has emerged from business research to information science [ 9 ]. The popularity of bibliometric methodology in social science research is not a trend but moderately an image of its usefulness for constructing high research impact by handling excessive scientific data [ 9 ].

The bibliometric analysis is beneficial for briefing the trends in the research documents classifying ‘blind spots’ and ‘hot spots’, and finding a more inclusive understanding of the published research documents [ 19 ]. In detail, this analysis empowers the recognition of the most advanced (hot spots) and the less established topics (blind spots) within the documents that, shared with other bibliometric procedures, recommend future research avenues. The bibliometric analysis uncovers several ascriptions, such as unveiling emerging trends in documents and the performance of journals, research constituents and collaboration patterns and discovering the intellectual edifice of an exact domain in the existing literature [ 13 , 18 ]. The data that apply in this analysis incline to be immense (hundreds, thousands) and unbiased in nature (publications and citations number, keywords occurrences and topics). However, its explanations often depend on both subjective (thematic analysis) and objective (performance analysis) assessments formed through well-versed techniques and procedures [ 9 ]. Therefore, this study applied bibliometric analysis to examine the general perspective on banking performance and economic growth.

Two categories are mainly manifest in the bibliometric techniques, namely, performance and science mapping. Precisely, research elements’ contributions are accounted for in the performance analysis, while the connections between research elements are focused on science mapping [ 9 ]. This study follows performance analysis, science mapping and network analysis suggested by Donthu et al. [ 9 ].

Data extraction process

Two primary databases, the Web of Science and the Scopus, are commonly used in the bibliometric analysis [ 20 ]. Both databases are prominent for the peer-reviewed published research articles. The data for this analysis were a collection of bibliographic data from the Web of Science. The Web of Science (WoS) is a multidisciplinary online database providing access to several citation databases, namely Science Citation Index Expanded (SCIE), Social Sciences Citation Index (SSCI), Emerging Sources Citation Index (ESCI), Arts and Humanities Citation Index (AHCI), Conference Proceedings Citation Index, Index Chemicus and Current Chemical Reactions [ 18 , 21 ].

This study has applied a two-stage data extraction process, following Bretas and Alon, Alon et al. and Apriliyanti and Alon [ 16 , 22 , 23 ] as shown in Fig.  1 . The choice of the keywords is crucial to ensure that it covers the total body of published documents on banking performance and economic growth [ 21 ]. Accordingly, the selection of keywords was carried out by reviewing several abstracts and authors’ keywords in most related literature on the Web of Science. The selected keywords were executed in the WoS online database on 9 August 2021. A combination of keyword search terms was considered; (1) ‘banking performance*’ to nail all discrepancies of the term such as the role of the bank, bank efficiency, bank productivity, banking efficiency, banking productivity, banking performance, bank performance, upon refining the search by including only research articles from the categories; economics, business finance, business, management, operations research management, social sciences mathematical measures and documents written in English.

The second stage extracted raw data from the online database combined, checked for duplicate documents and merged using ‘R’. Further, the documents were filtered in the ‘biblioshiny’ tool to omit book chapters and conference proceedings. After the extraction process for the bibliometric analysis, several impactful documents were selected based on local and global citations to conduct content analysis. The content analysis allowed the researcher to identify the leading research scopes and trends. Further, it allows identifying the streams and recommendations for future studies [ 22 ]. A total of 36 documents were selected to conduct a comprehensive review and valuation of the documents.

Performance analysis

Performance analysis investigates the contributions of academic research elements to a particular discipline [ 24 ]. This analysis is naturally descriptive, which is the hallmark of bibliometric analysis [ 9 ]. It is a standard method in reviews to exhibit the performance of various research elements such as authors, countries, institutions and sources similar to the profile or background of respondents generally presented in empirical studies, albeit more statistically [ 9 , 18 ]. Many measures exist in the performance analysis; hence, the most protuberant measurements are publications number and citations per research constituent or year. The publication is considered productivity, whereby citation measures influence an impact [ 9 ]. Besides, citation per document and h -index associate both publications and citations with evaluating research performance [ 18 ].

Table 1 presents the publication’s performance of banking performance. The results show a total number of 1308 documents published from 1972 to the present. Among 2275 contributed authors, a total of 202 authors were solely, and 2106 authors collaborated to the publications. A total of 31,458 citations received by published documents lead to an average of 629.16 citations per year, while 775 in h -index and 1023 in g -index. Hence, the banking efficiency field acknowledged productivity of research published by an average of 26.16 documents per year whereby nearly two authors (CI = 1.9) published one article, and standardised collaboration is 0.43 (between 0 and 1).

The annual production of scientific publications on banking efficiency is presented in Fig.  2 . The first research article related to banking performance was published by Fraser and Rose [ 25 ], who studied the effect of new bank appearance in the market on bank performance. The annual growth of publications on banking performance or banking efficiency is recorded to 12.39%. The publications are significantly increasing in recent periods, especially from 2016 to the present. However, the mandated growth in publications is observed between 2004 and 2015, while earlier periods (1972–2003) were quite sluggish. In these consequences, academic researchers have started to focus on banking performance or banking efficiency in the recent period. As a result, it can be concluded that banking performance and its sphere are shaping upwards through the research contributions.

Annual Scientific production

Science mapping

Science mapping investigates the connections between research elements [ 26 ] that relates to the intellectual connections and structural networks within research constituents [ 9 ]. The science mapping includes citation analysis, bibliographic coupling, co-citation analysis, co-occurrence network, collaboration techniques. When combined with network analysis, these techniques are instrumental in exhibiting the research area’s bibliometric edifice and intellectual structure [ 27 ].

Citation analysis

The citation analysis is a fundamental approach for science mapping that runs on the assumption that citations reproduce intellectual contributions and impact the research horizons [ 28 ]. This analysis shows the impact of published documents by measuring the number of citations they received [ 9 ]. Accordingly, it enables the discovery of the most influential and informative documents in a research constituent. Thus, it allows gathering insights into that constituent’s intellectual dynamics [ 9 ]. Table 2 presents the top 20 impactful and influential documents in the field of banking performance or efficiency. The analysis has discovered that a total of 1112 documents (85%) out of 1308 documents received global citations. The global citations refer to the number of citations received in the overall Web of Science citations. However, 196 documents (about 15%) have not received any citation; meanwhile, 130 documents (about 10%) received only one citation. A document written by Berger An received the highest number (665) of citations which was published in 1997. The second most influential document was written by Seiford [51] received a total of 549 citations, followed by the document written by Back (2013) received 512 citations. In fact, a total of four documents written by Berger An rank in the top 20 impactful research articles in the field of banking performance or efficiency.

Factually, the majority of the documents without citations was published in a recent period. At the same time, the highly cited documents were published quite earlier. To detect the immediate influence of more recent documents is to apply the measurement of an average citation per year [ 29 ]. By evaluating the average citations per year, nine out of ten documents are also among the top 10 documents. Perpetually, Beck [45] holds the highest number of average citations per year (56.89), followed by Berger An (2013) ranked second position (51.44) and Beltratti A (2012) ranked the following position (48.40). Based on the citation analysis, it can be elucidated that Berger An is the most influential author in the banking efficiency research constituent.

Co-occurrence analysis

Co-occurrence analysis was projected by Callon et al. [ 30 ], considered as content analysis that is useful in plotting the strength of connotation within keywords in textual data. In other words, co-occurrence analysis is an approach that investigates the actual content of the document itself [ 9 ]. It maps the pertinent literature straight from the associations of keywords shared by research articles [ 24 , 27 , 31 , 32 ]. The co-occurrence analysis deduces words to appear recurrently in a cluster. It exhibits conceptual or semantic groups of various topics or sub-topics considered by research constituents [ 9 , 24 ]. Cobo and Herrera signified that spotted clusters could be applied with few objectives [ 24 ]. For instance, they can be applied to analyse their progression by gauging extension across successive subperiods and measuring the research area through performance analysis. Figure  3 displays the co-occurrence of keywords within the bank efficiency research constituent. As the focus of this research, bank performance represents the larger node associated with corporate governance, financial performance, financial crisis, nonperforming loans and others. In these scenarios, the red-coloured cluster depicts that these subtopics or variables are directly associated related to the bank performance theme due to repetitive co-occurrence of those words. Likewise, the green-coloured cluster represents a theme related to bank efficiency associated with performance and ownership. In the same cluster, the nonparametric data envelopment analysis is extensively used to measure commercial banks' technical and cost efficiency and productivity. Parametric stochastic frontier analysis is narrowly observed in efficiency measurements comparably. The green-coloured cluster depicts the determinants of bank profitability including other impactful variables such as risk, competition, corporate governance. This cluster applied panel data in order to examine performance, financial development as well as economic growth. Each of the cluster identifies the interacted themes used in the published documents using co-occurrence of keywords.

Co-occurrence of keywords, Tool: VOSviewer. Note the nodes represent the keywords, and the edges between words present their occurrence of interactions. Each colour of nodes represents a cluster/theme. The size of the node presents a greater frequency of occurrence

Collaboration networks

Collaboration analysis explores the associations within researchers in a particular constituent. It is a formal way of intellectual association among researchers [ 33 , 34 ]. Therefore, it is crucial to understand how researchers associate among themselves [ 9 ]. In the presence of growing theoretical and methodological complexity in research, intellectual networking (collaboration) has become commonplace [ 33 ]. Indeed, collaboration or interaction among researchers enables improvements in academic research; for instance, greater interactions among diverse researchers allow richer insights and greater clarity [ 35 ]. Researchers who collaborate form a network named ‘invisible collages’ whose research can help improve undertakings in the study field [ 36 ]. Figure  4 presents the collaboration network of authors those co-authored academic articles in banking efficiency. Based on the collaboration network, Wanke P (Universidade Federal do Rio de Janeiro) was the most collaborated author who co-authored with four authors from different institutions in different countries. At the same time, Matousek, R (University Kent), Hasan, I (Rensselaer Polytechnic Institute) and Mamatzakis, E (University of Sussex), have also exhibited as greater collaborative researchers. In these consequences, authors from different institutions and from different parts of the world are collaborating to the banking performance/efficiency field.

Source : VOSviewer. Note the nodes represent the authors, and the size represents the frequency of contribution, the colour presents a cluster or a particular group, and the link shows the link among authors that collaborated for research articles

Authors’ collaboration networks.

Bibliographic coupling

Co-authorship or collaborative networks within the authors and other crucial facets in the collaboration networks are the collaboration of author-affiliated countries and institutions [ 31 ]. Figure  5 exhibits the collaboration network within authors’ affiliated organisations. University Malaya and University Utara Malaysia, University Malaya and University Putra Malaysia, University Malaya and University Fed Rio de Janeiro all depict a strong collaboration network. In general, all the institutions display an embellishment among the institutions within the same region.

Source : VOSviewer

Bibliographic coupling of author-affiliated institutions.

Similar to co-authors’ affiliated institutions, the collaboration of authors’ country presents a steady association among authors’ connections that allow exploring comparative and concurrent research works. Figure  6 represents the network of collaborative authors’ affiliation countries. These countries include South Africa and the USA, England and the USA, Australia and the USA, Malaysia and the USA, Germany and the USA, representing a high proportion of authors’ affiliated institutions are in the USA with this country performing as a hub of co-authorship publications from 1972 to 2021.

Collaborative authors’ affiliated countries

This study discusses trending themes based on the bibliometric findings and reviews of highly cited and most recent documents (see Appendix 1 ). It also indicated the type of study, theories, methods and main findings to suggest comprehensive future studies.

Research directions

Between 1991 and 2010, studies related to banking performance have posited several antecedents to banking performance. Figure  7 displays the trend topics based on author keywords that appeared between 1972 and 2010. Studies in this period mainly focused on mergers and acquisitions, information technology and transition economies that emerged from universal banking deregulation and bank privatisation. The financial crisis during 2008–2009 drew the attention of scholars to evaluate the banking performance. Idiosyncratically, this phenomenon has been acknowledged by researchers from 2010 to 2015, focusing on the role of corporate governance in the performance of the banking industry, including compensation, risk management, determinants of stock returns, capital buffer, productivity. Idiosyncratically, a vast of studies were conducted on Chinese commercial banks and the effect on their economic growth.

Source : Biblioshiny analysis. Note the frequency of terms selected 3 times for 1972–2010, 5 times for 2011–2015, 10 times for 2016–2021

Trend topics in different periods.

In the recent period (2016–2021), diverse factors posited in the studies that dominantly present a significant interest from banking scholars. While studies earlier mainly focusing on efficiency and its contributing factors, recent periods extended research directions to multiple constituents. For example, how banks diversified their services and the role of human capital efficiency to the banking performance [ 37 ]. Bose et al. employed the effect of green banking on the performance that underpins the inclusion of the environmental sustainability approach by the banking industry [ 38 ]. Meanwhile, Bhattacharyya et al. showed the effect of CSR expenditures and financial inclusion on the performance that define the social sustainability indicator of the banks [ 39 ]. Repeatedly, the role and structure of the board, categorisation of deposits and loans, risk exposures (business cycle), macroeconomic factors were also acknowledged in recent banking performance studies [ 40 , 41 , 42 , 43 ]. Idiosyncratically, scholars recently focus the components of sustainability of the banking industry from economic, environmental and social aspects [ 44 ]. Furthermore, the effect of banking and its stability on economic growth has been broadly carried out in the recent period. Moreover, the development of studies was taken into account, which implies the contribution to the economic growth of particular regions. Based on the earlier and recent studies, it is precisely observed the diversification of research constituents in relation to bank performance studies. Earlier studies (up to 2015) mainly measured banking performance or efficiency based on accounting measurements, while recent studies started to include market measurements principally based on stock returns performance. On the other hand, the rise of Islamic banking and finance influenced academic researchers to compare the business models [ 45 ], banking efficiencies [ 46 ] between conventional and Islamic banks, and efficiency for Islamic banks [ 5 ].

Based on the review of impactful documents published from 1990 to 2010, two particular objectives were identified: the effect of the board of directors or ownership on the bank performance [ 47 , 48 , 49 ] and measurement of efficiency, including cost and profit efficiency [ 50 , 51 , 52 ]. These constituents extended during 2011–2020 by the inclusion of risk-taking management [ 53 ], CEO incentives [ 54 ], contributing factors including capital, banking crises on banking performance [ 42 , 55 , 56 , 57 ]. Meanwhile, the Islamic banking system got crucial attention from academic researchers. Accordingly, several studies evaluated and compared efficiency between Islamic and conventional banks [ 45 , 58 , 59 ]. Nevertheless, the role of the banking industry in economic growth was included in the research constituents in the recent decade. For example, Xu, Santana and a few more scholars investigated the correlation between financial intermediation and economic growth [ 57 , 60 , 61 ]. In recent years, scholars extended the banking-related research constituents to diverse areas. The effect of human capital efficiency [ 37 ], green banking [ 38 ], CSR expenditures [ 39 ] and bank stability was included to measure banking performance. These extensions of research themes within banking performance studies posited a significant interest by academic researchers.

Apparently, almost all documents adopted the quantitative method in measuring banking performance research constituents. However, studies that measured banking efficiency mainly applied nonparametric analysis DEA [ 5 , 51 ], while SFA was adopted by limited studies [ 37 , 42 , 43 ]. On the other hand, regression analysis was predominantly applied to investigate banking performance from 1990 to 2010 [ 49 , 50 ]. In recent studies, academic researchers have vastly adopted GMM (generalised method of moments) to examine the contributing factors on banking performance [ 39 , 42 , 57 , 60 ]. These methods are dominating the banking-related studies throughout the publication periods. Over the periods, scholars have developed DEA applications in several categories, such as bootstrap, networking. Meanwhile, GMM with different approach (dynamic and system) techniques exploited panel data primarily extracted from Bankscope, Datastream, annual reports etc.

Main findings

Earlier, banking inefficiencies were substantially observed low, negatively affecting profitability and marketability [ 50 , 51 ]. This trend was continuously depicted in studies [ 52 ]. However, Berger et al. evidenced better efficiency for larger banks than smaller banks [ 50 ]. On the contrary, Seiford and Zhu posited an adverse effect of bank size on marketability [ 51 ]. More so, Rehman et al. found larger banks are less efficient than smaller banks [ 40 ]. Hence, Moudud-Ul-Huq posited diverse impacts of bank size and competition on performance [ 62 ]. So, banking size is deemed to have a substantial effect on the overall performance of banks. However, Adesina embellished that diversification of services and choices of management decisions on loans (nonperforming, debt issuances) [ 63 , 64 ] and deposits [ 41 ] affect the banking performance [ 37 ]. Moreover, board structure affects banking performance [ 40 , 65 ], while higher human capital efficiency enhances banking performance [ 37 ].

Generally, foreign-owned banks provide better service, greater profitability and are better efficient than local banks. This phenomenon was evidenced in several studies; for example, Bonin et al. and other scholars demonstrated that foreign-owned banks are more cost-efficient than other banks [ 48 ]. However, this trend did not exist for Islamic banks as local banks showed better efficiency than foreign peers [ 58 ] and more efficient than conventional [ 59 ]. Meanwhile, state-owned or government-owned commercial banks were less efficient and provided poorer services [ 48 , 49 , 52 ]. But these banks’ efficiency was higher than urban/rural banks during credit risk shock [ 41 ]. Nevertheless, banking efficiency and performance substantially depend on diversification of services, managerial adequacy, ownership, types and size.

Studies have evidenced financial development and thus the banking industry’s role in economic growth [ 60 ]. In the nineteenth century, the establishment of the savings bank demonstrated city growth in Prussia [ 66 ]. Potentially, banks provide investment capital to increase per capita GDP [ 43 ]. However, Haini documented a contrasting effect of banking development on economic growth through a push out of private investment due to high levels of the banking sector [ 67 ]. However, Stewart and Chowdhury proved that a stable banking sector lessens the negative impact of a crisis on GDP growth and provides economic resilience in both developed and developing countries. Overall, findings elaborated a crucial link between banking sector development and economic growth.

Future study suggestions

This study has recommended several scopes for future studies in the hybrid review, mainly through bibliometric findings and the structured review of impactful articles [ 11 ]. In other words, the recommendations for future studies are made by observing and analysing discussions on highly cited and recent cited documents. Overall findings and analyses raised several questions that need to be addressed for future studies.

Firstly, does the banking sector improve economic growth in the least developed countries? Prior studies mainly focused on developed and developing economies, but less attention was given to least developed countries. Secondly, vast studies investigated contributing factors of banking performance, while political instability has been ignored. Future studies might include political instability on the banking performance. Apart from it, nonperforming loans can be another addition to future studies, and even few studies documented it. Thirdly, how do banks perform during the pandemic crisis, for instance, COVID-19? The current pandemic crisis can be a significant factor in banking performance related to future studies, including efficiency, mortgages, loan recovery, deposits and business services. The studies can include consumer behaviour (due to restricted movements, safety measurements), green banking (online transaction and services), financial technologies (inclusion of nonbanking services) and the contribution or continuance of economic activities in the country during and after the pandemic crisis.

Significantly, prior studies have ignored the current trend of FinTech inclusion in banking performance. Fourthly, will FinTech takeover the banking services and diminish banks in the near future? Future studies may investigate the effect of FinTech applications on banking. More so, future studies may explore the banking industry’s barriers, challenges and threats due to FinTech growth. Fifthly, almost all studies employed quantitative analysis related to banking performance. Therefore, future studies may use qualitative methods to explore the opportunities and practices of banks and their performance. Sixthly, the majority of the studies either applied parametric or econometric techniques to investigate the bank performance. Recent developments in technologies and methods may provide easy and robust results in such related studies as using machine learning for data analysis and predicting banking efficiency and productivity determinants. Seventhly, past studies mostly followed the intermediation approach, which scarcely included production and operating approach measurement. Future studies may extend the efficiency analysis using productivity growth analysis. Further, the majority of the studies observed efficiency only. Future studies can include a productivity change index along with an efficiency analysis. Finally, GMM and regression were broadly applied to investigate the effect of antecedents of banking performance and link to economic growth. Future studies may adopt other advanced data analysis techniques such as partial least squares, structural equations and other econometric techniques.

Conclusions

The main purpose of this study is to explore the trends and research activities in banking performance and the economic growth research domain. To achieve this objective, a bibliometric analysis was applied and performed several analyses, namely citation, co-occurrence of keywords, the collaboration between authors and coupling between institutions and countries, and discussion by reviewing most cited and most recent influential research articles. This study presents the most common themes, sub-themes associated with highly cited documents and authors; furthermore, the content analysis identified the research directions, research objectives, methodologies, topics and findings.

Based on the reviewing literature, the efficiency theory, banking theory mainly intermediation approach and nonparametric technique, namely data envelopment analysis along with econometric method, regression was used in the published documents. The findings of this study, along with future study suggestions, could be beneficial to bankers as well as academic researchers and students studying banking performance and its role in the economy.

Limitations

The most crucial limitation in any bibliometric analysis is the database selection. It means selecting the data and the limits of its interpretation [ 68 ]. This study has three key limitations; firstly, it has chosen ‘Web of Science’, one of the largest online databases to gather data on banking performance research articles from 1972 to 2021 and refined based on subject categories and language (English). The database could be improved if other databases were included and also if book chapters and conference proceedings were added. Secondly, the selection of keywords; although selected keywords are deemed to be most relevant to encompass the majority of articles related to banking performance, there is always an opportunity to search further articles by using additional keywords. Lastly, this study could not conduct co-citation analysis due to the unavailability of cited documents in Web of Science data format.

Availability of data and materials

The data collected from the Web of Science online database were saved on Microsoft excel and remained with authors. The data are available upon request.

Abbreviations

Data envelopment analysis

Generalized method of moments

• Web of Science

Collaboration index

Chief executive officer

Corporate social responsibility

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Alam, S.M.S., Chowdhury, M.A.M. & Razak, D.B.A. Research evolution in banking performance: a bibliometric analysis. Futur Bus J 7 , 66 (2021). https://doi.org/10.1186/s43093-021-00111-7

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• Banking performance
• Banking efficiency
• Bibliometric analysis
• Biblioshiny
• Content analysis

Utilization of artificial intelligence in the banking sector: a systematic literature review

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• Published: 11 August 2022
• Volume 28 , pages 835–852, ( 2023 )

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• Omar H. Fares   ORCID: orcid.org/0000-0003-0950-0661 1 ,
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This study provides a holistic and systematic review of the literature on the utilization of artificial intelligence (AI) in the banking sector since 2005. In this study, the authors examined 44 articles through a systematic literature review approach and conducted a thematic and content analysis on them. This review identifies research themes demonstrating the utilization of AI in banking, develops and classifies sub-themes of past research, and uses thematic findings coupled with prior research to propose an AI banking service framework that bridges the gap between academic research and industry knowledge. The findings demonstrate how the literature on AI and banking extends to three key areas of research: Strategy, Process, and Customer. These findings may benefit marketers and decision-makers in the banking sector to formulate strategic decisions regarding the utilization and optimization of value from AI technologies in the banking sector. This study also provides opportunities for future research.

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Introduction

Digital innovations in the modern banking landscape are no longer discretionary for financial institutions; instead, they are becoming necessary for financial institutions to cope with an increasingly competitive market and changing customer expectations (De Oliveira Santini, 2018 ; Eren, 2021 ; Hua et al., 2019 ; Rajaobelina and Ricard, 2021 ; Valsamidis et al., 2020 ; Yang, 2009 ). In the era of modern banking, many new digital technologies have been driven by artificial intelligence (AI) as the key engine (Dobrescu and Dobrescu, 2018 ), leading to innovative disruptions of banking channels (e.g., automated teller machines, online banking, mobile banking), services (e.g., imaging of checks, voice recognition, chatbots), and solutions (e.g., AI investment advisors and AI credit selectors).

The application of AI in banking is across the board, with uses in the front office (voice assistants and biometrics), middle office (anti-fraud risk monitoring and complex legal and compliance workflows), and back office (credit underwriting with smart contracts infrastructure). Banks are expected to save $447 billion by 2023, by employing AI applications. Almost 80% of the banks in the USA are cognizant of the potential benefits offered by AI (Digalaki, 2022 ). Indeed, the emergence of AI has generated a wealth of opportunities and challenges (Malali and Gopalakrishnan, 2020 ). In the banking context, the use of AI has led to more seamless sales and has guided the development of effective customer relationship management systems (Tarafdar et al., 2019 ). While the focus in the past was on the automation of credit scoring, analyses, and the grants process (Mehrotra, 2019 ), capabilities evolved to support internal systems and processes as well (Caron, 2019 ).

The term AI was first used in 1956 by John McCarthy (McCarthy et al., 1956 ); it refers to systems that act and think like humans in a rational way (Kok et al., 2009 ). In the aftermath of the dot com bubble in 2000, the field of AI shifted toward Web 2.0. era in 2005, and the growth of data and availability of information encouraged more research in AI and its potential (Larson, 2021 ). More recently, technological advancements have opened the doors for AI to facilitate enterprise cognitive computing, which involves embedding algorithms into applications to support organizational processes (Tarafdar et al., 2019 ). This includes improving the speed of information analysis, obtaining more accurate and reliable data outputs, and allowing employees to perform high-level tasks. In recent years, AI-based technologies have been shown to be effective and practical. However, many corporate executives still lack knowledge regarding the strategic utilization of AI in their organizations. For instance, Ransbotham et al. ( 2017 ) found that 85% of business executives viewed AI as a key tool for providing businesses with a sustainable competitive advantage; however, only 39% had a strategic plan for the use of AI, due to the lack of knowledge regarding implementation of AI for their organizations.

Here, we systematically analyze the past and current state of AI and banking literature to understand how it has been utilized within the banking sector historically, propose a service framework, and provide clear future research opportunities. In the past, a limited number of systematic literature reviews have studied AI within the management discipline (e.g., Bavaresco et al., 2020 ; Borges et al., 2020 ; Loureiro et al., 2020 ; Verma et al., 2021 ). However, the current literature lacks either research scope and depth, and/or industry focus. In response, we seek to differentiate our study from prior reviews by providing a specific focus on the banking sector and a more comprehensive analysis involving multiple modes of analysis.

In light of this, we aim to address the following research questions:

What are the themes and sub-themes that emerge from prior literature regarding the utilization of AI in the banking industry?

How does AI impact the customer's journey process in the banking sector, from customer acquisition to service delivery?

What are the current research deficits and future directions of research in this field?

Methodology

Selection of articles.

Adhering to the best practices for conducting a Systematic Literature Review (SLR) (see Khan et al., 2003 ; Tranfield et al, 2003 ; Xiao and Watson, 2019 ), we began by selecting the appropriate database and identifying keywords, based on an in-depth review of the literature. Research papers were extracted from Web of Science (WoS) and Scopus. These databases were selected to complement one another and provide access to scholarly articles (Mongeon and Paul-Hus, 2016 ); this was also the first step in ensuring the inclusion of high-quality articles (Harzing and Alakangas, 2016 ). The following query was used to search the title, abstract, and keywords: “Artificial intelligence OR machine learning OR deep learning OR neural networks OR Intelligent systems AND Bank AND consumer OR customer OR user.” The keywords were selected, based on prior literature review, with the goal of covering various business functions, especially focusing on the banking sector (Loureiro et al., 2020 ; Verma et al., 2021 ; Borges et al., 2020 ; Bavaresco et al., 2020 ). The initial search criteria yielded 11,684 papers. These papers were then filtered by “English,” “article only” publications, and using the subject area filter of “Management, Business Finance, accounting and Business,” which resulted in 626 papers.

In this study, we used the preferred reporting method for systematic reviews and meta-analyses (PRISMA) to ensure that we follow the systematic approach and track the flow of data across different stages of the SLR (Moher et al., 2009 ). After extracting the articles, each of the 626 papers was given a distinctive ID number to help differentiate the papers; the ID number was maintained throughout the analysis process. The data were then organized using the following columns: “ID number,” “database source,” “Author,” “title,” “Abstract,” “keywords,” “Year,” Australian Business Deans Council (ABDC) Journals, “and keyword validation columns.”

The exclusion of papers was done systematically in the following manner: a) All duplicate papers in the database were eliminated (105 duplicates); b) as a second quality check, papers not published in ABDC journals (163 papers) were omitted to ensure a quality standard for inclusion in the review,Query a practice consistent with other recent SLRs (Goyal and Kumar, 2021 ; Nusair et al., 2019 ; Pahlevan-Sharif et al., 2019 ); c) in order to ensure the relevance of articles included, and following our research objectives, we excluded non-consumer-related papers, searching for consumers (consumer, customer, user) in the title, abstract, and keywords; this resulted in the removal of 314 papers; d) for the remaining 48 papers, a relevance check was manually conducted to determine whether the papers were indeed related to AI and banking. Papers that specifically focused on the technical computational process of AI were removed (4 papers). This process resulted in the selection of 44 articles for subsequent analyses.

Thematic analysis

A thematic analysis classifies the topics and subtopics being researched. It is a method for identifying, analyzing, and reporting patterns within data (Boyatzis, 1998 ). We followed Chatha and Butt ( 2015 ) to classify the articles into themes and sub-themes using manual coding. Second, we employed the Leximancer software to supplement the manual classification process. The use of these two approaches provides additional validity and quality to the research findings.

Leximancer is a text-mining software that provides conceptual and relational information by identifying concept occurrences and co-occurrences (Leximancer, 2019 ). After uploading all the 44 papers onto Leximancer, we added “English” to the stoplist, which removed words such as “or/and/like” that are not relevant to developing themes. We manually removed irrelevant filler words, such as “pp.,” “Figure,” and “re.” Finally, our results consisted of two maps: a) a conceptual map wherein central themes and concepts are identified, and b) a relational cloud map where a network of connections and relationships are drawn among concepts.

Thematic map

RQ 1: What are the themes and sub-themes that emerge from prior literature regarding the utilization of AI in the banking industry?

We began with a deductive approach to categorize articles into predetermined themes for the theme identification process. We then employed an inductive approach to identify the sub-themes and provide context for the primary themes (See Fig. 1 ). The procedure for determining the primary themes included, a) reviewing previous related systematic literature reviews (Bavaresco et al., 2020 ; Borges et al., 2020 ; Loureiro et al., 2020 ; Verma et al., 2021 ), b) identifying keywords and developing codes (themes) from selected papers; and c) reviewing titles, abstracts, and full papers, if needed, to identify appropriate allocation within these themes. Three primary themes were curated from the process: Strategy, Processes, and Customers (see Fig.  2 ).

Themes by timeline

In the Strategy theme (21 papers), early research shows the potential uses and adoption of AI from an organizational perspective (e.g., Akkoç, 2012 ; Olson et al., 2012 ; Smeureanu et al., 2013 ). Data mining (an essential part of AI) has been used to predict bankruptcy (Olson et al., 2012 ) and to optimize risk models (Akkoç, 2012 ). The increasing use of AI-driven tools to drive organizational effectiveness creates greater business efficiency opportunities for financial institutions, as compared to traditional modes of strategizing and risk model development. The sub-theme Organizational use of AI (14 papers) covers a range of current activities wherein banks use AI to drive organizational value. These organizational uses include the use of AI to drive business strategies and internal business activities. Medhi and Mondal ( 2016 ) highlighted the use of an AI-driven model to predict outsourcing success. Our findings indicate the effectiveness of AI tools in driving efficient organizational strategies; however, there remain several challenges in implementing AI technologies, including the human resources aspect and the organizational culture to allow for such efficiencies (Fountain et al., 2019 ). More recently, there has been a noticeable focus on discussing some of the challenges associated with AI implementation in banking institutions (e.g., Jakšič and Marinč, 2019 ; Mohapatra, 2020 ). The sub-theme Challenges with AI (three papers) covers a range of challenges that organizations face, including the integration of AI in their organizations. Mohapatra ( 2020 ) characterizes some of the key challenges related to human–machine interactions to allow for the sustainable implementation of AI in banking. While much of the current research has focused on technology, our findings indicate that one of the main areas of opportunity in the future is related to adoption and integration. The sub-theme AI and adoption in financial institutions (six papers) covered a range of topics regarding motivation, and barriers to the adoption of AI technology from an organizational standpoint. Fountain et al. ( 2019 ) conceptually highlighted some barriers to organizational adoption, including workers’ fear, company culture, and budget constraints. Overall, in the Strategy theme, organizational uses of AI seemed to be the most prominent, which highlights the consistent focus on technology development compared with technology implementation. However, the literature remains limited in terms of discussions related to the organizational challenges associated with AI implementation.

In the Processes theme (34 papers), after the dot com bubble and with the emergence of Web 2.0, research on AI in the banking sector started to emerge. This could have been triggered by the suggested use of AI to predict stock market movements and stock selection (Kim and Lee, 2004 ; Tseng, 2003 ). At this stage, the literature on AI in the banking sector was related to its use in credit and loan analysis (Baesens et al., 2005 ; Ince and Aktan, 2009 ; Kao et al., 2012 ; Khandani et al., 2010 ). In the early stages of AI implementation, it is essential to develop fast and reliable AI infrastructure (Larson, 2021 ). Baesens et al. ( 2005 ) utilized a neural network approach to better predict loan defaults and early repayments. Ince and Aktan ( 2009 ) used a data mining technique to analyze credit scores and found that the AI-driven data mining approach was more effective than traditional methods. Similarly, Khandani et al. ( 2010 ) found machine-learning-driven models to be effective in analyzing consumer credit risk. The sub-theme, AI and credit (15 papers), covers the use of AI technology, such as machine learning and data mining, to improve credit scoring, analysis, and granting processes. For instance, Alborzi and Khanbabaei ( 2016 ) examined the use of data mining neural network techniques to develop a customer credit scoring model. Post-2013, there has been a noticeable increase in investigating how AI improves processes that go beyond credit analysis. The sub-theme AI and services (20 papers) covers the uses of AI for process improvement and enhancement. These process-related uses of technology include institutional uses of technology to improve internal service processes. For example, Soltani et al. ( 2019 ) examined the use of machine learning to optimize appointment scheduling time, and reduce service time. Overall, regarding the process theme, our findings highlight the usefulness of AI in improving banking processes; however, there remains a gap in practical research regarding the applied integration of technology in the banking system. In addition, while there is an abundance of research on credit risk, the exploration of other financial products remains limited.

In the Customer theme (26 papers), we uncovered the increasing use of AI as a methodological tool to better understand customer adoption of digital banking services. The sub-theme AI and Customer adoption (11 papers) covers the use of AI as a methodological tool to investigate customers’ adoption of digital banking technologies, including both barriers and motivational factors. For example, Arif et al. ( 2020 ) used a neural network approach to investigate barriers to internet-banking adoption by customers. Belanche et al. ( 2019 ) investigate factors related to AI-driven technology adoption in the banking sector. Payne et al. ( 2018 ) examine the drivers of the usage of AI-enabled mobile banking services. In addition, bank marketers have found an opportunity to use AI to better segment, target, and position their banking products and services. The sub-theme, AI and marketing (nine papers), covers the use of AI for different marketing activities, including customer segmentation, development of marketing models, and delivery of more effective marketing campaigns. For example, Smeureanu et al. ( 2013 ) proposed a machine learning technique to segment banking customers. Schwartz et al. ( 2017 ) utilized an AI-based method to examine the resource allocation in targeted advertisements. In recent years, there has been a noticeable trend in investigating how AI shapes customer experience (Soltani et al., 2019 ; Trivedi, 2019 ). The sub-theme of AI and customer experience (Papers 11) covers the use of AI to enhance banking experience and services for customers. For example, Trivedi ( 2019 ) investigated the use of chatbots in banking and their impact on customer experience.

Table 1 highlights the number of papers included in the themes and sub-themes. Overall, the papers related to Processes (77%) were the most frequently occurring, followed by Customer (59%) and Strategy-based (48%) papers. From 2013 onward, there was an increase in the inter-relation between all three areas of Strategy, Processes, and Customers. Since 2016, there has been a surge in research linking the themes of Processes and Customers. More recently, since 2017, papers combining Customers with Strategy have become more frequent.

Leximancer analysis

A Leximancer analysis was conducted on all the papers included in the study. This resulted in two major classifications and 56 distinct concepts. Here, a “concept” refers to a combination of closely related words. When referring to “concept co-occurrence,” we refer to the total number of times two concepts appear together. In comparison, the word association percentage refers to the conditional probability that two concepts will appear side-by-side.

Conceptual and relational analyses

Conceptual analysis refers to the analysis of data based on word frequency and word occurrence, whereas relational analysis refers to the analysis that draws connections between concepts and captures the co-occurrences between words (Leximancer, 2019 ). As Fig.  3 shows, the most prominent concept is “customer,” which provides additional credence to our customer theme. The concept “customer” appeared 2,231 times across all papers. For the concept “customer,” some of the key concept associations include satisfaction (324 co-occurrences and 64% word association), service (185 co-occurrences and 43% word association), and marketing (86 co-occurrences and 42% word association). This may imply the importance of utilizing AI in improving customer service and satisfaction, and in marketing to retain and grow the customer base. For instance, Trivedi ( 2019 ) examined the factors affecting chatbot satisfaction and found that information, system, and service quality, all have a significant positive association with it. Ekinci et al. ( 2014 ) proposed a customer lifetime value model, supported by a deep learning approach, to highlight key indicators in the banking sector. Xu et al. ( 2020 ) examined the effects of AI versus human customer service, and found that customers are more likely to use AI for low-complexity tasks, whereas a human agent is preferred for high-complexity tasks. It is worth noting that most of the research related to the customer theme has utilized a quantitative approach, with limited qualitative papers (i.e., four papers) in recent years.

Concept map of content of all papers included in the study

Not surprisingly, the second most prominent concept is “banking,” which is expected as it is the sector that we are examining. The concept “banking” appeared 1,033 times across all the papers. In the “banking” concept, some of the key concept associations include mobile (248 co-occurrences and 88% word association), internet (152 co-occurrences and 82% word association), adoption (220 co-occurrences and 50% word association), and acceptance (71 co-occurrences and 42% word association). This implies the importance of utilizing AI in mobile- and internet-banking research, along with inquiries related to the adoption and acceptance of AI for such uses. Belanche et al. ( 2019 ) proposed a research framework to provide a deeper understanding of the factors driving AI-driven technology adoption in the banking sector. Payne et al. ( 2018 ) examined digital natives' comfort and attitudes toward AI-enabled mobile banking activities and found that the need for services, attitude toward AI, relative advantage, and trust had a significant positive association with the usage of AI-enabled mobile banking services.

Figure  4 highlights the concept associations and draws connections between concepts. The identification and classification of themes and sub-themes using the deductive method in thematic analysis, and the automated approach using Leximancer, provide a reliable and detailed overview of the prior literature.

Cloud map of content of all papers included in the study

Customer credit solution application-service blueprint

RQ 2: How does AI impact the banking customer’s journey?

A service blueprint is a method that conceptualizes the customer journey while providing a framework for the front/back-end and support processes (Shostack, 1982 ). For a service blueprint to be effective, the core focus should be on the customer, and steps should be developed based on data and expertise (Bitner et al., 2008 ). As previously discussed, one of the key research areas, AI and banking, relates to credit applications and granting decisions; these are processes that directly impact customer accessibility and acquisition. Here, we develop and propose a Customer Credit Solution Application-Service Blueprint (CCSA) based on our earlier analyses.

Not only was the proposed design developed but the future research direction was also extracted from the articles included in this study. We also validated the framework through direct consultation with banking industry professionals. The CCSA model allows marketers, researchers, and banking professionals to gain a deeper understanding of the customer journey, understand the role of AI, provide an overview of future research directions, and highlight the potential for future growth in this field. As seen in Fig.  5 , we divided the service blueprint into four distinct segments: customer journey, front-stage, back-stage, and support processes. The customer journey is the first step in building a customer-centric blueprint, wherein we highlight the steps taken by customers to apply for a credit solution. The front-stage refers to how the customer interacts with a banking touchpoint (e.g., chatbots). Back-stage actions provide support to customer-facing front-stage actions. Support processes aid in internal organizational interactions and back-stage actions. This section lays out the steps for applying for credit solutions online and showcases the integration and use of AI in the process, with examples from the literature.

Customer credit solution application journey

Acquire customer

We begin from the initial step of customer acquisition, and proceed to credit decision, and post-decision (Broby, 2021 ). In the acquisition step, customers are targeted with the goal of landing them on the website and converting them to active customers. The front-stage includes targeted ads , where customers are exposed to ads that are tailored for them. For instance, Schwartz et al. ( 2017 ) utilized a multi-armed bandit approach for a large retail bank to improve customer acquisition, and proposed a method that allows bank marketers to maintain the balance between learning from advertisement data and optimizing advertisement investment. At this stage, the support processes focus on integrating AI as a methodological tool to better understand customers' banking adoption behaviors, in combination with utilizing machine learning to evaluate and update segmentation activities. The building block at this stage, is understanding the factors of online adoption. Sharma et al. ( 2017 ) used the neural network approach to investigate the factors influencing mobile banking adoption. Payne et al. ( 2018 ) examined digital natives' comfort and attitudes toward AI-enabled mobile banking activities. Markinos and Daskalaki ( 2017 ) used machine learning to classify bank customers based on their behavior toward advertisements.

Visit bank’s website & apply for a credit solution

At this stage, banking institutions aim to convert website traffic to credit solution applicants. The integration of robo-advisors will help customers select a credit solution that they can best qualify for, and which meets their banking needs. The availability of a robo-advisor can enhance the service offering, as it can help customers with the appropriate solution after gathering basic personal financial data and validating it instantly with credit reporting agencies. Trivedi ( 2019 ) found that information, system, and service quality are key to ensuring a seamless customer experience with the chatbot, with personalization moderating the constructs. Robo-advisors have task-oriented features (e.g., checking bank accounts) coupled with problem-solving features (e.g., processing credit applications). Following this, the data collected will be consistently examined through the use of machine learning to improve the offering and enhance customer experience. Jagtiani and Lemieux ( 2019 ) used machine learning to optimize data collected through different channels, which helps arrive at appropriate and inclusive credit recommendations. It is important to note that while the proposed process provides immense value to customers and banking institutions, many customers are hesitant to share their information; thus, trust in the banking institution is key to enhancing customer experience.

Receive a decision

After the data have been collected through the online channel, data mining and machine learning will aid in the analysis and provide optimal credit decisions. At this stage, the customer receives a credit decision through the robo-advisor. The traditional approaches for credit decisions usually take up to two weeks, as the application goes to the advisory network, then to the underwriting stage, and finally back to the customer. However, with the integration of AI, the customer can save time and be better informed by receiving an instant credit decision, allowing an increased sense of empowerment and control. The process of arriving at such decisions should provide a balance between managing organizational risk, maximizing profit, and increasing financial inclusion. For instance, Khandani et al. ( 2010 ) utilized machine learning techniques to build a model predicting customers' credit risk. Koutanaei et al. ( 2015 ) proposed a data mining model to provide more confidence in credit scoring systems. From an organizational risk standpoint, Mall ( 2018 ) used a neural network approach to examine the behavior of defaulting customers, so as to minimize credit risk, and increase profitability for credit-providing institutions.

Customer contact call center

At this stage, we outline the relationship between humans and AI. As Xu et al. ( 2020 ) found that customers prefer humans for high-complexity tasks, the integration of human employees for cases that require manual review is vital, as AI can make errors or misevaluate one of the C's of credit (Baiden, 2011 ). While AI provides a wealth of benefits for customers and organizations, we refer to Jakšič and Marinč's ( 2019 ) discussion that relationship banking still plays a key role in providing a competitive advantage for financial institutions. The integration of AI at this stage can be achieved by optimizing banking channels. For instance, banking institutions can optimize appointment scheduling time and reduce service time through the use of machine learning, as proposed by Soltani et al. ( 2019 ).

General discussion

Researchers have recognized the viable use of AI to provide enhanced customer service. As discussed in the CCSA service advice, facilities, such as robo-advisors, can aid in product selection, application for banking solutions, and time-saving in low-complexity tasks. As AI has been shown to be an effective tool for automating banking processes, improving customer satisfaction, and increasing profitability, the field has further evolved to examine issues pertaining to strategic insights. Recent research has been focused on investigating the use of AI to drive business strategies. For instance, researchers have examined the use of AI to simplify internal audit reports and evaluate strategic initiatives (Jindal, 2020 ; Muñoz-Izquierdo et al., 2019 ). The latest research also highlights the challenges associated with AI, whether from the perspective of implementation, culture, or organizational resistance (Fountain et al., 2019 ). Moreover, one of the key challenges uncovered in the CCSA is privacy and security concerns of customers in sharing their information. As AI technologies continue to grow in the banking sector, the privacy-personalization paradox has become a key research area that needs to be examined.

In addition, the COVID-19 pandemic has brought on a plethora of challenges in the implementation of AI in the banking sector. Although banks' interest in AI technologies remains high, the reduction in revenue has resulted in a decrease in short-term investment in AI technologies (Anderson et al., 2021 ). Wu and Olson ( 2020 ) highlight the need for banking institutions to continue investing in AI technologies to reduce future risks and enhance the integration between online and offline channels. From a customer perspective, COVID-19 has led to an uptick in the adoption of AI-driven services such as chatbots, E-KYC (Know your client), and robo-advisors (Agarwal et al., 2022 ).

Future research directions

RQ 3: What are the current research deficits and the future directions of research in this field?

Tables 2 , 3 , and 4 provide a complete list of recommendations for future research. These recommendations were developed by reviewing all the future research directions included in the 44 papers. We followed Watkins' ( 2017 ) rigorous and accelerated data reduction (RADaR) technique, which allows for an effective and systematic way to analyze and synthesize calls for future research (Watkins, 2017 ).

Regarding strategy, as AI continues to grow in the banking industry, financial institutions need to examine how internal stakeholders perceive the value of embracing AI, the role of leadership, and multiple other variables that impact the organizational adoption of AI. Therefore, we recommend that future research investigate the different factors (e.g., leadership role) that impact the organizational adoption of AI technologies. In addition, as more organizations use and accept AI, internal challenges emerge (Jöhnk et al., 2021 ). Thus, we recommend examining the different organizational challenges (e.g., organizational culture) associated with AI adoption.

Regarding processes, AI and credit is one of the areas that has been extensively explored since 2005 (Bhatore et al., 2020 ). We recommend expanding beyond the currently proposed models and challenging the underlying assumptions by exploring new aspects of risks presented with the introduction of AI technologies. In addition, we recommend the use of more practical case studies to validate new and existing models. Additionally, the growth of AI has evoked further exploration of how internal processes can be improved (Akerkar, 2019 ). For instance, we suggest investigating AI-driven models with other financial products/solutions (e.g., investments, deposit accounts, etc.).

Regarding customers, the key theories mentioned in the research papers included in the study are the Technology Acceptance Model (TAM) and diffusion of innovation theories (Anouze and Alamro, 2019 ; Azad, 2016 ; Belanche et al., 2019 ; Payne et al., 2018 ; Sharma et al., 2015 , 2017 ). However, as customers continue to become accustomed to AI, it may be imperative to develop theories that go beyond its acceptance and adoption. Thus, we recommend investigating different variables (e.g., social influence and user trends) and methods (e.g., cross-cultural studies) that impact customers' relationship with AI. The gradual shift toward its customer-centric utilization has prompted the exploration of new dimensions of AI that influence customer experience. Going forward, it is important to understand the impact of AI on customers and how it can be used to improve customer experience.

Limitations and implications

This study had several limitations. During our inclusion/exclusion criteria, it is plausible that some AI/banking papers may have been missed because of the specific keywords used to curate our dataset. In addition, articles may have been missed due to the time when the data were collected, such as Manrai and Gupta ( 2022 ), who examined investors' perceptions of robo-advisors. Second, regarding theme identification, there may be a potential bias toward selecting themes, which may lead to misclassification. In addition, we acknowledge that the papers were extracted only from the WoS and Scopus databases, which may limit our access to certain peer-reviewed outlets.

This research provides insights for practitioners and marketers in the North American banking sector. To assist in the implementation of AI-based decision-making, we encourage banking professionals to consider further refining their use of AI in the credit scoring, analysis, and granting processes to minimize risk, reduce costs, and improve customer experience. However, in doing so, we recommend using AI not only to improve internal processes but also as a tool (e.g., chatbots) to improve customer service for low-complexity tasks, thereby directing employees' efforts to other business-impacting activities. Moreover, we recommend using AI as a marketing segmentation tool to target customers for optimal solutions.

This study systematically reviewed the literature (44 papers) on AI and banking from 2005 to 2020. We believe that our findings may benefit industry professionals and decision-makers in formulating strategic decisions regarding the different uses of AI in the banking sector, and optimizing the value derived from AI technologies. We advance the field by providing a more comprehensive outlook specific to the area of AI and banking, reflecting the history and future opportunities for AI in shaping business strategies, improving logistics processes, and enhancing customer value.

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Fares, O.H., Butt, I. & Lee, S.H.M. Utilization of artificial intelligence in the banking sector: a systematic literature review. J Financ Serv Mark 28 , 835–852 (2023). https://doi.org/10.1057/s41264-022-00176-7

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151+ Good Banking And Finance Research Topics For Students [2024 Updated]

Are you curious about Banking and Finance Research Topics? In this blog, we explore various banking and finance-related research topics. What drives the banking sector’s resilience in the face of challenges? How do financial markets influence our economic well-being? 

Let’s find the good topics of personal finance, corporate decision-making, risk management, and more. From the fundamental principles of accounting to the latest trends in fintech, this collection of research topics spans various fields, offering a comprehensive view of the ever-evolving finance domain.

Discover the impact of digital currencies, the role of central banks, and the effectiveness of credit scoring models. Explore the importance of real estate finance and know the behavioral aspects influencing investment decisions. We also examine the intersection of finance with emerging technologies and its role in sustainable development. 

Whether you are a student researching finance or the banking sector with good research ideas about economic difficulties. These Banking and Finance Research Topics provide a gateway to understanding the pivotal role finance plays in our global society. Let’s know all about them here. 

Table of Contents

What Is Banking And Finance Research Topics?

Banking and finance research topics refer to specific questions that researchers investigate related to financial systems and institutions. These topics help explore how banks, investments, financial markets, and economic policies work.

Some examples of banking and finance research topics include:

• How new technologies like mobile apps are changing banking
• What causes stock market prices to rise and fall
• How government regulations impact financial institutions
• Why do people make certain financial decisions?
• Ways to improve risk management for banks
• The future of cryptocurrencies as an investment
• How fintech companies are competing with traditional banks

Researching these topics aims to gain a deeper understanding of the financial world. The knowledge can then be used to inform better policies, practices, and decisions related to banking and finance.

How To Find Banking And Finance Research Topics For Students?

Here are some tips for students on finding good banking and finance research topics:

• Look at current events in the banking and finance industries for inspiration. Pay attention to what’s happening with major banks, new technologies, economic policies, financial crises, and industry trends.
• Review finance publications, academic journals, magazines, and websites to discover recent research studies related to banking and see what knowledge gaps they identify that require further investigation.
• Browse research paper databases for sample banking and finance essays to find potential topics or note areas requiring additional up-to-date research.
• Align topics with your existing interests and course curriculum. If you enjoy technology, explore fintech questions. If macroeconomics fascinates you, investigate the implications of monetary policies.
• Consider meaningful real-life research questions, like how underprivileged groups are financially underserved or how developing nations can gain affordable banking access.
• Brainstorm ideas and get input from professors who will guide you in refining topics based on viability, available data sources, analytical methods, and relevance to the current finance field.

List of Good Banking And Finance Research Topics

Here are the most interesting banking and finance research topics:

Good Banking And Finance Research Topics For Students

• Comparative analysis of traditional banking vs. online banking.
• The impact of mergers and acquisitions on bank performance.
• Assessing the role of central banks in ensuring financial stability.
• Investigating the effectiveness of bank stress tests in predicting financial crises.
• Analyzing the factors influencing customer satisfaction in banking services.
• The role of blockchain technology in enhancing banking security.
• Examining the impact of interest rate fluctuations on bank profitability.
• Evaluating the role of government intervention in preventing bank failures.
• Analyzing the challenges and opportunities of Islamic banking.
• The impact of Basel III regulations on banking risk management.

Best Banking And Finance Sector Research Topics For MBA Students

• The role of the stock market in economic development.
• Examining the factors affecting stock market volatility.
• Impact of high-frequency trading on financial markets.
• Exploring the relationship between corporate governance and stock prices.
• The role of derivatives in managing financial market risks.
• Analyzing the impact of macroeconomic indicators on stock prices.
• The role of insider trading in financial markets.
• Investigating the efficiency of emerging financial markets.
• The impact of market sentiment on stock prices.
• Analyzing the role of financial analysts in shaping market perceptions.

Personal Finance-Related Research Topics

• The impact of financial literacy on personal finance management.
• Evaluating the effectiveness of budgeting tools in personal finance.
• The role of behavioral economics in understanding individual investment decisions.
• Investigating the factors influencing retirement savings decisions.
• The impact of socio-economic factors on household debt levels.
• Assessing the effectiveness of financial planning in achieving financial goals.
• The role of technology in personal financial management.
• Analyzing the impact of tax policies on personal savings.
• The relationship between education and income levels in personal finance.
• Investigating the role of psychological biases in personal investment decisions.

Corporate Banking And Finance Research Topics

• The impact of capital structure on firm profitability.
• Evaluating the role of financial leverage in corporate decision-making.
• Analyzing the factors influencing dividend payout policies.
• The impact of corporate governance on firm performance.
• Investigating the relationship between CEO compensation and firm performance.
• The role of working capital management in corporate finance.
• Analyzing the impact of exchange rate fluctuations on multinational corporations.
• The influence of financial disclosure on investor decisions.
• Evaluating the impact of corporate social responsibility on shareholder value.
• The role of venture capital in financing innovation and startups.

Risk Management Research Topics For College Students

• The impact of credit risk on financial institutions.
• Analyzing the role of derivatives in hedging financial risks.
• Evaluating the effectiveness of value-at-risk (VaR) models in risk management.
• The impact of operational risk on financial institutions.
• Exploring the relationship between risk-taking and financial performance.
• Analyzing the role of insurance in managing financial risks.
• The impact of climate change on financial risk assessment.
• Evaluating the role of stress testing in assessing systemic risk.
• The influence of cyber threats on financial institutions’ risk management.
• The role of artificial intelligence in enhancing risk management practices.

Accounting and Auditing Research Topics

• Analyzing the impact of International Financial Reporting Standards (IFRS) on financial reporting quality.
• Evaluating the role of forensic accounting in fraud detection.
• The impact of audit quality on financial statement reliability.
• Investigating the role of auditor independence in ensuring financial transparency.
• Analyzing the effectiveness of fair value accounting in financial reporting.
• The influence of accounting conservatism on financial decision-making.
• Evaluating the impact of accounting information on investment decisions.
• The role of big data analytics in modern accounting practices.
• Analyzing the challenges and opportunities of sustainability reporting.
• The impact of earnings management on financial statement reliability.

Financial Regulation and Policy Research Topics

• The role of government intervention in preventing financial crises.
• Evaluating the impact of Dodd-Frank Wall Street Reform and Consumer Protection Act.
• Analyzing the effectiveness of Basel III in regulating global banking.
• The role of regulatory bodies in promoting financial market integrity.
• Investigating the impact of tax policies on corporate financial decisions.
• Analyzing the challenges and opportunities of cross-border financial regulation.
• The role of ethics in financial decision-making and regulation.
• Evaluating the impact of monetary policy on inflation and economic growth.
• The influence of political factors on financial regulation.
• The impact of regulatory changes on financial innovation.

Real Estate Finance Related Research Topics

• Analyzing the factors influencing real estate prices and investment.
• The impact of interest rate changes on real estate markets.
• Evaluating the role of mortgage-backed securities in real estate finance.
• The influence of housing policies on real estate market dynamics.
• The role of real estate crowdfunding in property financing.
• Analyzing the impact of urbanization on real estate development.
• The role of sustainability in real estate investment decisions.
• Evaluating the impact of economic downturns on real estate values.
• The influence of demographic trends on real estate market dynamics.
• Analyzing the challenges and opportunities of real estate finance in emerging markets.

Behavioral Finance Research Paper Topics

• Investigating the role of behavioral biases in investment decisions.
• The impact of overconfidence on financial decision-making.
• Analyzing the influence of social networks on investment behavior.
• Evaluating the role of emotions in financial decision-making.
• The impact of financial news and media on investor sentiment.
• Investigating the role of heuristics in shaping financial perceptions.
• Analyzing the impact of market bubbles on investor behavior.
• The influence of framing effects on investment choices.
• Evaluating the role of financial education in mitigating behavioral biases.
• The impact of cultural factors on individual investment decisions.

Financial Technology (Fintech) Research Topics

• Analyzing the impact of robo-advisors on traditional investment advisory services.
• The role of blockchain in reshaping payment systems.
• Evaluating the potential of cryptocurrencies as a mainstream means of exchange.
• The impact of artificial intelligence on credit scoring models.
• Analyzing the challenges and opportunities of regulating fintech startups.
• The role of big data analytics in personalized financial services.
• Evaluating the impact of open banking on financial innovation.
• The influence of cybersecurity threats on fintech adoption.
• Analyzing the role of regulatory sandboxes in fostering fintech innovation.
• The impact of fintech on financial inclusion in developing economies.

Economics and Finance Sector Related Research Topics

• Investigating the relationship between economic indicators and financial markets.
• The impact of trade policies on exchange rates and international finance.
• Analyzing the role of economic sanctions in shaping financial landscapes.
• Evaluating the impact of globalization on financial stability.
• The role of monetary policy in addressing economic inequality.
• Analyzing the impact of economic recessions on financial decision-making.
• The influence of political instability on financial markets.
• The impact of demographic trends on economic and financial dynamics.
• Evaluating the role of economic forecasting in financial decision-making.
• The relationship between economic growth and financial development.

Sustainable Banking And Finance Research Topics

• Analyzing the impact of environmental, social, and governance (ESG) factors on investment decisions.
• The role of green finance in promoting sustainable development.
• Evaluating the impact of carbon pricing on financial markets.
• The influence of sustainable investing on corporate decision-making.
• Analyzing the challenges and opportunities of integrating sustainability into financial reporting.
• The role of impact investing in addressing social and environmental issues.
• Evaluating the impact of climate change on financial risk assessment.
• The influence of corporate sustainability on shareholder value.
• The role of green bonds in financing environmentally friendly projects.
• Analyzing the effectiveness of sustainable finance policies in achieving global goals.

Recent Banking And Finance Research Topics

• Investigating the potential of decentralized finance (DeFi) in traditional banking services.
• The impact of quantum computing on financial modeling and risk management.
• Analyzing the challenges and opportunities of central bank digital currencies (CBDCs).
• The role of augmented reality (AR) and virtual reality (VR) in financial services.
• The impact of 5G technology on financial transactions and services.
• Evaluating the potential of tokenization in transforming financial markets.
• Analyzing the role of artificial intelligence in credit scoring and lending decisions.
• The influence of geopolitical factors on global financial markets.
• The impact of regulatory technology (RegTech) in compliance and risk management.
• The role of smart contracts in streamlining financial transactions.

Cross-Border Finance Research Paper Topics

• Investigating the impact of exchange rate fluctuations on cross-border investments.
• The role of currency unions in promoting cross-border trade and investments.
• Analyzing the challenges and opportunities of cross-border banking operations.
• Evaluating the impact of trade agreements on cross-border financial flows.
• The influence of political and economic integration on cross-border finance.
• Analyzing the role of international financial institutions in cross-border finance.
• The impact of capital controls on cross-border investments.
• The role of cross-border financial services in promoting global economic integration.
• Evaluating the impact of cross-border financial regulations on multinational corporations.
• The influence of cross-border financial crimes on international cooperation.

Financial Education and Literacy Research Topics

• Investigating the impact of financial education programs on students’ financial literacy.
• The role of technology in enhancing financial education and literacy.
• Evaluating the effectiveness of workplace financial wellness programs.
• Analyzing the impact of cultural factors on financial literacy levels.
• The influence of family background on financial literacy.
• The impact of early financial education on long-term financial behavior.
• Analyzing the relationship between financial literacy and retirement planning.
• The role of schools and universities in promoting financial literacy.
• The influence of gender on financial literacy and decision-making.
• Evaluating the impact of online resources on improving financial literacy.

Banking and Finance in Developing Economies

• Analyzing the challenges and opportunities of financial inclusion in developing economies.
• The role of microfinance in poverty alleviation and economic development.
• Evaluating the impact of foreign aid on financial stability in developing countries.
• The influence of corruption on financial development in developing economies.
• Analyzing the role of remittances in shaping economic landscapes in developing countries.
• The impact of informal financial services on rural communities.
• Evaluating the role of government policies in promoting financial development.
• The influence of economic and political instability on financial systems in developing countries.
• The role of international financial institutions in supporting economic growth in developing economies.
• Analyzing the impact of technology adoption on financial inclusion in developing regions.

What Are Some Good Topics In The Area Of Finance And Accounting For A Ph.D. Research?

Here are some current Banking And Finance research topics for students:

Recent Project Topics On Banking And Finance PDF

Here are the most recent project topics on banking and finance pdf:

These Are the best Banking and Finance Research Topics. These topics serve as gateways to understanding the nature of banking, finance, and other research topics. As you find a good research topic, consider your interests and the current trends shaping the financial domain. Whether it’s the impact of technology on banking, the dynamics of stock markets, or the role of sustainable finance.

Engage with your coursework, delve into academic journals, and attend seminars to find the latest understandings and potential research questions. Consulting with professors and advisors offers valuable guidance, helping refine your focus. Keep an eye on industry reports and financial news for inspiration, considering contemporary challenges and emerging trends.

Remember, your research can contribute to understanding financial systems and inform real-world practices. Choose a topic that not only captivates your interest but also addresses relevant issues, and you’ll find yourself good banking and finance research topics. Happy exploring!

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The evolution of banking in the 21st century

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Evidence and regulatory implications, samuel g. hanson , samuel g. hanson marvin bower associate professor - harvard business school victoria ivashina , victoria ivashina professor of business administration - harvard business school laura nicolae , laura nicolae ph.d. candidate - harvard university @lauramnicolae jeremy c. stein , jeremy c. stein moise y. safra professor of economics - harvard university adi sunderam , and adi sunderam professor - harvard university daniel k. tarullo daniel k. tarullo nonresident senior fellow - economic studies , the hutchins center on fiscal and monetary policy.

March 27, 2024

The paper summarized here is part of the spring 2024 edition of the Brookings Papers on Economic Activity , the leading conference series and journal in economics for timely, cutting-edge research about real-world policy issues. Research findings are presented in a clear and accessible style to maximize their impact on economic understanding and policymaking. The editors are Brookings Nonresident Senior Fellows  Janice Eberly  and  Jón Steinsson .

See the spring 2024 BPEA event page to watch paper presentations and read summaries of all the papers from this edition.  Submit a proposal to present at a future BPEA conference  here .

Uninsured deposits should be subjected to tougher regulatory requirements to guard against the type of rapid runs that toppled three large regional banks last spring, suggests a paper discussed at the Brookings Papers on Economic Activity (BPEA) conference on March 29.

In the wake of the failures of Silicon Valley Bank, Signature Bank, and First Republic Bank (three of the four largest bank failures in U.S. history), the authors look at two trends over the past quarter century—the substantial growth of uninsured deposits and the migration of business lending to non-banks. The trends challenged the failed banks and banks like them, and in some cases left them vulnerable to runs. And, using a simple model they constructed, the authors assess regulatory options for reducing the risk of destabilizing runs.

“One of the most striking developments that we document … is a dramatic growth in the economy-wide ratio of bank deposits to GDP [gross domestic product], with much of this growth coming from large uninsured deposits,” write Samuel G. Hanson, Victoria Ivashina, Laura Nicolae, Jeremy C. Stein, Adi Sunderam, and Daniel K. Tarullo, all from Harvard University.

According to their paper—”The Evolution of Banking in the 21 st Century: Evidence and Regulatory Implications ” —total deposits in the fourth quarter of 1995 were 49% of GDP, with 20% of those deposits uninsured. By the third quarter of 2023, total deposits were 75% of GDP, 39% of them uninsured. Adding to that vulnerability, technology and social media have made it increasingly easier for large depositors to quickly withdraw their money.

Meanwhile, banks with the most rapid growth in deposits have seen the biggest declines in business lending, which has migrated toward non-bank entities such as securitization vehicles, mutual funds, insurance companies, and, in recent years, private-credit funds and business development companies. (Smaller community banks tend to specialize in lending to smaller firms and have been less affected by the growth of non-bank institutions.)

Instead of lending to large- and medium-size businesses, regional banks have shifted toward investing in longer-term Treasury securities and government-guaranteed mortgage backed securities. Those securities have little or no credit risk (the risk of default) but they are subject to interest-rate risk. When interest rates rise sharply, as they did in 2022 when the Federal Reserve raised rates to fight inflation, existing long-term securities lose value because investors can earn more from newly issued securities.

To reduce the risk of runs, the authors looked at expanding federal deposit insurance to cover all or most deposits. But that expansion of the government’s footprint would increase taxpayer exposure and could weaken banks’ incentives to guard against risk. Also, in the case of banks that have shifted away from lending, it would in effect subsidize bond holding rather than lending.

Instead, the authors favor strengthening liquidity regulations, which aim to ensure banks have funds available to meet deposit withdrawals. The authors would require banks with more than $100 billion in assets to back their uninsured deposits by pre-positioning collateral, largely in the form of short-term government securities, at the Federal Reserve. That requirement would enable them to withstand a run by borrowing from the Fed’s discount window and would encourage them to shift their asset-mix away from longer-term securities and toward short-term securities, which are much less subject to interest-rate risk.

The authors also recommend that regulators re-think rules that, except for the eight largest U.S. banks, shield regulatory capital from reflecting most market losses on the securities banks hold.

And, the authors recommend that regulators “look more positively on proposed mergers of mid-size regionals and on acquisitions of smaller banks by mid-sized regionals.” That could either help regionals to better compete with the largest banks or could aid in wringing out excess capacity to the extent that the business model of the regionals continues to be under pressure.

Hanson, Samuel, Victoria Ivashina, Laura Nicolae, Jeremy Stein, Adi Sunderam, and Daniel Tarullo. 2024. “The evolution of banking in the 21st century: Evidence and regulatory implications.” BPEA Conference Draft, Spring.

David Skidmore authored the summary language for this paper. Chris Miller assisted with data visualization.

Stein and Tarullo are former members of the Federal Reserve Board of Governors. Sunderam was a visiting scholar at the Federal Reserve Bank of Boston from January-June 2023, and Ivashina has been a visiting scholar there since 2015. The authors did not receive financial support from any firm or person for this article or, other than the aforementioned, from any firm or person with a financial or political interest in this article. The authors are not currently an officer, director, or board member of any organization with a financial or political interest in this article.

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Banking and Finance Dissertation Topics – Selected for Business Students

Published by Owen Ingram at January 2nd, 2023 , Revised On August 16, 2023

Looking for an interesting banking and finance research idea for your dissertation? Your search for the best finance and banking dissertation topics ends right here because, a t ResearchProspect, we help students choose the most authentic and relevant topic for their dissertation projects.

Bank taxes, financial management, financial trading, credit management, market analysis for private investors, economic research methods, the economics of money and banking, international trade and multinational business, the wellbeing of people and society, principles and practices of banking, management and cost accounting, governance and ethics in banking, investment banking, introductory econometrics, and capital investment management are among the many topics covered in banking and finance.

Without further ado, here is our selection of the besting banking and finance thesis topics and ideas.

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The following dissertation topics for banking will assist students in achieving the highest possible grades in their dissertation on banking finance:

List of Banking and Finance Dissertation Topics

• A Comprehensive Analysis of the Economic Crisis as It Relates to Banking and Finance
• A Critical Review of Standard Deviation in Business
• The Political and Economic Risks Involving National Bank Transactions
• A Study of Corporate Developments in European Countries Regarding Banking and Finance
• Security Measures Implemented in Financial Institutions Around the World
• Banking and Finance Approaches from Around the World
• An in-depth study of the World Trade Organization’s role in banking and finance
• A Study of the Relationship Between Corporate Strategy and Capital Structures
• Contrasting global, multinational banks with regional businesses
• Preventing Repetitive Economic Collapse in National and Global Finances
• The Motivations for Becoming International Expats All Over the World
• The Difference Between Islamic Banking and Other Religious Denominations in Banking and Financial Habits
• How Can Small-Scale Industries Survive the Global Banking Demands?
• A Study of the Economic Crisis’s Impact on Banking and Finance
• The Impact of the International Stock Exchange on Domestic Bank Transactions
• A 2025 Projected Report on World Trade and Banking Statistics
• How Can We Address the Issue of the Government’s Financial Deficit in Banking?
• A Comparison of Contemporary and Classic Business Models and Companies’ Banking and Financial Habits
• Which of the following should be the principal area of money investment that has arrived at the bank in the form of deposits?
• How to strike a balance between investing money in various plans to generate a profit and managing depositor trust
• What are banks’ responsibilities to their depositors, and how may such liabilities be managed without jeopardising depositor trust?
• How the new banking financing laws enacted by governments throughout the world are better protecting depositors’ rights?
• What is the terminology related to banking finance, which oversees the investment of deposited funds as well as the banks’ responsibilities to depositors?
• Explain the most recent developments in research related to the topic of banking finance
• How research in the banking finance industry assists governments and banking authorities in properly managing their finances?
• What is the most recent credit rating software that assists in determining the rewards and dangers of investing bank funds in the stock market? 
• How banking finance assists the world’s top banks in managing consumer expectations and profit?
• The negative impact of a manager’s poor management of a bank’s banking financing
• Is it feasible to conduct a banking firm without the assistance of banking finance management?
• What are the most significant aspects of banking financing that allow businesses to develop without constraints?

The importance of banking finance cannot be overstated. These are only a few of the most extensive subjects on which you may write a banking and finance dissertation. Remember that if you want to succeed in your studies, you must be able to offer reliable numbers and facts on the history and current state of banking and finance throughout the world. Otherwise, you will very certainly be unable to justify your study effectively. We hope you can take some inspiration and ideas from the above banking and finance dissertation topics .

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Banking and Finance Dissertation Topics (28 Examples) For Research

Mark May 26, 2020 Jun 5, 2020 Banking and Finance , Finance No Comments

Are you searching for banking and finance dissertation topics? We understand that selecting a dissertation topic is one of the biggest challenges. So, we offer a wide range of banking and finance dissertation topics and project topics on banking and finance. You can also visit our site for corporate finance dissertation topics and other business […]

Are you searching for banking and finance dissertation topics? We understand that selecting a dissertation topic is one of the biggest challenges. So, we offer a wide range of project topics on banking and finance.

Our team of writers can provide quality work on your selected banking and finance research topics. Once you select from the research topics on banking and finance, we will provide an outline, which can provide guidance on how the study should be carried out .

If you have come to this post after searching for corporate finance or finance topics, following are the seperate posts made on these topics.

• Finance Research Topics
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Banking and finance dissertation topics

Role of micro-loans in the modern financial industry.

Online currencies like Bitcoin brought changes in the concept of fiat currencies.

Identifying the forces causing American retail banking centres to change.

Analysing the treatment of off-balance sheet activities.

Examining the role of internet banking in society.

Evaluating how the modern economy prevents a run on the banks from happening.

To find out whether the technology can replace the role of retail banking centre.

Relationship between housing loans and the 2008 recession.

Impact of foreign direct investment on the emerging economies.

Identifying the best capital structure for a retail bank.

To study the effect of mergers and acquisition on employee’s morale and performance in the case of banks.

Evaluating the credit management and issues of bad debts in commercial banks in the UAE.

To what extent the electronic banking has affected customer satisfaction.

Portfolio management and its impact on the profitability level of banks.

Impact of interest rate on loan repayment in microfinance banks.

An appraisal of operational problems facing micro-finance banks in delta state.

Studying the impact of risk management on the profitability of banks.

Evaluation of bank lending and credit management.

Role of automated teller machine on customer satisfaction and retention.

Examining the impact of bank consolidation on operational efficiency.

Competitive strategies and changes in the banking industry.

Development of rural banking in the case of developed countries.

The effect of electronic payment systems on the behaviour and satisfaction level of customers.

How does the organisational structure affect the commercial banks and their performance?

How can banks use ratio analysis as a bank lending tool?

Evaluating the relationship between e-banking and cybercrime.

Studying the importance of credit management in the banking industry.

Problems related to loan granting and recovery.

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Research evolution in banking performance: a bibliometric analysis

S. m. shamsul alam.

Department of Finance, International Islamic University Malaysia, Jalan Gombak, 53100 Kuala Lumpur, Malaysia

Mohammad Abdul Matin Chowdhury

Dzuljastri bin abdul razak, associated data.

The data collected from the Web of Science online database were saved on Microsoft excel and remained with authors. The data are available upon request.

Banking performance has been regarded as a crucial factor of economic growth. Banks collect deposits from surplus and provide loans to the investors that contribute to the total economic growth. Recent development in the banking industry is channelling the funds and participating in economic activities directly. Hence, academic researchers are gradually showing their concern on banking performance and its effect on economic growth. Therefore, this study aims to explore the academic researchers on this particular academic research article. By extracting data from the web of Science online database, this study employed the bibliometrix package (biblioshiny) in the ‘R’ and VOSviewer tool to conduct performance and science mapping analyses. A total of 1308 research documents were analysed, and 36 documents were critically reviewed. The findings exhibited a recent growth in academic publications. Three major themes are mainly identified, efficiency measurement, corporate governance effect and impact on economic growth. Besides, the content analysis represents the most common analysis techniques used in the past studies, namely DEA and GMM. The findings of this study will be beneficial to both bank managers and owners to gauge a better understanding of banking performance. Meanwhile, academic researchers and students may find the findings and suggestions to study in the banking area.

Introduction

The financial services formed a significant contributory trademark in the overall economic growth by stimulating employment, offering vast avenues for investment and services to the consumers and the society [ 1 ]. Thus, economic development is led by economic growth whereby required capital is provided by the financial services [ 2 ]. Suggestively, capital creation by the financial services industry through accumulation and mobilisation of resources is considered the most crucial economic growth strategy component [ 3 ]. The banking system associates with creating funds by accumulating funds from surplus and channelling them to the investors as credit; those exhibit excellent ideas to generate a surplus in the economy but lack the capital to implement such ideas [ 4 , 5 ]. Accordingly, the banking system plays a vital role to pledge the leading role of finance in economic development and promoting stable and healthy financial and economic development [ 6 ].

Banking performance has been regarded as a crucial factor of economic growth [ 7 ]. Efficiency and productivity change measures are rapidly used to evaluate banking performance. Academic researchers have been focusing on the efficiency and productivity of banking institutions for a long period, while economic growth is carried out in the discussions. Discovering research activities on banking efficiency and productivity in economic growth enables researchers to identify the local and international input to this particular discipline. More so, it will enable researchers to identify the ‘hot spots’ discussed by academic researchers and find the research gaps [ 8 ]. Indeed, banking performance in standings is a broad scientific topic, and estimating research activities might not be useful. For instance, research activities in this area extended to several constituents such as methodological approaches, banking approaches. In the current study, banking efficiency and productivity are considered as banking performance that contributes to the economic growth of an economy. Therefore, the main objective of this study is to explore the research activities of banking performance to economic growth. The investigation of banking performance research activities will enable the researchers to find the present directions of the research area and thus speculates the future research suggestions. Besides, it will also enable to expound the depth of past research activities and themes on banking performance relating to the economic growth measurements.

The use of the bibliometric method is appropriate to demonstrate the research shape and activity, volume and growth in a specific discipline [ 9 ]. A bibliometric method is a quantitative application of bibliometric data [ 10 ]. It analyses a wide-ranging quantity of published research articles employing the statistical tool to identify trends and citations or/and co-citations of a certain theme by year, author, country, journal, theory, method, and research constituent [ 11 ]. Significantly, this technique further distinguishes key research themes and active researchers, countries and institutions for future research planning and funding [ 12 ]. Scholars apply this method for several reasons: to reveal emerging trends in published research articles and journal performance, cooperation patterns, and research elements, and to reconnoitre the intellectual edifice of an exact domain in the existing literature [ 9 , 13 ].

Minimal studies have used bibliometric analysis related to banks. For instance, Violeta and Gordana have employed bibliometric analysis to spot the trends of DEA application in banking [ 14 ]. Another study conducted by Ikra et al. applied the bibliometric method to Islamic banking efficiency [ 15 ]. By an extensive search on the Scopus, Web of Science and Google Scholar, no such study was found related to bibliometric analysis on banking performance to the economic growth. Nevertheless, this study will be the first attempt to conduct bibliometric methods on the banking performance to the economic growth that could be the basis for future studies.

The findings of this study unfolded several contributions to both policymakers, bank managers and academic researchers. Firstly, the findings would benefit the policymakers regarding the contribution and trends of banking performance. It would allow them to take necessary initiatives to promote and improve banking performance, thus economic development. Meanwhile, bank managers may utilise the findings to strengthen their banking operations by acknowledging key factors that contributed to the performance. Finally, academic researchers are enabled to detect the current trend and topics related to the banking area that leads to further studies.

Bibliometric analysis has achieved enormous popularity in social sciences research in the current years [ 9 , 16 – 18 ]. The popularity of bibliometric analysis is observed from the development, accessibility and availability of software, for instance, Leximancer, Gephi, VOSviewer, Biblioshiny and publication databases (Web of Science and Scopus). Further, the rapid growth of bibliometric analysis in scientific production has emerged from business research to information science [ 9 ]. The popularity of bibliometric methodology in social science research is not a trend but moderately an image of its usefulness for constructing high research impact by handling excessive scientific data [ 9 ].

The bibliometric analysis is beneficial for briefing the trends in the research documents classifying ‘blind spots’ and ‘hot spots’, and finding a more inclusive understanding of the published research documents [ 19 ]. In detail, this analysis empowers the recognition of the most advanced (hot spots) and the less established topics (blind spots) within the documents that, shared with other bibliometric procedures, recommend future research avenues. The bibliometric analysis uncovers several ascriptions, such as unveiling emerging trends in documents and the performance of journals, research constituents and collaboration patterns and discovering the intellectual edifice of an exact domain in the existing literature [ 13 , 18 ]. The data that apply in this analysis incline to be immense (hundreds, thousands) and unbiased in nature (publications and citations number, keywords occurrences and topics). However, its explanations often depend on both subjective (thematic analysis) and objective (performance analysis) assessments formed through well-versed techniques and procedures [ 9 ]. Therefore, this study applied bibliometric analysis to examine the general perspective on banking performance and economic growth.

Two categories are mainly manifest in the bibliometric techniques, namely, performance and science mapping. Precisely, research elements’ contributions are accounted for in the performance analysis, while the connections between research elements are focused on science mapping [ 9 ]. This study follows performance analysis, science mapping and network analysis suggested by Donthu et al. [ 9 ].

Data extraction process

Two primary databases, the Web of Science and the Scopus, are commonly used in the bibliometric analysis [ 20 ]. Both databases are prominent for the peer-reviewed published research articles. The data for this analysis were a collection of bibliographic data from the Web of Science. The Web of Science (WoS) is a multidisciplinary online database providing access to several citation databases, namely Science Citation Index Expanded (SCIE), Social Sciences Citation Index (SSCI), Emerging Sources Citation Index (ESCI), Arts and Humanities Citation Index (AHCI), Conference Proceedings Citation Index, Index Chemicus and Current Chemical Reactions [ 18 , 21 ].

This study has applied a two-stage data extraction process, following Bretas and Alon, Alon et al. and Apriliyanti and Alon [ 16 , 22 , 23 ] as shown in Fig.  1 . The choice of the keywords is crucial to ensure that it covers the total body of published documents on banking performance and economic growth [ 21 ]. Accordingly, the selection of keywords was carried out by reviewing several abstracts and authors’ keywords in most related literature on the Web of Science. The selected keywords were executed in the WoS online database on 9 August 2021. A combination of keyword search terms was considered; (1) ‘banking performance*’ to nail all discrepancies of the term such as the role of the bank, bank efficiency, bank productivity, banking efficiency, banking productivity, banking performance, bank performance, upon refining the search by including only research articles from the categories; economics, business finance, business, management, operations research management, social sciences mathematical measures and documents written in English.

The second stage extracted raw data from the online database combined, checked for duplicate documents and merged using ‘R’. Further, the documents were filtered in the ‘biblioshiny’ tool to omit book chapters and conference proceedings. After the extraction process for the bibliometric analysis, several impactful documents were selected based on local and global citations to conduct content analysis. The content analysis allowed the researcher to identify the leading research scopes and trends. Further, it allows identifying the streams and recommendations for future studies [ 22 ]. A total of 36 documents were selected to conduct a comprehensive review and valuation of the documents.

Performance analysis

Performance analysis investigates the contributions of academic research elements to a particular discipline [ 24 ]. This analysis is naturally descriptive, which is the hallmark of bibliometric analysis [ 9 ]. It is a standard method in reviews to exhibit the performance of various research elements such as authors, countries, institutions and sources similar to the profile or background of respondents generally presented in empirical studies, albeit more statistically [ 9 , 18 ]. Many measures exist in the performance analysis; hence, the most protuberant measurements are publications number and citations per research constituent or year. The publication is considered productivity, whereby citation measures influence an impact [ 9 ]. Besides, citation per document and h -index associate both publications and citations with evaluating research performance [ 18 ].

Table ​ Table1 1 presents the publication’s performance of banking performance. The results show a total number of 1308 documents published from 1972 to the present. Among 2275 contributed authors, a total of 202 authors were solely, and 2106 authors collaborated to the publications. A total of 31,458 citations received by published documents lead to an average of 629.16 citations per year, while 775 in h -index and 1023 in g -index. Hence, the banking efficiency field acknowledged productivity of research published by an average of 26.16 documents per year whereby nearly two authors (CI = 1.9) published one article, and standardised collaboration is 0.43 (between 0 and 1).

Metrics for performance analysis

The annual production of scientific publications on banking efficiency is presented in Fig.  2 . The first research article related to banking performance was published by Fraser and Rose [ 25 ], who studied the effect of new bank appearance in the market on bank performance. The annual growth of publications on banking performance or banking efficiency is recorded to 12.39%. The publications are significantly increasing in recent periods, especially from 2016 to the present. However, the mandated growth in publications is observed between 2004 and 2015, while earlier periods (1972–2003) were quite sluggish. In these consequences, academic researchers have started to focus on banking performance or banking efficiency in the recent period. As a result, it can be concluded that banking performance and its sphere are shaping upwards through the research contributions.

Annual Scientific production

Science mapping

Science mapping investigates the connections between research elements [ 26 ] that relates to the intellectual connections and structural networks within research constituents [ 9 ]. The science mapping includes citation analysis, bibliographic coupling, co-citation analysis, co-occurrence network, collaboration techniques. When combined with network analysis, these techniques are instrumental in exhibiting the research area’s bibliometric edifice and intellectual structure [ 27 ].

Citation analysis

The citation analysis is a fundamental approach for science mapping that runs on the assumption that citations reproduce intellectual contributions and impact the research horizons [ 28 ]. This analysis shows the impact of published documents by measuring the number of citations they received [ 9 ]. Accordingly, it enables the discovery of the most influential and informative documents in a research constituent. Thus, it allows gathering insights into that constituent’s intellectual dynamics [ 9 ]. Table ​ Table2 2 presents the top 20 impactful and influential documents in the field of banking performance or efficiency. The analysis has discovered that a total of 1112 documents (85%) out of 1308 documents received global citations. The global citations refer to the number of citations received in the overall Web of Science citations. However, 196 documents (about 15%) have not received any citation; meanwhile, 130 documents (about 10%) received only one citation. A document written by Berger An received the highest number (665) of citations which was published in 1997. The second most influential document was written by Seiford [51] received a total of 549 citations, followed by the document written by Back (2013) received 512 citations. In fact, a total of four documents written by Berger An rank in the top 20 impactful research articles in the field of banking performance or efficiency.

Top 20 most cited papers.

Source : Biblioshiny R package

Factually, the majority of the documents without citations was published in a recent period. At the same time, the highly cited documents were published quite earlier. To detect the immediate influence of more recent documents is to apply the measurement of an average citation per year [ 29 ]. By evaluating the average citations per year, nine out of ten documents are also among the top 10 documents. Perpetually, Beck [45] holds the highest number of average citations per year (56.89), followed by Berger An (2013) ranked second position (51.44) and Beltratti A (2012) ranked the following position (48.40). Based on the citation analysis, it can be elucidated that Berger An is the most influential author in the banking efficiency research constituent.

Co-occurrence analysis

Co-occurrence analysis was projected by Callon et al. [ 30 ], considered as content analysis that is useful in plotting the strength of connotation within keywords in textual data. In other words, co-occurrence analysis is an approach that investigates the actual content of the document itself [ 9 ]. It maps the pertinent literature straight from the associations of keywords shared by research articles [ 24 , 27 , 31 , 32 ]. The co-occurrence analysis deduces words to appear recurrently in a cluster. It exhibits conceptual or semantic groups of various topics or sub-topics considered by research constituents [ 9 , 24 ]. Cobo and Herrera signified that spotted clusters could be applied with few objectives [ 24 ]. For instance, they can be applied to analyse their progression by gauging extension across successive subperiods and measuring the research area through performance analysis. Figure  3 displays the co-occurrence of keywords within the bank efficiency research constituent. As the focus of this research, bank performance represents the larger node associated with corporate governance, financial performance, financial crisis, nonperforming loans and others. In these scenarios, the red-coloured cluster depicts that these subtopics or variables are directly associated related to the bank performance theme due to repetitive co-occurrence of those words. Likewise, the green-coloured cluster represents a theme related to bank efficiency associated with performance and ownership. In the same cluster, the nonparametric data envelopment analysis is extensively used to measure commercial banks' technical and cost efficiency and productivity. Parametric stochastic frontier analysis is narrowly observed in efficiency measurements comparably. The green-coloured cluster depicts the determinants of bank profitability including other impactful variables such as risk, competition, corporate governance. This cluster applied panel data in order to examine performance, financial development as well as economic growth. Each of the cluster identifies the interacted themes used in the published documents using co-occurrence of keywords.

Co-occurrence of keywords, Tool: VOSviewer. Note the nodes represent the keywords, and the edges between words present their occurrence of interactions. Each colour of nodes represents a cluster/theme. The size of the node presents a greater frequency of occurrence

Collaboration networks

Collaboration analysis explores the associations within researchers in a particular constituent. It is a formal way of intellectual association among researchers [ 33 , 34 ]. Therefore, it is crucial to understand how researchers associate among themselves [ 9 ]. In the presence of growing theoretical and methodological complexity in research, intellectual networking (collaboration) has become commonplace [ 33 ]. Indeed, collaboration or interaction among researchers enables improvements in academic research; for instance, greater interactions among diverse researchers allow richer insights and greater clarity [ 35 ]. Researchers who collaborate form a network named ‘invisible collages’ whose research can help improve undertakings in the study field [ 36 ]. Figure  4 presents the collaboration network of authors those co-authored academic articles in banking efficiency. Based on the collaboration network, Wanke P (Universidade Federal do Rio de Janeiro) was the most collaborated author who co-authored with four authors from different institutions in different countries. At the same time, Matousek, R (University Kent), Hasan, I (Rensselaer Polytechnic Institute) and Mamatzakis, E (University of Sussex), have also exhibited as greater collaborative researchers. In these consequences, authors from different institutions and from different parts of the world are collaborating to the banking performance/efficiency field.

Authors’ collaboration networks.

Source : VOSviewer. Note the nodes represent the authors, and the size represents the frequency of contribution, the colour presents a cluster or a particular group, and the link shows the link among authors that collaborated for research articles

Bibliographic coupling

Co-authorship or collaborative networks within the authors and other crucial facets in the collaboration networks are the collaboration of author-affiliated countries and institutions [ 31 ]. Figure  5 exhibits the collaboration network within authors’ affiliated organisations. University Malaya and University Utara Malaysia, University Malaya and University Putra Malaysia, University Malaya and University Fed Rio de Janeiro all depict a strong collaboration network. In general, all the institutions display an embellishment among the institutions within the same region.

Bibliographic coupling of author-affiliated institutions.

Source : VOSviewer

Similar to co-authors’ affiliated institutions, the collaboration of authors’ country presents a steady association among authors’ connections that allow exploring comparative and concurrent research works. Figure  6 represents the network of collaborative authors’ affiliation countries. These countries include South Africa and the USA, England and the USA, Australia and the USA, Malaysia and the USA, Germany and the USA, representing a high proportion of authors’ affiliated institutions are in the USA with this country performing as a hub of co-authorship publications from 1972 to 2021.

Collaborative authors’ affiliated countries

This study discusses trending themes based on the bibliometric findings and reviews of highly cited and most recent documents (see Appendix 1 ). It also indicated the type of study, theories, methods and main findings to suggest comprehensive future studies.

Research directions

Between 1991 and 2010, studies related to banking performance have posited several antecedents to banking performance. Figure  7 displays the trend topics based on author keywords that appeared between 1972 and 2010. Studies in this period mainly focused on mergers and acquisitions, information technology and transition economies that emerged from universal banking deregulation and bank privatisation. The financial crisis during 2008–2009 drew the attention of scholars to evaluate the banking performance. Idiosyncratically, this phenomenon has been acknowledged by researchers from 2010 to 2015, focusing on the role of corporate governance in the performance of the banking industry, including compensation, risk management, determinants of stock returns, capital buffer, productivity. Idiosyncratically, a vast of studies were conducted on Chinese commercial banks and the effect on their economic growth.

Trend topics in different periods.

Source : Biblioshiny analysis. Note the frequency of terms selected 3 times for 1972–2010, 5 times for 2011–2015, 10 times for 2016–2021

In the recent period (2016–2021), diverse factors posited in the studies that dominantly present a significant interest from banking scholars. While studies earlier mainly focusing on efficiency and its contributing factors, recent periods extended research directions to multiple constituents. For example, how banks diversified their services and the role of human capital efficiency to the banking performance [ 37 ]. Bose et al. employed the effect of green banking on the performance that underpins the inclusion of the environmental sustainability approach by the banking industry [ 38 ]. Meanwhile, Bhattacharyya et al. showed the effect of CSR expenditures and financial inclusion on the performance that define the social sustainability indicator of the banks [ 39 ]. Repeatedly, the role and structure of the board, categorisation of deposits and loans, risk exposures (business cycle), macroeconomic factors were also acknowledged in recent banking performance studies [ 40 – 43 ]. Idiosyncratically, scholars recently focus the components of sustainability of the banking industry from economic, environmental and social aspects [ 44 ]. Furthermore, the effect of banking and its stability on economic growth has been broadly carried out in the recent period. Moreover, the development of studies was taken into account, which implies the contribution to the economic growth of particular regions. Based on the earlier and recent studies, it is precisely observed the diversification of research constituents in relation to bank performance studies. Earlier studies (up to 2015) mainly measured banking performance or efficiency based on accounting measurements, while recent studies started to include market measurements principally based on stock returns performance. On the other hand, the rise of Islamic banking and finance influenced academic researchers to compare the business models [ 45 ], banking efficiencies [ 46 ] between conventional and Islamic banks, and efficiency for Islamic banks [ 5 ].

Based on the review of impactful documents published from 1990 to 2010, two particular objectives were identified: the effect of the board of directors or ownership on the bank performance [ 47 – 49 ] and measurement of efficiency, including cost and profit efficiency [ 50 – 52 ]. These constituents extended during 2011–2020 by the inclusion of risk-taking management [ 53 ], CEO incentives [ 54 ], contributing factors including capital, banking crises on banking performance [ 42 , 55 – 57 ]. Meanwhile, the Islamic banking system got crucial attention from academic researchers. Accordingly, several studies evaluated and compared efficiency between Islamic and conventional banks [ 45 , 58 , 59 ]. Nevertheless, the role of the banking industry in economic growth was included in the research constituents in the recent decade. For example, Xu, Santana and a few more scholars investigated the correlation between financial intermediation and economic growth [ 57 , 60 , 61 ]. In recent years, scholars extended the banking-related research constituents to diverse areas. The effect of human capital efficiency [ 37 ], green banking [ 38 ], CSR expenditures [ 39 ] and bank stability was included to measure banking performance. These extensions of research themes within banking performance studies posited a significant interest by academic researchers.

Apparently, almost all documents adopted the quantitative method in measuring banking performance research constituents. However, studies that measured banking efficiency mainly applied nonparametric analysis DEA [ 5 , 51 ], while SFA was adopted by limited studies [ 37 , 42 , 43 ]. On the other hand, regression analysis was predominantly applied to investigate banking performance from 1990 to 2010 [ 49 , 50 ]. In recent studies, academic researchers have vastly adopted GMM (generalised method of moments) to examine the contributing factors on banking performance [ 39 , 42 , 57 , 60 ]. These methods are dominating the banking-related studies throughout the publication periods. Over the periods, scholars have developed DEA applications in several categories, such as bootstrap, networking. Meanwhile, GMM with different approach (dynamic and system) techniques exploited panel data primarily extracted from Bankscope, Datastream, annual reports etc.

Main findings

Earlier, banking inefficiencies were substantially observed low, negatively affecting profitability and marketability [ 50 , 51 ]. This trend was continuously depicted in studies [ 52 ]. However, Berger et al. evidenced better efficiency for larger banks than smaller banks [ 50 ]. On the contrary, Seiford and Zhu posited an adverse effect of bank size on marketability [ 51 ]. More so, Rehman et al. found larger banks are less efficient than smaller banks [ 40 ]. Hence, Moudud-Ul-Huq posited diverse impacts of bank size and competition on performance [ 62 ]. So, banking size is deemed to have a substantial effect on the overall performance of banks. However, Adesina embellished that diversification of services and choices of management decisions on loans (nonperforming, debt issuances) [ 63 , 64 ] and deposits [ 41 ] affect the banking performance [ 37 ]. Moreover, board structure affects banking performance [ 40 , 65 ], while higher human capital efficiency enhances banking performance [ 37 ].

Generally, foreign-owned banks provide better service, greater profitability and are better efficient than local banks. This phenomenon was evidenced in several studies; for example, Bonin et al. and other scholars demonstrated that foreign-owned banks are more cost-efficient than other banks [ 48 ]. However, this trend did not exist for Islamic banks as local banks showed better efficiency than foreign peers [ 58 ] and more efficient than conventional [ 59 ]. Meanwhile, state-owned or government-owned commercial banks were less efficient and provided poorer services [ 48 , 49 , 52 ]. But these banks’ efficiency was higher than urban/rural banks during credit risk shock [ 41 ]. Nevertheless, banking efficiency and performance substantially depend on diversification of services, managerial adequacy, ownership, types and size.

Studies have evidenced financial development and thus the banking industry’s role in economic growth [ 60 ]. In the nineteenth century, the establishment of the savings bank demonstrated city growth in Prussia [ 66 ]. Potentially, banks provide investment capital to increase per capita GDP [ 43 ]. However, Haini documented a contrasting effect of banking development on economic growth through a push out of private investment due to high levels of the banking sector [ 67 ]. However, Stewart and Chowdhury proved that a stable banking sector lessens the negative impact of a crisis on GDP growth and provides economic resilience in both developed and developing countries. Overall, findings elaborated a crucial link between banking sector development and economic growth.

Future study suggestions

This study has recommended several scopes for future studies in the hybrid review, mainly through bibliometric findings and the structured review of impactful articles [ 11 ]. In other words, the recommendations for future studies are made by observing and analysing discussions on highly cited and recent cited documents. Overall findings and analyses raised several questions that need to be addressed for future studies.

Firstly, does the banking sector improve economic growth in the least developed countries? Prior studies mainly focused on developed and developing economies, but less attention was given to least developed countries. Secondly, vast studies investigated contributing factors of banking performance, while political instability has been ignored. Future studies might include political instability on the banking performance. Apart from it, nonperforming loans can be another addition to future studies, and even few studies documented it. Thirdly, how do banks perform during the pandemic crisis, for instance, COVID-19? The current pandemic crisis can be a significant factor in banking performance related to future studies, including efficiency, mortgages, loan recovery, deposits and business services. The studies can include consumer behaviour (due to restricted movements, safety measurements), green banking (online transaction and services), financial technologies (inclusion of nonbanking services) and the contribution or continuance of economic activities in the country during and after the pandemic crisis.

Significantly, prior studies have ignored the current trend of FinTech inclusion in banking performance. Fourthly, will FinTech takeover the banking services and diminish banks in the near future? Future studies may investigate the effect of FinTech applications on banking. More so, future studies may explore the banking industry’s barriers, challenges and threats due to FinTech growth. Fifthly, almost all studies employed quantitative analysis related to banking performance. Therefore, future studies may use qualitative methods to explore the opportunities and practices of banks and their performance. Sixthly, the majority of the studies either applied parametric or econometric techniques to investigate the bank performance. Recent developments in technologies and methods may provide easy and robust results in such related studies as using machine learning for data analysis and predicting banking efficiency and productivity determinants. Seventhly, past studies mostly followed the intermediation approach, which scarcely included production and operating approach measurement. Future studies may extend the efficiency analysis using productivity growth analysis. Further, the majority of the studies observed efficiency only. Future studies can include a productivity change index along with an efficiency analysis. Finally, GMM and regression were broadly applied to investigate the effect of antecedents of banking performance and link to economic growth. Future studies may adopt other advanced data analysis techniques such as partial least squares, structural equations and other econometric techniques.

Conclusions

The main purpose of this study is to explore the trends and research activities in banking performance and the economic growth research domain. To achieve this objective, a bibliometric analysis was applied and performed several analyses, namely citation, co-occurrence of keywords, the collaboration between authors and coupling between institutions and countries, and discussion by reviewing most cited and most recent influential research articles. This study presents the most common themes, sub-themes associated with highly cited documents and authors; furthermore, the content analysis identified the research directions, research objectives, methodologies, topics and findings.

Based on the reviewing literature, the efficiency theory, banking theory mainly intermediation approach and nonparametric technique, namely data envelopment analysis along with econometric method, regression was used in the published documents. The findings of this study, along with future study suggestions, could be beneficial to bankers as well as academic researchers and students studying banking performance and its role in the economy.

Limitations

The most crucial limitation in any bibliometric analysis is the database selection. It means selecting the data and the limits of its interpretation [ 68 ]. This study has three key limitations; firstly, it has chosen ‘Web of Science’, one of the largest online databases to gather data on banking performance research articles from 1972 to 2021 and refined based on subject categories and language (English). The database could be improved if other databases were included and also if book chapters and conference proceedings were added. Secondly, the selection of keywords; although selected keywords are deemed to be most relevant to encompass the majority of articles related to banking performance, there is always an opportunity to search further articles by using additional keywords. Lastly, this study could not conduct co-citation analysis due to the unavailability of cited documents in Web of Science data format.

Acknowledgements

Abbreviations, appendix 1: reviewed documents, authors' contributions.

MAMC conducted the data analysis. SMSA prepared the manuscript by contributing literature and discussion for this study. DBAR managed the data and edited the manuscript. All authors read and approved the final manuscript.

Availability of data and materials

Declarations.

We have no conflicts of interest to disclose.

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Research Topics & Ideas: Finance

120+ Finance Research Topic Ideas To Fast-Track Your Project

If you’re just starting out exploring potential research topics for your finance-related dissertation, thesis or research project, you’ve come to the right place. In this post, we’ll help kickstart your research topic ideation process by providing a hearty list of finance-centric research topics and ideas.

PS – This is just the start…

We know it’s exciting to run through a list of research topics, but please keep in mind that this list is just a starting point . To develop a suitable education-related research topic, you’ll need to identify a clear and convincing research gap , and a viable plan of action to fill that gap.

If this sounds foreign to you, check out our free research topic webinar that explores how to find and refine a high-quality research topic, from scratch. Alternatively, if you’d like hands-on help, consider our 1-on-1 coaching service .

Overview: Finance Research Topics

• Corporate finance topics
• Investment banking topics
• Private equity & VC
• Asset management
• Hedge funds
• Financial planning & advisory
• Quantitative finance
• Treasury management
• Financial technology (FinTech)
• Commercial banking
• International finance

Corporate Finance

These research topic ideas explore a breadth of issues ranging from the examination of capital structure to the exploration of financial strategies in mergers and acquisitions.

• Evaluating the impact of capital structure on firm performance across different industries
• Assessing the effectiveness of financial management practices in emerging markets
• A comparative analysis of the cost of capital and financial structure in multinational corporations across different regulatory environments
• Examining how integrating sustainability and CSR initiatives affect a corporation’s financial performance and brand reputation
• Analysing how rigorous financial analysis informs strategic decisions and contributes to corporate growth
• Examining the relationship between corporate governance structures and financial performance
• A comparative analysis of financing strategies among mergers and acquisitions
• Evaluating the importance of financial transparency and its impact on investor relations and trust
• Investigating the role of financial flexibility in strategic investment decisions during economic downturns
• Investigating how different dividend policies affect shareholder value and the firm’s financial performance

Investment Banking

The list below presents a series of research topics exploring the multifaceted dimensions of investment banking, with a particular focus on its evolution following the 2008 financial crisis.

• Analysing the evolution and impact of regulatory frameworks in investment banking post-2008 financial crisis
• Investigating the challenges and opportunities associated with cross-border M&As facilitated by investment banks.
• Evaluating the role of investment banks in facilitating mergers and acquisitions in emerging markets
• Analysing the transformation brought about by digital technologies in the delivery of investment banking services and its effects on efficiency and client satisfaction.
• Evaluating the role of investment banks in promoting sustainable finance and the integration of Environmental, Social, and Governance (ESG) criteria in investment decisions.
• Assessing the impact of technology on the efficiency and effectiveness of investment banking services
• Examining the effectiveness of investment banks in pricing and marketing IPOs, and the subsequent performance of these IPOs in the stock market.
• A comparative analysis of different risk management strategies employed by investment banks
• Examining the relationship between investment banking fees and corporate performance
• A comparative analysis of competitive strategies employed by leading investment banks and their impact on market share and profitability

Private Equity & Venture Capital (VC)

These research topic ideas are centred on venture capital and private equity investments, with a focus on their impact on technological startups, emerging technologies, and broader economic ecosystems.

• Investigating the determinants of successful venture capital investments in tech startups
• Analysing the trends and outcomes of venture capital funding in emerging technologies such as artificial intelligence, blockchain, or clean energy
• Assessing the performance and return on investment of different exit strategies employed by venture capital firms
• Assessing the impact of private equity investments on the financial performance of SMEs
• Analysing the role of venture capital in fostering innovation and entrepreneurship
• Evaluating the exit strategies of private equity firms: A comparative analysis
• Exploring the ethical considerations in private equity and venture capital financing
• Investigating how private equity ownership influences operational efficiency and overall business performance
• Evaluating the effectiveness of corporate governance structures in companies backed by private equity investments
• Examining how the regulatory environment in different regions affects the operations, investments and performance of private equity and venture capital firms

Asset Management

This list includes a range of research topic ideas focused on asset management, probing into the effectiveness of various strategies, the integration of technology, and the alignment with ethical principles among other key dimensions.

• Analysing the effectiveness of different asset allocation strategies in diverse economic environments
• Analysing the methodologies and effectiveness of performance attribution in asset management firms
• Assessing the impact of environmental, social, and governance (ESG) criteria on fund performance
• Examining the role of robo-advisors in modern asset management
• Evaluating how advancements in technology are reshaping portfolio management strategies within asset management firms
• Evaluating the performance persistence of mutual funds and hedge funds
• Investigating the long-term performance of portfolios managed with ethical or socially responsible investing principles
• Investigating the behavioural biases in individual and institutional investment decisions
• Examining the asset allocation strategies employed by pension funds and their impact on long-term fund performance
• Assessing the operational efficiency of asset management firms and its correlation with fund performance

Hedge Funds

Here we explore research topics related to hedge fund operations and strategies, including their implications on corporate governance, financial market stability, and regulatory compliance among other critical facets.

• Assessing the impact of hedge fund activism on corporate governance and financial performance
• Analysing the effectiveness and implications of market-neutral strategies employed by hedge funds
• Investigating how different fee structures impact the performance and investor attraction to hedge funds
• Evaluating the contribution of hedge funds to financial market liquidity and the implications for market stability
• Analysing the risk-return profile of hedge fund strategies during financial crises
• Evaluating the influence of regulatory changes on hedge fund operations and performance
• Examining the level of transparency and disclosure practices in the hedge fund industry and its impact on investor trust and regulatory compliance
• Assessing the contribution of hedge funds to systemic risk in financial markets, and the effectiveness of regulatory measures in mitigating such risks
• Examining the role of hedge funds in financial market stability
• Investigating the determinants of hedge fund success: A comparative analysis

Financial Planning and Advisory

This list explores various research topic ideas related to financial planning, focusing on the effects of financial literacy, the adoption of digital tools, taxation policies, and the role of financial advisors.

• Evaluating the impact of financial literacy on individual financial planning effectiveness
• Analysing how different taxation policies influence financial planning strategies among individuals and businesses
• Evaluating the effectiveness and user adoption of digital tools in modern financial planning practices
• Investigating the adequacy of long-term financial planning strategies in ensuring retirement security
• Assessing the role of financial education in shaping financial planning behaviour among different demographic groups
• Examining the impact of psychological biases on financial planning and decision-making, and strategies to mitigate these biases
• Assessing the behavioural factors influencing financial planning decisions
• Examining the role of financial advisors in managing retirement savings
• A comparative analysis of traditional versus robo-advisory in financial planning
• Investigating the ethics of financial advisory practices

The following list delves into research topics within the insurance sector, touching on the technological transformations, regulatory shifts, and evolving consumer behaviours among other pivotal aspects.

• Analysing the impact of technology adoption on insurance pricing and risk management
• Analysing the influence of Insurtech innovations on the competitive dynamics and consumer choices in insurance markets
• Investigating the factors affecting consumer behaviour in insurance product selection and the role of digital channels in influencing decisions
• Assessing the effect of regulatory changes on insurance product offerings
• Examining the determinants of insurance penetration in emerging markets
• Evaluating the operational efficiency of claims management processes in insurance companies and its impact on customer satisfaction
• Examining the evolution and effectiveness of risk assessment models used in insurance underwriting and their impact on pricing and coverage
• Evaluating the role of insurance in financial stability and economic development
• Investigating the impact of climate change on insurance models and products
• Exploring the challenges and opportunities in underwriting cyber insurance in the face of evolving cyber threats and regulations

Quantitative Finance

These topic ideas span the development of asset pricing models, evaluation of machine learning algorithms, and the exploration of ethical implications among other pivotal areas.

• Developing and testing new quantitative models for asset pricing
• Analysing the effectiveness and limitations of machine learning algorithms in predicting financial market movements
• Assessing the effectiveness of various risk management techniques in quantitative finance
• Evaluating the advancements in portfolio optimisation techniques and their impact on risk-adjusted returns
• Evaluating the impact of high-frequency trading on market efficiency and stability
• Investigating the influence of algorithmic trading strategies on market efficiency and liquidity
• Examining the risk parity approach in asset allocation and its effectiveness in different market conditions
• Examining the application of machine learning and artificial intelligence in quantitative financial analysis
• Investigating the ethical implications of quantitative financial innovations
• Assessing the profitability and market impact of statistical arbitrage strategies considering different market microstructures

Treasury Management

The following topic ideas explore treasury management, focusing on modernisation through technological advancements, the impact on firm liquidity, and the intertwined relationship with corporate governance among other crucial areas.

• Analysing the impact of treasury management practices on firm liquidity and profitability
• Analysing the role of automation in enhancing operational efficiency and strategic decision-making in treasury management
• Evaluating the effectiveness of various cash management strategies in multinational corporations
• Investigating the potential of blockchain technology in streamlining treasury operations and enhancing transparency
• Examining the role of treasury management in mitigating financial risks
• Evaluating the accuracy and effectiveness of various cash flow forecasting techniques employed in treasury management
• Assessing the impact of technological advancements on treasury management operations
• Examining the effectiveness of different foreign exchange risk management strategies employed by treasury managers in multinational corporations
• Assessing the impact of regulatory compliance requirements on the operational and strategic aspects of treasury management
• Investigating the relationship between treasury management and corporate governance

Financial Technology (FinTech)

The following research topic ideas explore the transformative potential of blockchain, the rise of open banking, and the burgeoning landscape of peer-to-peer lending among other focal areas.

• Evaluating the impact of blockchain technology on financial services
• Investigating the implications of open banking on consumer data privacy and financial services competition
• Assessing the role of FinTech in financial inclusion in emerging markets
• Analysing the role of peer-to-peer lending platforms in promoting financial inclusion and their impact on traditional banking systems
• Examining the cybersecurity challenges faced by FinTech firms and the regulatory measures to ensure data protection and financial stability
• Examining the regulatory challenges and opportunities in the FinTech ecosystem
• Assessing the impact of artificial intelligence on the delivery of financial services, customer experience, and operational efficiency within FinTech firms
• Analysing the adoption and impact of cryptocurrencies on traditional financial systems
• Investigating the determinants of success for FinTech startups

Commercial Banking

These topic ideas span commercial banking, encompassing digital transformation, support for small and medium-sized enterprises (SMEs), and the evolving regulatory and competitive landscape among other key themes.

• Assessing the impact of digital transformation on commercial banking services and competitiveness
• Analysing the impact of digital transformation on customer experience and operational efficiency in commercial banking
• Evaluating the role of commercial banks in supporting small and medium-sized enterprises (SMEs)
• Investigating the effectiveness of credit risk management practices and their impact on bank profitability and financial stability
• Examining the relationship between commercial banking practices and financial stability
• Evaluating the implications of open banking frameworks on the competitive landscape and service innovation in commercial banking
• Assessing how regulatory changes affect lending practices and risk appetite of commercial banks
• Examining how commercial banks are adapting their strategies in response to competition from FinTech firms and changing consumer preferences
• Analysing the impact of regulatory compliance on commercial banking operations
• Investigating the determinants of customer satisfaction and loyalty in commercial banking

International Finance

The folowing research topic ideas are centred around international finance and global economic dynamics, delving into aspects like exchange rate fluctuations, international financial regulations, and the role of international financial institutions among other pivotal areas.

• Analysing the determinants of exchange rate fluctuations and their impact on international trade
• Analysing the influence of global trade agreements on international financial flows and foreign direct investments
• Evaluating the effectiveness of international portfolio diversification strategies in mitigating risks and enhancing returns
• Evaluating the role of international financial institutions in global financial stability
• Investigating the role and implications of offshore financial centres on international financial stability and regulatory harmonisation
• Examining the impact of global financial crises on emerging market economies
• Examining the challenges and regulatory frameworks associated with cross-border banking operations
• Assessing the effectiveness of international financial regulations
• Investigating the challenges and opportunities of cross-border mergers and acquisitions

Choosing A Research Topic

These finance-related research topic ideas are starting points to guide your thinking. They are intentionally very broad and open-ended. By engaging with the currently literature in your field of interest, you’ll be able to narrow down your focus to a specific research gap .

When choosing a topic , you’ll need to take into account its originality, relevance, feasibility, and the resources you have at your disposal. Make sure to align your interest and expertise in the subject with your university program’s specific requirements. Always consult your academic advisor to ensure that your chosen topic not only meets the academic criteria but also provides a valuable contribution to the field. 

If you need a helping hand, feel free to check out our private coaching service here.

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thank you for suggest those topic, I want to ask you about the subjects related to the fintech, can i measure it and how?

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194 Banking Essay Topics

🏆 best essay topics on banking, ✍️ banking essay topics for college, 👍 good banking research topics & essay examples, 🌶️ hot banking ideas to write about, 🎓 most interesting banking research titles, 💡 simple banking essay ideas, ❓ banking essay questions.

• Information Systems Evolution in the Banking Industry
• Bank Street Curriculum: Implementation and Assessment
• The Impact of the Internet on Banking
• Online Banking Fraud Risk Awareness
• Starling Bank’s Environment and Resource Analysis
• Banking and Inventory Management
• DBS Bank’s Digital Transformation Strategy
• Barclays Bank’s Strategic Analysis Barclays Bank is among the largest financial services. The paper analyzes the bank’s external business environment, financial position, and recommendations.
• Risk Management Strategies of Bank of America This essay analyses the risk management techniques adopted by the Bank of India to increase not only its profit but also its market share in detail.
• Managing Employees Performance at HSBC Private Bank and Theoretical Analysis of Performance For a better understanding of Managing Employee Performance this paper would go for HSBC, the UK as a case study and then go for theoretical analysis.
• TD Canada Trust Bank’s Performance Management The performance management system implemented in the TD Canada Trust Bank corresponds to the international financial sector management standards.
• Banking Merger, Its Benefits and Consequences The paper seeks to discuss the effects of mergers in the banking industry on the public especially in the United Kingdom.
• The Goals of a Banking Institution The management should ensure that effective structures are in place to align the firm’s resource so that the aims and objectives are met.
• Barclays Bank’s Talent Management The Barclays Bank in Stanford has successfully organised its human resource management approach to internalise the aspects of employee equity.
• The Structure and Functions of the World Bank The paper highlights the structure and functions of the World Bank and the United Nations in the global arena. It centered on the reasons behind the formation.
• Bank of Credit and Commerce International Case When the branch offices of the Bank of Credit and Commerce International (BCCI) in seven countries were raided in early July 1991, one of the major bank scams involving billions of dollars was brought to light.
• The Toronto-Dominion Bank in the Industry The Toronto-Dominion Bank measures its effectiveness using a personnel engagement score, optional labor turnover, and industry comparison.
• Standard Chartered Bank Managing Human Resources This report is a case study on Standard Chartered, and the strength-based approach in the bank has been discussed with its benefits and also disadvantages.
• Mergers and Acquisitions in the Banking Sector This paper discusses mergers in the banking sector, reasons for a wave of mergers between banks, and difficulties that acquiring banks may face in the future.
• HSBC Bank Balance Sheet Analysis Financial accounts have different users; each user has specific needs they require from the accounts. Financial account users can be defined into two main segments.
• Banking, Its Ancient and Modern History The history of banking dates back to Ancient Greece and the Roman Empire. The first prototypes were created by merchants around 2000 BC in Assyria and Sumeria.
• Sustainable Solutions for the Bank of America Tower The following paper analyzes the current constraints present on the bank based on the building usage, the existing construction, the site, and the location.
• Bank Management and Business Report Analysis This report is prepared in the interest of a bank that is planning to increase their sales performance, with the aim to provide an opinion on how sales should be improved.
• Bank Reconciliation: Theft and Control Deficiencies Internal control is a vital process because it gives reasonable assurance about the activities of a company and compliance with laws and regulations.
• Punjab National Bank Housing Finance Company: Case Analysis Punjab Nation Bank Housing Finance Limited has experienced stagnant growth since its incorporation with other partners in 1988.
• Problems With Improve Bank Services Some of the problems that banks are likely to encounter while attempting to deliver solid customer service include privacy laws, fair lending policies, and debt securities.
• Mountain Bank’s Business Strategy Organizational profits rely on a good business strategic plan. For the case of Mountain Bank, the profits have been declining as a result of the poor business strategic plan.
• Barclays Bank’s Decision-Making & Risk Management Barclays Bank has a clear and progressive vision of the decision-making process, with risk management being the most elaborate one.
• The National Australia Bank’ Corporate Governance The purpose of this paper is to develop a critical analysis of NAB’s corporate governance in terms of the protocols and practices.
• JPMorgan Chase Bank and Big Data The purpose of this paper is to analyze big data as technology concerning JPMorgan Chase and consider how it can be used shortly by this company.
• HSBC Bank and Barclays Bank: Comparison and Risk Exposures This paper focuses on the evaluation of the financial performance of HSBC bank and Barclays bank since the start of the global financial crisis.
• Electronic Banking Services in a Qatar Bank The present research is based on the context of e-banking services in Qatar, a small country with abundant natural assets. Banks in Qatar have not been able to get the majority of customers.
• Benefits and the Challenges of Financial Restructuring for Bank Muscat – Oman Bank Muscat is a fiscal services company in Oman that offers retail banking, corporate banking, treasury, investment banking, asset management, and private banking.
• Information Technology and Banking Sector IT has influenced two dissimilar areas in banking, including communication and connectivity, together with business progression reengineering.
• Waiting Lines Situation at Banking Organizations Hiring more personnel could be a solution to address the challenge of long queues at many facilities.
• Finance: The Currency School-Banking School Debate The period of the 1840s in the history of the economic thought is characterized by a significant controversy observed between the Currency School and Banking School.
• United States Banking Merger Relevance In the banking sector, mergers and takeovers have become very common. In this paper, the researcher will look at the relevance of banking mergers in the modern market.
• Lloyd’s Tsb Bank Is Under Fire for Money Laundering Offense This research article discusses the role of the bank, either knowingly or unknowingly, in laundering the money obtained by cheating.
• The Effectiveness of the World Bank The World Bank has been ineffective in its roles because of the poor review of projects, weak implementation of organizational policies, and failure to alleviate extreme poverty.
• Corporate Social Responsibility in Bangladesh’s Banking Sector CSR practices by banks in Bangladesh not only enhance their accountability but also boost their success and influence the socially responsible behaviors of other firms.
• Transformational Leadership in Pakistan’s Banking Sector The report tries to explicate the degree of diffusion of transformational and transactional leadership across the banking sector in Pakistan.
• Co-operative Banking Group’s Enterprise Software The report illustrates how implementation of ERP system in Co-operative banking group will help in improving the firm’s accounting, inventory as well as logistics practices.
• Corporate Governance in the Banking Industry Work utilizes the stakeholder theories and the stewardship presumption to shows how corporate governance contributes to higher standards of accountability in the banking industry.
• Mobile Banking Development and Analysis Project This research will be discussing the application of a mobile banking application, its effects, and its benefits to the consumers.
• International Monetary Fund, World Bank, and World Trade Organization This paper studies three international financial organizations: the International Monetary Fund, the World Bank, and the World Trade Organization.
• The Bank Robbery Crime Investigation The primary objective of securing the crime scene is to preserve all the evidence that can help trace and identify the bank robbery suspect.
• Island Banking Services: Cybersecurity Strategy and Implementation Plan This paper aims to describe the cybersecurity strategy and its implementation plan for Island Banking Services that is a firm that works in Financial Transactions Processing.
• Analysis of Abu Dhabi Commercial Bank Abu Dhabi Commercial Bank is a full-service commercial bank that provides a broad range of products and services, for instance, retail banking, management of wealth and others.
• Macroeconomic Theory: Barclays Bank in the UK For purposes of this study, we will analyze how the national economy can affect the performance of Barclays Bank, a major Public Limited Company.
• Chinese Bank’ Human Resources Management The paper analyses HRM through an examination of new approaches, recruitment and selection, monitoring and rewarding at the Industrial and Commercial Bank of China.
• The Bain & Co. and the Old Family Bank Analysis This paper aims at a holistic and comprehensive analysis of Bain & Co. and the Old Family Bank from the point of view of internal and external aspects.
• The Impact of the COVID-19 Pandemic on the Standard Chartered Bank This paper will explore the impact that the COVID-19 pandemic had on the Standard Chartered bank, the development of technology, and its influence on human resource management.
• Analysis of Islamic Banking and Finance The purpose of this article is to consider the features of Islamic banking, as well as the principles on which the relationship between the bank and customers is built.
• The Lehman Brothers Bank Collapse The main purpose of this study is to examine the financial crisis of 2008-2010 on public discourse with regard to the collapse of Lehman Brothers.
• HSBC Bank’s Staffing Change: Communication Plan This work shows the communication plan for the change in staffing at HSBC Bank, identifies its key trends, assumptions, and risks, and gives a SWOTT analysis of the organization.
• Credit Quality in Banking Lending and Investment This paper analyses the credit quality problems of banking institutions’ lending and investment decisions over the last 30 years.
• Evolution of Modern Banking: Middle Ages to Present The history of banking began around 2000 BCE in Assyria, Sumeria, and India when wealthy families kept gold and silver coins in their homes.
• The Effect of Finance as It Relates to Banking in Our Society The purpose of this paper is to analyze the effects of finance as it relates to banking in the Cayman Islands.
• Attempted Bank Robbery Criminal Justice Case The suggested case describing the plan to commit a crime of bank robbery is characterized by several elements that are commonly identified in crime attempts.
• Wachovia Bank Financial Report Wachovia bank, which is now a part of Wells Fargo bank, was regarded as the fourth-largest bank holding company in the USA, the financial system of which was based on total assets.
• Analyzing Bank Performance: Risk Propositions This report points out some of the challenging circumstances that the banks and financial institutions may find themselves in if the crisis goes out of hand.
• Doha Bank Qatar’s Strategic Thinking and Leadership Doha Bank Qatar involves its departments together with external agencies and customer firms to incorporate innovation and focus on change to achieve success in its operations.
• Barclays Bank’s Decision-Making and Leadership Barclays Bank Board comes up with the vision for the bank. It could be the expansion plans into the Middle East or the African continent.
• Bank of Japan’s Unconventional Monetary Policy In Japan, the supply of money is mainly controlled by the Bank of Japan with the help of monetary policy that is focused on inflation and interest rates.
• Barclays Bank’s Innovative Managerial Practices One of the most vivid examples of Barclays’s encouragement of entrepreneurship processes is the LifeSkills program.
• World Bank’s Contribution to Sustainable Development Goals The essay examines the role of the World Bank in bolstering the Sustainable Development Goals measures to combat poverty and promote development.
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• St. George Bank: Human Resources and Entrepreneurship St. George Bank should also come up with new methods to access their customers and also new channels on which the customers can get their services.
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• National Australia Bank: Corporate Social Responsibility This paper explores corporate social responsibility through an analysis of a company selected from the database of the world’s most ethical companies.
• Commercial Bank’s Profitability in Austria The analysis done in this paper shows that there is a close relationship between gross domestic product and commercial banks’ profitability in Austria.
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• Key Learnings for Banking Sector During COVID-19 The changing nature of the modern business environment requires considering organizational development (OD) practices.
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• CNP Bank Card: Case Analysis This paper focuses on the CNP bank card case, which aims to create a method for forecasting credit-card defaults and identifying potential client bases for various credit instruments.
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• Moroccan Central Bank’s Ethics and Systems The banking sector in the last two years has been impacted greatly by the COVID-19 pandemic. The situation led to the emergence of various innovations.
• A Bank, a Grocery Store, and a Restaurant: The Cultural Features This paper analyzes the available cultural features of a bank, a grocery store, and a restaurant to determine the distinctive features of these public places.
• America’s Banking Industry: Past, Present, and Future Banks are critical to the economic stability of a country. Banks are the primary option for borrowing, saving, and investing for millions of Americans in the United States.
• People Analytics of the Qatar National Bank One of the biggest challenges in conducting people analytics research for the Qatar National Bank is working with unstructured data.
• Developing the Islamic Banking Cluster in the UAE The report’s mission is to develop the Islamic banking cluster in the UAE in order to be number one in Islamic Banking.
• The National Banking Crisis Analysis The recent crisis at a national bank has attracted nationwide coverage due to its massive effect on the economy.
• Qatar National Bank’s General Information Bank groups that have already developed the most efficient business models and managed to expand their operations globally are in a comfortable position.
• Banking in the United States of America The banking system of the United States of America is one of the youngest, and banking has its own specifics with a lot of restrictions and even archaic elements.
• The Community Reinvestment Act and the Banking Systems This paper aims to study the impact of the Community Reinvestment Act (CRA) on banking in communities of Arkansas, California, and Boston.
• Islamic Banking and Its Development Problems Islamic banking’s main purpose is to perform the function of making payments and working with a considerable amount of money.
• Bank’s Digital Trends, Opportunities, and Threats The essay demonstrates the most crucial digital opportunities and threats for a commercial bank. The strategies to reduce the number of abandoned baskets are discussed.
• AMZ Bank’s Main Problems and Their Solution As a result of the analysis of the AMZ bank and its activities, it was found that the main problem is a toxic culture and the resulting social and economic structure.
• Banking: A Balance Sheet and an Income Statement The paper indicates that when compared to a balance sheet, an income statement presents a less defined and incomplete type of analysis.
• Wells Fargo Bank Scandal in Southern California The scandal in Wells Fargo Bank emerged after the customers started receiving the cards in their mail and others noticed accumulating bank fees.
• An Overview of Risks in Banking and Investments Credit ratings serve as vital tools for the investor, especially when they need a precise analysis of the organization’s position at a glance.
• Green Initiatives of the Toronto-Dominion Bank The paper will assess the actions taken by Toronto-Dominion Bank in order to reduce its impact on the environment.
• Organizational and National Culture in Banking The most important feature of commercial bank management is the continuous search for a productive compromise between the organizational and the national cultures.
• Current Dynamics and Trends in Corporate Banking Sustainable financing is one of the emerging trends in corporate banking due to the consequences of the COVID-19 pandemic.
• Banking Regulations Undermining Financial Crisis Traces of financial crisis and negative externalities have been present across the banking sector for the last several decades.
• Investment Opportunity Analysis: British Banking Sector The Big Four British banks dominate the UK banking industry for a number of reasons, including their longevity, aggressive marketing, and service variety.
• East Bank Regional Hospital System The paper presents reasons to support East Bank Regional Hospital’s decision to expand its services. The consideration of the diseases will meet the medical needs.
• Change in Composition of Bank Funding Since 2008 The main components of bank funding are deposits, short-term debts, and long-term debts. Over 50% of bank funding originates from retail deposits.
• Impact of Bank Regulation, Market Structure, and Institutions on Cost of Financial Intermediation Through the process of intermediation, the financial institutions are able to ensure that there is an effective flow of funds.
• Banks and Banking in Spain The Spanish legal framework has transformed banking and insurance services due to the creation of the EU single market.
• Hull vs. Bank Case Study This case reflects the issue that occurred between the property tenants and the North Adams Hoosac Savings Bank. Harry transferred his interests in East Quincy and to his wife.
• Competition in Islamic Banking Systems The main purpose of the research will be to investigate the effect of competition on profitability and the market power in the Islamic banking system.
• Islamic Banking: Risk Management, Operations and Barriers Islamic banks have been opened all over the world and they have their own unique operations that depend on the rules and regulations of Islamic law.
• National Bank of Bahrain Analysis This report attempts to analyze the characteristics that determine the attractiveness of the NBB to investors, namely its financial structure and corporate governance framework.
• Piggy Bank’s Sample Size to Estimate Mean Dollars To estimate a single population mean, the sample size should be the same as the population size. So, all the customers of Piggy Bank will have to be included in the sample.
• Improving the American International Bank Situation The research is targeted at offering several ways to better the American International Bank (AIB) current situation as well as outline its future opportunities.
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• Information Age, Future, and Medical Banking Medical banking organized following the concept of patient-centered care can facilitate the shift from logical considerations to the particular needs of patients.
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• Opening a Bank Branch in Lithuania Lithuania is a perfect country to open a new branch of the regional bank. It is a highly developed state with significant achievements in economics and international trade.
• The Bank of America on the Verge of Substantial Changes It is essential to find the right balance between the desire to improve the growth margins and the risk of losing everything through bankruptcy to profit and raise capital.
• COVID-19 Effects for Truist Bank With the spread of COVID-19, causing many Americans to lose jobs and see financial hardships, Truist would need to focus on how they can help their customers in their times of need.
• To Loan or Not to Loan: Taggert’s Bank Plans Taggert’s bank plans to extend its subprime loans and is exploring new lending methods that will increase its competitive edge.
• Banking Policy Regulation: Lending to Minorities The lenders argue, many minorities take loans which they cannot afford to pay. Some households take mortgage loans with anticipation that the prices for these houses will increase.
• Best Big Bank in Australia & Principal Agent Theory The paper reviewed the possible problems that occurred while the “Nucleus” referral system implementation in the Best Big Bank located in Australia.
• The Analysis of Wells Fargo Bank Actions The Wells Fargo Bank was helping the mining companies to raise enough money to enhance their efficient exploitation of minerals on mountain tops.
• Financial Market Regulation and Bank Activity Limitations The limitations on bank activity vary in countries, there are some similar processes: policies on bank’s capital, and the policies on the connection between banking and business.
• Financial Management and Investment Banking This paper will focus on the primary markets, analyze the functions that investment bankers perform in the traditional process for issuing new securities.
• Mobile Telephony Services Investing in Real-Time Banking Investing in new smartphone technology is a waste of time in poor markets. Investing in services through mobile telephone services seems to be the next big thing.
• Improving Workplace Learning for the Bank Tellers Improving workplace learning for the bank tellers by first identifying the weaknesses or obstacles then developing a strategy towards addressing the weaknesses.
• The Ethical Issues of Western Bank and Trust and Bobby’s Bagels Managers In this paper I am going to examine ethical issues in two companies: Western Bank and Trust and Bobby’s Bagel.
• Geithner’s Bank Plan: Winners and Losers Joshua Zumbrun in his article “Geithner’s Bank Plan: Winners and Losers” in the “Forbes” offers banks to sell their bad assets – the loans and securities they cannot unload in the market.
• The Grew of Financial World Crisis: Global Central Bank As Michael Mandel writes in his article, the financial world crisis flows out of the absence of a global central bank, which could have regulated the world financial movements.
• Banking Bail-Outs and the Housing Market This paper focuses on the impact of the banking bail-out on the housing sector. The US banking bail-outs elicited spirited criticism and resistance from thousands of Americans.
• Bank of America Launching New Online Services Bank of America successfully tested its new mobile banking service on a small-scale basis to determine the acceptability level among customers.
• Abu Dhabi Islamic Bank’s Online Banking Services The purpose of this paper is to analyze modern online banking practices in the UAE, using Abu Dhabi Islamic Bank (ADIB) as an example.
• Macroeconomics Interest Rates and Aggregated Supply: Demand in the Federal Reserve Bank The Federal Reserve Bank makes a decision to increase interest rates regardless of the fact that real wages do not rise.
• Vision Bank’s Intercultural Communication: Problems and Recommendations The selected company for this report is Vision Bank. It provides banking, loans, financial advice, and consultancy services to customers in different regions.
• International Logistics, Business, and Banking Conservative decisions are quite typical in the realm of financial operations for numerous reasons, the high possibility of a failure as a result of the lack of proper testing.
• Central Bank’s Communications Strategy The set of genres and a wide range of meditating technologies associated with the Central bank’s communications strategy can be perceived as portions of local organization action.
• Global Political Economy: World Trade Organization, World Bank, and European Union This essay on global political economy will present answers to the attached questions. The answer to the first question will illuminate the exact functions of World Trade Organization.
• Bank Solutions International’s Technology Gaps and Security Strategy Training of information staff and personnel would be done on a quarterly basis and this would reduce the effect of an outdated approach to problem-solving.
• Global Financial Crisis and Banking System in Australia The recent global financial crisis affected almost all banks in the world with very few banks shielded from this misfortune.
• Human Rights in Israel-Gaza and West Bank Regions The conflict in the Gaza region was a violation of human rights because the sovereignty of the state was not respected by foreign powers.
• Veema Banking Company’s Investment in the UAE This report provides an analysis of the general business environment that Veemah Banking Company will meet during the employment of its investment endeavors in the UAE.
• Grameen Banking System Alleviating Poverty This paper discusses various aspects of the Grameen banking system and focuses on how it has assisted communities, and evaluate its future success.
• Bank’s Performance Financial Regulation Net income which signifies the profits that a bank makes after taxes gives us a direct view of a bank’s performance in terms of its ability to pay dividends as well as retain earnings.
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• Barclays Bank History and Analysis Barclays bank is one of the oldest banks in the world. Its history dates back in the 17th century when, banking services were being introduced in the United Kingdom.
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• US Financial and Banking Reforms History The paper reviews articles that analyze the challenges of the US financial institution in 1832 and explain the significance of the US banking reforms under Nicolas Biddle.
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• Time Management for Students in Bahrain’s Banking This research is aimed to study the opinions and attitudes towards time management among the students at Bahrain University and the country’s financial sector.
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• China’s Asian Infrastructure Investment Bank China’s Asian Infrastructure Investment Bank is an organization intended to support infrastructural development in the region. The US and Japan voiced their disproval of the endeavor.
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• Does Banking Regulation Cause Counterproductive Economic Dynamics?
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• How Does Banking Sector Globalization Affect the Banking Crisis?
• Can Sustainable Banking Help Stimulate Economic Growth in Sub-Sahara Africa?
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• How Does Competition Affect Efficiency and Soundness in Banking?
• Can Central Banking Survive the IT Revolution?
• Are More Competitive Banking Systems More Stable?
• Does Banking Consolidation Lead to Efficiency Gains?
• Are Recoveries From Banking and Financial Crises Really So Different?
• What Determines the Banking Sector Performance in Globalized Financial Markets?
• Can the Chinese Banking System Continue to Grow Without Sacrificing Loan Quality?
• Are Systemic Banking Crises in Developed and Developing Countries Predictable?
• What Drives Banking Sector Fragility in the Eurozone?
• Can Islamic Banking Increase Financial Inclusion?
• Does Banking Sector Development Affect Economic Growth and Inflation?
• What Are the Customer Perceptions Towards Banking Industry Marketing?

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This essay topic collection was updated on January 5, 2024 .

RESEARCH REPORT

Top 10 banking trends for 2024

Banking on AI

5-MINUTE READ

January 8, 2024

• Banking stands on the threshold of a new era, similar to the start of the Digital Age.
• Like digital, the Age of AI is likely to have a transformative impact on the industry, affecting roles in virtually every part of the bank.
• Not only is the rapid adoption of gen AI the most important trend for banks in 2024—it’s also shaping the other nine trends.

The age of AI

A quarter of a century ago, banking stood on the verge of the Digital Age. The internet was starting to reveal its potential and most bankers had a strong premonition that far-reaching change was coming. Today we feel a similar sense of awe as we contemplate the potential of gen AI, especially when powered by the cloud and rapidly expanding data capabilities.

We’re confident the age of AI will change banking and many other industries—exactly how, we’ll only know in retrospect. No part of the bank—and few if any roles within it—will remain untouched. 

Every year we share our perspective on the trends most likely to shape the future of the industry in the next 12 months and beyond. It should be no surprise the number one trend this year is the rapid adoption of gen AI, nor that it’ll have a transformative impact on the other nine trends bankers will need to confront in the months to come.

We’re now on the threshold of the Age of AI. Banking, like most other industries, will never be the same. The challenge is to ensure it’s a force for good that benefits our organizations, our people and all humankind.

10 trends will change banking in 2024

1. the rise of gen ai.

Banks are likely to benefit more than other industries—our analysis indicates productivity could rise by 20–30% and revenue by 6%. Banks will need to not only utilize cloud and data effectively, but also to rethink work and talent.

2. Capturing the digital dividend

While most banks have mastered digital, it has come at the cost of close customer relationships. Banks will need to focus on finding ways to have meaningful conversations with customers across these channels – AI may hold the key.

3. All the risk we cannot see

In 2024, banks will be confronted by a variety of risks—some familiar, others less obvious. We've identified five that deserve particular attention. Planning for the unplanned will pay dividends.

4. A whole new way of working

Banks are realizing that people are just as important as technology to the success of their human + machine initiatives. They’re putting talent at the center of their strategies as they reimagine the future of work.

5. The power of pricing

Banks have always known optimized pricing can hugely impact their top and bottom lines. Now they’re starting to combine intuition with gen AI and more comprehensive data to turbocharge scenario planning and move closer to personalized pricing.

6. Time to think cloud first

Most banks’ early experiences of cloud were like that of a novice driver put behind the wheel of a Ferrari: they tried to drive it like a family sedan. Lately they're moving up through the gears and discovering what cloud can really do for them.

7. Regulation recalibrated

Bank regulations have ballooned since the 2008/9 Financial Crisis. We expect more collaboration among banks, central banks and regulators to work more effectively together.

8. From technology to engineering

How does the role of technology in banking evolve? A subtle change, with major organizational implications: the shift from a technology management to an engineering mindset.

9. The key to the core

New approaches and technologies—not least of which is gen AI and its ability to swiftly convert outdated code—are combining to finally free banks from the limitations of their aging core systems.

10. Beyond Six Sigma

Banks have historically employed re-engineering and cost-out thinking to optimize operations and experiences—the limitations were clear. Gen AI’s learning ability breaks this barrier and ushers in a new way of thinking that goes beyond Six Sigma.

Gen AI will undoubtedly be disruptive, but we’re confident that most of this will be positive. Our recent Art of AI Maturity survey on the topic—involving 1,600 C-suite executives at many of the world’s largest companies—found that 42% of those leading the way have already achieved a return on their AI investments that exceeds their expectations.

But the secret to these outcomes isn’t AI—it’s how it’s being used. It’s as much about people as it is about technology and as much about strategy as implementation. That’s a lot of balls to keep up in the air. But banks that master this juggling act will look back in years to come and toast to 2024.

As we enter the Age of AI, many bankers feel the same sense of awe that their counterparts did a quarter of a century ago as they stood on the verge of the Digital Age.

Michael Abbott / Global Banking Lead

Michael Abbott discusses how generative AI could reshape financial services in 2024 in this American Banker podcast.

Frequently asked questions

Is gen ai just another technology fad.

The speed at which gen AI is being adopted by most organizations in nearly all industries, and the massive escalation of the power of the technology, are convincing indicators that it is here to stay—and will have a profound impact on banking.

What benefits does gen AI offer banks?

Gen AI will make bank professionals more productive and improve the efficiency of banks’ operating model. However, we believe its biggest impact will be to increase revenue and loyalty by improving banks’ ability to understand and respond to individual customers’ intent and financial goals.

Where in the average bank is AI likely to have the greatest positive impact?

There are few functions and roles that will not be affected; our analysis indicates 73% of banking roles have a high potential to be either automated or augmented. We’ve already identified about 50 promising use cases for banks.

How should banks include talent in their gen AI strategy?

People should be at the very center of every gen AI strategy. New skills are needed to design, build, implement and train gen AI – banks will need to get used to a new way of working.

Related insights

• Top 10 banking trends for 2023
• Art of AI maturity
• Banking Consumer Study

Michael Abbott

Senior Managing Director – Global Banking Lead

The World Bank Demonstrates Depth of its Capital Markets Investor Base with Dual Tranche USD 6 Billion Sustainable Development Bond Transaction

WASHINGTON, D.C., April 3, 2024 – The World Bank (International Bank for Reconstruction and Development, IBRD, Aaa/AAA) today priced two Sustainable Development Bonds, raising a total of USD 6 billion from a USD 3 billion 2-year bond maturing in April 2026 and a USD 3 billion 7-year bond maturing in April 2031.

The transactions attracted over 260 orders totaling more than USD 12.7 billion. The dual tranche format, with points on the short and longer end of the yield curve, drew a globally diverse and broad base of fixed income investors and their investment strategies.  As is common with World Bank benchmark transactions, leading investor groups included central banks and official institutions, including sub-national and municipal entities, as well private sector investors including bank treasuries, pension funds, insurance companies and asset managers.

HSBC Bank plc, J.P. Morgan Securities plc, Merrill Lynch International, Wells Fargo Securities, LLC are the lead managers for both transactions. The bonds will be listed on the Luxembourg Stock Exchange.

The 2-year tranche priced at a spread versus the reference US Treasury of +8.5 basis points, resulting in a semi-annual yield of 4.764%, and the 7-year tranche priced at a spread versus the reference US Treasury of +15.3 basis points, resulting in a semi-annual yield of 4.521%.   

“This dual tranche transaction mobilized over 260 investor orders, demonstrating the wide breadth and depth of support that we enjoy from capital markets investors” said Jorge Familiar Vice President and Treasurer, World Bank .  “ This globally diverse stakeholder group is very important to the World Bank by providing financial support for its efforts to end extreme poverty and boost prosperity on a livable planet.”

Investor Breakdown by Type

Investor Breakdown by Geography

Lead Manager Quotes

“Congratulations to the World Bank team, returning to the bond market with a dual-tranche transaction and printing an impressive USD 3 billion 2-year and USD 3 billion 7-year bond on the back of a combined orderbook over USD 12.7 billion. This high-quality investor support allowed for their largest issuance since April 2021 and the largest USD dual tranche to date,” said Adrien de Naurois, Head of EMEA IG Syndicate, BofA Securities / Merrill Lynch International.

“Today’s US dollar dual-tranche transaction was a great result for the World Bank team. The trade highlights the quality and global appeal of the World Bank name and its Sustainable Development Bond format, taking a combined issue size of USD 6 billion and attracting a strong and diverse orderbook on both the 2-year and 7-year tranche. HBSC was delighted to be a part of the transaction,” said Asif Sherani, EMEA Head of Syndicate and Head of Public Sector DCM, HSBC .

“The World Bank was quick to take advantage of the constructive market tone following the holiday break, moving ahead with the first Sovereign, Supranational and Agency (SSA) US dollar new issue of the quarter.  With this well-timed transaction, the World Bank was able to achieve the largest US dollar outing of the year in the SSA market, choosing two under-supplied tenors and launching a USD 6 billion combined size across the two maturities.  Congratulations to the World Bank team for this impressive transaction,” said Sarah Lovedee, Head of Supranational DCM, J.P. Morgan.

“Utilizing good timing sense, the World Bank issued their first dual-tranche USD benchmark since March 2022. Robust demand allowed issuer to garner an orderbook more than USD 12.7 billion to price a combined USD 6 billion 2 & 7-year transaction. This issue becomes, the largest USD SSA transaction priced this year, an impressive result.  Wells Fargo is delighted to be part of this trade,” said Carlos Perezgrovas, Head SSA Origination, Wells Fargo Securities .

Transaction Summary

About the World Bank The World Bank (International Bank for Reconstruction and Development, IBRD), rated Aaa/AAA (Moody’s/S&P), is an international organization. Created in 1944, it is the original member of the World Bank Group and operates as a global development cooperative owned by 189 nations. The World Bank provides loans, guarantees, risk management products, and advisory services to middle-income and other creditworthy countries to support the Sustainable Development Goals and to end extreme poverty and promote shared prosperity. It also provides leadership to coordinate regional and global responses to development challenges. The World Bank has been issuing sustainable development bonds in the international capital markets for over 70 years to fund programs and activities that achieve a positive impact. More information on World Bank bonds is available at  www.worldbank.org/debtsecurities .

World Bank bonds support the financing of programs that further the Sustainable Development Goals (SDGs). World Bank bonds are aligned with the Sustainability Bond Guidelines published by the International Capital Market Association and as such support the financing of a combination of green and social, i.e., “sustainable development” projects, programs and activities in IBRD member countries as described in the  World Bank Sustainable Development Bond Framework . The World Bank is also a member of the Executive Committee of the Green Bond, Social Bond, and Sustainability Bond Principles. A key priority for the World Bank’s capital markets’ engagement is building strategic partnerships with investors to promote the importance of private sector financing in sustainable development. The World Bank’s Sustainable Development Bond  Impact Report  describes how the World Bank engages with investors on the SDGs and raises awareness for specific development challenges.

Disclaimers This press release is not an offer for sale of securities of the International Bank for Reconstruction and Development ("IBRD"), also known in the capital markets as "World Bank". Any offering of World Bank securities will take place solely on the basis of the relevant offering documentation including, but not limited to, the prospectus, term sheet and/or final terms, as applicable, prepared by the World Bank or on behalf of the World Bank, and is subject to restrictions under the laws of several countries. World Bank securities may not be offered or sold except in compliance with all such laws. The World Bank Sustainable Development Bond Framework, the World Bank’s Sustainable Development Bond Impact Report, and the information set forth therein are not a part of, or incorporated by reference into, the offering documentation.

Net proceeds of the securities described herein are not committed or earmarked for lending to, or financing of, any particular projects or programs. Payments on the securities described herein are not funded by any particular project or program

Contact Heike Reichelt, The World Bank +1 202 477 2880 [email protected]

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Türkiye | Weekly Banking Tracker. March 29, 2024

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Published on Friday, April 5, 2024

In the week ending by March 29th, foreign currency adjusted weekly credit growth continued to accelerate from 0.7% to 1% due to commercial credits of public banks and consumer credit cards in the sector. Total credits’ 13-week annualized trend rose from 34.8% to 35.4%.

• Key points:
• TL commercial credits’ weekly growth accelerated in public banks with SME lending. Consumer credits’ weekly growth (excluding credit cards) decelerated in both public and private banks, led by the decline in general purpose loans of the sector. Consumer credit cards on the other hand accelerated strongly in both public and private banks.
• Weekly growth of FC credits was strong led by the non-SME lending of public banks. The accelerating growth rate seen in FC credits since Oct’23 pushed its trend rate to the highest level since 2013.
• TL deposits fell by TL 41.4bn, mainly caused by the fall in TL time deposits of households and corporates. After 3 weeks of strong upward movements, residents’ FC deposits fell by $2.2bn led by the decline in corporates USD deposits by $3bn compared to the increase in households’ USD deposits by almost $1bn.
• Credit interest rates continued to rise sharply for the 3rd week in a row (following the latest update in credit growth caps and the CBRT’s rate hike by 500 bps on March 21st). Commercial credit rates rose by another 427bps to 67.6% (a total of 1226 bps in 3 weeks). Consumer rates rose also by another 180bps to 78.7% (a total of 1704 bps).
• As released by the CBRT, TL deposit rates rose by 529bps to 57.3%.

Documents to download

Report (pdf).

• Deniz Ergun BBVA Research - Senior Economist

Geographies

• Geography Tags
• Interest rates
• Macroprudential regulation
• Banking and Financial Systems

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