Journal of Financial Services Marketing (2021) 26:107–121

https://doi.org/10.1057/s41264-020-00082-w

ORIGINAL ARTICLE

Adoption of digital banking channels in an emerging economy:

exploring the role of in‑branch efforts
Simran Jit Kaur1 · Liaqat Ali1 · M. Kabir Hassan2 · Md Al‑Emran3

Received: 22 April 2019 / Revised: 8 November 2020 / Accepted: 19 November 2020 / Published online: 17 February 2021
© The Author(s), under exclusive licence to Springer Nature Limited part of Springer Nature 2021

Abstract
The aim of this qualitative study is to analyse the role of in-branch efforts of banks on migrating customers from branch
banking to digital banking in India. In-depth semi-structured interviews were conducted with bank executives represent-
ing senior management from public and private sector banks in India. Qualitative content analysis technique was used to
analyse the data. Varieties of responses received during interviews were clubbed into four main themes based on data reduc-
tion, display, and conclusion-drawing processes. In-branch communication with customers, digital transformation of the
branch, customer-centric initiatives, and redefined role of branch staff hold the potential to bridge the customers’ migration
to digital banking. The paper suggests that the key identified factor in improving digital banking acceptance in India is the
requirement of integrated cultural and organisational changes at the bank’s level to gain the customers’ confidence and trust
in digital banking.

Keywords  Digital banking · Communication · Branch transformation · In-branch efforts · Branch staff

Introduction a major chunk of customers to modern banking channels

(Howcroft et al. 2002). However, the expected reduction in
In the last few decades, huge investments have been made operating expenses has not been achieved yet by the banks
by banks in technology to reduce their cost and improve as they are still struggling to move customers towards digital
customer’s experience. Banks are offering digital banking banking channels (Sarel and Marmorstein 2002; DeYoung
channels such as ATM, Internet banking, mobile banking, et al. 2007; He et al. 2019). The situation is much critical
digital banking kiosks to deliver best quality services to for emerging countries such as India where only 16% of the
customers with the expectation of increasing profitability rural population use the Internet for making digital payments
and reducing operating cost (Sarel and Marmorstein 2003). (Pandey 2018).
It is observed that the bank’s costs reduce with the shift of According to the report released by Gartner, IT expendi-
ture by securities and banking firms in India has reached
$9.1 billion with a growth of 11.7% (Shetty 2017). Further,
* Liaqat Ali the total IT expenditure is expected to reach $11 billion in
draliliaqat@gmail.com 2020 (Gartner 2019). However, the return on investment of
Simran Jit Kaur Indian banks in technology is just 12% of US banks due
sjkbawa@gmail.com to the low rate of digital banking acceptance (Sinha and
M. Kabir Hassan Mukherjee 2016). At the same time, it is worth mentioning
mhassan@uno.edu that the cash transactions cost is 1.7% of Indian GDP which
Md Al‑Emran puts a huge burden on the economy (Bakshi 2016). In this
malemran@mcneese.edu regard, the Government of India initiated the ‘Digital India’
1 campaign in 2015 to empower people digitally. The success
School of Management Studies, Punjabi University, Patiala,
Punjab, India of the ‘Digital India’ campaign is apparent from the fact that
2 more than a billion Indian citizens have a digital identity
Department of Economics and Finance, University of New
Orleans, New Orleans, LA 70148, USA with 560 million Internet connections (Kumar 2019). The
3 purpose of digitisation is to bring disconnected rural remote
McNeese State University, Lake Charles, LA 70609, USA

Vol.:(0123456789)

108 S. J. Kaur et al.

regions into the formal financial sector through electronic and antecedent variables that matter to customers while
banking channels which in turn will contribute to economic using digital banking channels or the factors impacting
development. Digital banking mediums help to connect the the intention of customers’ to use the modern banking
underserved masses with mainstream banking system by channels (Montazemi and Qahri-Saremi 2015; Szopiński
offering various innovative banking services. The modern 2016; Alalwan et al. 2017; He et al. 2019). But surpris-
mobile banking apps also enable customers to use non- ingly, rarely a study in India has given attention to study
financial services. However, due to the lack of awareness the impact of the bank’s initiatives within the branch to
and knowledge, these services have not been fully utilised encourage customers to adopt modern banking channels.
by customers (Shaikh et al. 2020). Certainly, there is a dire The present study tries to close this research gap by
need to positively influence customers about the usability of answering the following research question:
modern banking channels and persuade them to migrate to
RQ: How In-branch experience and technological
digital channels (Figs. 1 and 2).
initiatives can contribute to the adoption of digital
Banks in India need to understand that making huge
banking channels by customers.
investments in technology is not enough unless most bank
customers adopt it for banking transactions. As rightly To answer this research questions, we draw on TAM
argued by Shaikh and Karjaluoto (2016) that digital bank- (technology acceptance model) to analyse how in-branch
ing is much more than an innovative banking channel and efforts of banks can contribute to enhancing customers’
a convincing marketing strategy. The term digitisation has perceived usefulness (PU) and ease of use (PEOU) which
brought a significant change in how banks understand and positively influences customers’ attitude towards technol-
satisfy its customers’ needs. In India, efforts have been made ogy acceptance. Also, the analysis is guided by additional
by the banks to persuade customers to adopt digital bank- antecedents’ variables identified by extended TAM pro-
ing channels such as intensive digital marketing campaigns posed by various researchers and scholars in the context
to educate customers about modern channels, but still, the of adopting self-service banking technology.
adoption rate is not as expected (Patel and Patel 2018). Since The empirical data for the qualitative study are based
bank branches provide an opportunity to the bank to commu- on in-depth interviews conducted with 22 bank executives
nicate and persuade customers personally by demonstrating from public and private sector banks in northern urban
the proposed benefits of adopting modern banking chan- India. The recent report by Vater et al. (2019) strongly
nels, the present study exhibits the need for Indian banks highlights the struggle for banks at present to migrate
to focus upon implementing serious in-branch effort. It is customers to digital channels. Due to huge investments
the high time for banks to identify cost-effective in-branch involved in the digital banking platform, ensuring the
strategies to connect the masses with digital banking chan- adoption and usage of these channels is an important goal
nels, though this area is under-researched. In this regard, of the banks. The study elucidates the need to transform
the present study attempts to evaluate the bank executives’ future bank branches by identifying cost-effective strate-
perceptions regarding the effectiveness of in-branch efforts gies and segmenting the branch customers on the basis of
of banks to persuade the customers to adopt and use digital their banking needs and preferences. The present study
banking channels. contributes to the literature by studying how personali-
The earlier studies conducted in the area of digital sation and in-branch initiatives should be strengthened
banking have mainly explored the attitude of customers by the bank managers to build customers’ initial trust in

Fig. 1  Research framework
(adapted from Davis 1989; Lee
et al. 2007; Yap et al. 2010)
Adoption of digital banking channels in an emerging economy: exploring the role of in-branch… 109

digital banking channels. The study also contributes to adoption and use of digital banking channels from the con-
identifying various integrated cultural and organisational sumer end. Apparently, in high-income economies, 91%
obstacles particularly in public sector bank branches of adults use digital payment method, while in develop-
which hinder the customers’ adoption of digital bank- ing economies just 44% of adults make digital payment
ing. The study begins with a review of the literature on through their account (Global Findex Database 2017).
customer technology acceptance for banking transactions. India is an emerging economy wherewith the launch
In the later section, we describe the conceptual frame- of digitisation campaign (2015) and implementation of
work for analysing interview data based on TAM (Davis demonetisation (2016) the significant chunk of the popula-
1989) and its extensions propounded in context of adopt- tion is shifted quickly from traditional banking channels
ing self-service banking technology, followed by research to digital channels. However, education, lack of infra-
methodology section. The following section describes the structure and strong Internet connectivity are the issues
findings in terms of identified themes and concludes with which hinder the adoption of digital banking channel in
the discussion of findings. India (Tiwari 2019). As per statistics, 80% of Indians have
a bank account (The Economic Times 2018a, b). How-
ever, World Bank reported (2017) that 48% of the total
Status of digital banking adoption in India 310 million accounts opened in India from 2014 to 2017
are inactive. The lower than anticipated regular usage of
Technology has transformed the banking industry all over digital mediums for banking transactions calls for more
the world. However, the adoption rate of technology- in-depth and critical research on formulating the strategies
enabled banking services varies across different countries and practices to migrate customers to technology-enabled
(Takieddine and Sun 2015). In India, almost all banks offer banking channels based on the factors that matter to cus-
digital banking services to their customers as a strategic tomers the most.
tool to survive in the market (Safeena et al. 2014). With
the growth of investment in technology by financial ser-
vice providers in India, it becomes highly important to
understand the perceptions of customers and designing the
Conceptualisation of in‑branch efforts
strategies accordingly (Roy et al. 2017).
and technology acceptance
Post demonetisation (invalidation of large currency
The literature on digital banking is replete with examining
notes) Government of India has launched various efforts to
the customers’ attitude (Pikkarainen et al. 2004; Eriksson
migrate customers to digital payment channels from cash
et al. 2005; Ibrahim et al. 2006; Walker and Johnson, 2006;
(e.g. e-Wallets, Unified Payment Interface, Aadhaar-ena-
Poon 2007; Alalwan et al. 2016; Sánchez-Torres 2018) and
bled payment system, etc.). As per the report of Reserve
factors affecting the acceptance of digital banking services
Bank of India (RBI) on digital transactions, the total
(Montazemi and Qahri-Saremi 2015; Szopiński 2016; Alal-
volume of non-cash transaction in India has reached 1.9
wan et al. 2017). Few studies have also explored the impact
billion in 2016–2017 from 228.9 million in 2004–2005.
of technology on the bank-customer relationship (Harden
Despite this rapid growth, the largest public sector bank
2002; Durkin and Howcroft 2003). Further, Karjaluoto et al.
(SBI) in India has reported only 5.86% mobile banking
(2018) highlighted the impact of investment in mobile finan-
users and 9.69% of Internet banking users in its recent
cial services apps (MFSAs) on improved bank-customer
annual report 2016–17. Thus, only informing or spreading
relationships. Even in India vast number of studies have been
awareness would not shift customers towards digital bank-
conducted on customers’ behavioural factors (Malhotra and
ing but requires changes in the implementation process
Singh 2010; Singh and Kaur 2011; Sinha and Mukherjee
and successful implementation depends upon how well
2016) with regard to technology acceptance in the bank-
these technological advancements are communicated to
ing industry. However, very scanty literature is available
customers (Sarel and Marmorstein 2002).
on understanding the significance of in-branch efforts of
The point of utmost importance is that in India the
banks to migrate customers to adopt digital banking chan-
challenge is not just migrating customers from traditional
nels. Impact of in-branch communication with the custom-
banking channels to digital channels but also to connect
ers about technology-driven efforts has received hardly any
the unbanked masses with the mainstream banking system
attention of scholars in India.
using digital finance. Undoubtedly, digital mediums have
In reference to the present study, the in-branch efforts
increased the level of financial inclusion globally from
are “the services provided at branch level to make custom-
51% in 2011 to 69% in 2017 (Global Findex Database
ers comfortable with digital channels by imparting first-
2017). But the fact which differentiates the developing
hand knowledge of technology-enabled banking services”.
and emerging economies from developed economies is the

110 S. J. Kaur et al.

Sarel and Marmorstein (2002) were among the pioneering migrate customers to digital channels. The authors revealed
researchers who highlighted the role of communication at that banks need to identify the customer segments as per
branch level to migrate customers to digital banking chan- their banking needs and channel preference to create a
nels. They opined that effective communication with cus- unique channel mix. Similarly, the cognizant survey (2016)
tomers at the branch for persuading them to use digital bank- reported that bank branches can serve as the best platform
ing channels can make a difference in their perception and to interact with the customers and influence them positively.
attitude. It is worth mentioning that Former RBI governor The best customer experience at branch travels across other
Raghuram Rajan (2015) had also emphasised the signifi- banking channels. Dallerup et al. (2018) defined various
cance of communicating the banking products and services formats of smart branches in a digital era based on loca-
to customers in regional language to connect the bank with tion. Four categories of bank branches such as Box branch,
its customers: Standard branch, Segment branch and Flagship branch are
suitable for areas with specific attributes. At the same time,
It is the responsibility of the government and the
branch employees need to be trained to perform multiple
banking sector to provide banking facilities to those
analytical tasks to improve bank performance.
who have money but have no access to formal bank-
Schofield and Chew (2013) revealed that most of the
ing channels in a language that they would under-
branch visits in Asian countries involve routine banking
stand. We should also arrange for financial literacy in
transaction which increases the cost and can easily be per-
the language that they understand.
formed online. Thus, the biggest challenge for the banks
Previous studies have already reported high bank is to divert the customers from branch banking to digital
branch footfall in Indian banks. A survey report by Scho- banking in an interactive way. The fact that in the era of the
field and Chew (2013) on future of bank branch in Asian technology bank branches will continue to serve custom-
banks established that an average bank customer in India ers’ high-value and complex banking needs is well estab-
makes 28 branch visits in a year which is very high as lished in the literature (Luchetti 2017; Joyce 2017). Since the
compared to developed countries like Australia, UK and strong human relationship is the base of business in most of
the USA. Similarly, Avaya (2017) surveyed 5000 banking the Asian cultures (Rotchanakitumnuai and Speece 2003),
customers from UK, Australia, UAE and India. The survey the study attempts to concentrate on efforts to improve the
reports that 51% of Indian bank customers still prefer to online banking acceptance by maintaining the human touch.
visit their branch regularly which is highest among the The study was initiated to highlight the need for banks to
four countries surveyed. recognise the potential of in-branch initiatives to persuade
Further, Marous (2013) identified that encouraging cus- customers to use technology-enabled banking channels
tomers to change the current banking channel is a difficult and how banks can improve its online banking customer
venture. Similarly, Karjaluoto et al. (2019) asserted that base by convincing its existing branch visiting customers
customers’ intention to use contactless payment systems about the usefulness of digital banking channels. There is
is highly influenced by habit and it is hard to change such no doubt that digital channels hold the potential to improve
behaviours. The best alternative at this stage that the bank customer experience and banks have already invested hugely
could have is to set up an optimal channel mix to meet in technology.
customers banking needs. Banks can educate their cus- The acceptance rate of digital banking channels in India
tomers about online banking channels in the branch or is much lesser than anticipated (Patel and Patel 2018). The
online using interactive kiosks and tablets. Incentives for question is why banks are still struggling to move custom-
using online banking channel can persuade the customers ers to digital banking channels even after making a huge
to use these channels in the future (Accola 1996). Further, investment in technology. Even in the USA, 38% of cus-
Brunier et al. (2015) opined that banks can reduce their tomers reported preferring bank branches or ATMs to other
cost and improve technology adoption rate by educating digital banking channels in a recent survey conducted by
customers using in-branch interactive screens and branch McKinsey Consumer Insight (2016). The matter of fact is
employees can make customers familiar with technology- that the company cannot always allow its customers to fol-
enabled banking services during their visit in the branch. low their preferences as this leads to an increase in the cost
They further reported that in the era of technology the (Myers et al. 2004). This scenario brings light to focus on
significance of bank branch cannot be overlooked since directing the customers to adopt the right channel mix for
customers still prefer branch network for taking highly products and services. The first thing that banks can start
specialised advisory services to buy high-value and com- with is transforming or modernising the bank branches to
plex products such as investment and mortgage. satisfy the needs of customers (Cognizant 20–20 Insights
In a recent study, Yu and Hughes (2016) highlighted the 2016). More specifically in India where the acceptance rate
significance of in-branch ATMs and kiosks to successfully is already so low and digital banking is in its nascent stage.
Adoption of digital banking channels in an emerging economy: exploring the role of in-branch… 111

TAM and digital banking adoption and Madhavaiah 2015). Lack of required infrastructure and
connectivity and trust has been reported as the major inhibi-
In order to analyse the impact of in-branch efforts on the tor for technology adoption in India (Nath et al. 2013; Sinha
adoption of digital banking in India, the study draws upon and Mukherjee 2016). In previous studies, traditional service
the technology acceptance model (TAM) (Davis 1989). This quality in the bank has been viewed as an enabler to build
is the highly accepted model to study the users’ attitude to customers’ trust in e-banking services which in turn influ-
technology by analysing perceived usefulness (PU) and per- ences customers’ adoption of e-banking. For example, Yap
ceived ease of use (PEOU), the two main determinants of et al. (2010) were the pioneer researchers who explored the
users’ behaviour towards technology. Here, perceived use- impact of offline service quality provided in the branch on
fulness (PU) is the degree to which the potential customer the adoption of digital banking channels. Later on, Chiou
believes the new technology to improve his/her performance and Shen (2012) highlighted the significance of offline envi-
and perceived ease of use (PEOU) is concerned with pro- ronment on Internet banking acceptance.
spective customers’ perception that new technology will Following the same thought, we proposed research frame-
reduce the efforts required (Davis 1989). TAM has been very work for our study to analyse the bank executive’s percep-
well accepted and validated in a number of studies world- tions of how in-branch efforts of banks in India can influence
wide in the context of technology adoption (Taylor and Todd the adoption of digital banking based on some key identified
1995; Wang et al. 2003; Pikkarainen et al. 2004; King and factors from the literature to make it more relevant in the
He 2006). Therefore, TAM provides a valid approach for Indian context. Table 1 provides an overview of the pre-
our study to understand the adoption of digital banking in dictors of technology adoption. In order to shift customers
the Indian context. Also, the analysis is guided by additional towards digital banking channels, we identify some most
antecedents’ variables identified by extended TAM proposed significant factors for the adoption of technology by cus-
by various researchers and scholars in the context of adopt- tomers in India. These factors were further used for coding
ing self-service banking technology. the interview responses and identifying relevant themes for
Our review of related studies from developing countries analysis purpose.
mainly demonstrates the extension of technology accept-
ance model (TAM) (Davis 1989) based on cultural attributes
and individual characteristics of consumers, as it has been Data methodology
believed by various researchers that basic TAM ignores the
impact of external influences such as cultural and infrastruc- The current study attempts to qualitatively analyse the per-
ture availability on adoption pattern. For instance, evidence ceptions of the bank executives from public and private sec-
from the Middle East as provided by Sukkar and Hassan tor banks in India, working at branch level and well-versed
(2005) highlights the need to include cultural factors from with the bank’s operational and marketing strategies. Face-
the consumer side and technical quality from bank side to to-face interviews were conducted to collect the responses
the existing TAM in order to make it more relevant in the from the respondents between October 2017 and February
context of developing countries. In the same line, Tobbin 2018. The purpose is to get deeper insights into what bank
(2012) identified two additional variables such as economic executives perceive, experience and believe regarding the
factor and trust apart from TAM variables that matter to effectiveness of in-branch efforts on consumers’ attitude to
unbanked customers in Ghana while adopting mobile bank- adopt technology-enabled banking channels.
ing services. There are two reasons for selecting the qualitative
Evidence from India brings light on the impact of com- approach: the dearth of empirical research (Hirschman 1986)
puter self-efficacy, i.e. the ability to use computers, qual- in India on exploring the potential of in-branch efforts to
ity of Internet connection, Internet banking awareness and promote digital banking channels and the flexibility which
social influence apart from basic TAM variables on custom- qualitative approach extends to deeply investigate complex
ers’ adoption of Internet banking (Sharma and Govindaluri relationships (Healy and Perry 2000).
2014). In another study conducted by Nath et al. (2013) from
the perspective of bank employees, three additional factors, Sample selection
namely computer self-efficacy, social influence, technologi-
cal facility in terms of infrastructure, were reported as an Bank executives were selected from the public sector (State
extension to TAM variables in the Indian context. Banu et al. Bank of India, Punjab National Bank) as well as the pri-
(2019) identified ease of use and self-efficacy as major driv- vate sector (Axis and HDFC). Bank executives have been
ers of technology adoption in India. Researchers reported a selected as respondents as they possess a better understand-
direct link between trust, offline service quality and adoption ing of ground reality due to extensive experience of the
of technology (Patricio et al. 2003; Lee et al. 2007; Bashir banking industry. Geographically, the study concentrates on

112 S. J. Kaur et al.

two states from the Northern part of India where information (1) Their perception regarding technological interven-
technology (IT) hubs of north India are situated. As in most tions in the banking industry and how technology has
of the qualitative studies, purposive sampling technique was changed working experience in the bank;
used to select the respondents from various banks. In total, (2) In-branch efforts undertaken by the bank for persuading
35 bank executives representing senior management from customers to use innovative digital banking channels if
public and private banks were approached, but 13 bankers any;
refused to participate in the study. Sample organisations (3) Can these efforts bring a positive change in customers’
(Banks) selected for the study represent the top banks in attitude and perception towards technology-enabled
India in terms of market share and IT investment. banking channels and how?

The interviews were semi-structured in nature, and vari-

Data collection and analysis ous other related questions were asked loosely to allow flex-
ibility and get maximum insights. Appendix Table 3 gives
In total 22 face-to-face interviews were conducted, out of an outline of the semi-structured interview.
which 12 were with public sector managers and 10 with Qualitative content analysis technique (Mayring 2000)
private sector bank managers. The high response rate (62%) was used for the analysis of interview data. Extensive
indicates the willingness of bankers to share their experi- notes were prepared during interview sessions. Varieties of
ences and perceptions on the topic. One interviewee from responses received during interviews were clubbed into four
public sector bank had previous work experience with a main themes using NVIVO 9 software, based on data reduc-
private sector bank. This helped to attain the unique set of tion, display and conclusion-drawing processes (Miles and
perspectives regarding differences among in-branch prac- Huberman 1984).
tices of public and private sector banks in India. Most of the For the analysis purpose, both inductive and deductive
interviews lasted for an average of 25–30 min. Interviews technique was used for identifying themes. Firstly, using the
were conducted in the English language. Most of the bank deductive technique the TAM aspects were explored based
managers were not comfortable with the tape recording of on the research question and theoretical concepts (Davis
the interview, so detailed notes were prepared to record the 1989; Lee et al. 2007; Yap et al. 2010) and then the codes
responses of the managers. During the fieldwork, it was were identified. Following the coding process, the second,
observed that most of the bank branches were quite busy and third and fourth author refined the codes based on their
the staff was fully occupied specifically in case of the public suggestions but did not identify new codes. An inductive
sector banks. Due to heavy rush and long queues in most approach was used to connect the codes and identify themes
of the bank branches, it was hard to take the time of bank relating to in-branch communication, branch staff roles, cus-
managers for interview. However, with repeated visits and tomer-centric initiatives and digitally driven branches with
strong potential of the subject matter for improving banking the human touch. Table 2 provides an overview of the coding
experience, we managed to get insights of bank managers criteria and theme identification process of the study.
on the topic.
During interview sessions with bank executives basically,
three areas were covered

Table 1  Predictors of technology adoption

Construct Definition Reference studies

Perceived ease of use The degree to which the potential customer believes Davis (1989), Pikkarainen et al. (2004), Nath et al. (2013), Roy
the new technology to improve his/her performance et al. (2017)
Perceived usefulness Concerned with prospective customers’ perception Davis (1989), Nath et al. (2013), Roy et al. (2017)
that new technology will reduce the efforts required
Computer self-efficacy Customers’ ability to use computer applications Wentzel et al. (2013), Nath et al. (2013)
Branch Service Quality Traditional service quality at the bank branch Yap et al. (2010)
Trust in Bank Trust in services provided by the physical bank Lee et al. (2007), Yap et al. (2010), Chiou and Shen (2012),
Yiga and Cha (2014), Bashir and Madhavaiah (2015), Sinha
and Mukherjee (2016);
Trust in E-banking Trust in online banking services provided by the bank Bashir and Madhavaiah (2015), Sinha and Mukherjee (2016)
Adoption of digital banking channels in an emerging economy: exploring the role of in-branch… 113

Findings Our research findings also highlight that the introduction

of new banking channels requires bankers to gain expertise
In‑branch communication with customers not only in banking technology but also in communication
skills to educate customers to use innovative banking chan-
Communication at the branch to educate customers about nels, as customers’ trust in online banking is the positively
online banking channels with either self-service technology related to effective communication among bank and its cus-
like Internet kiosks or specialised bank staff was the domi- tomers (Mukherjee and Nath 2003). One of the interviewees
nant factor reported by interviewees. Majority of interview- commented:
ees believe that effective communication at branch level to That first experience of customers with online channels
guide customers for using technology to fulfil their banking defines their future chances of using it and effective
needs can bring a positive change in customers’ perception, interactive sessions at bank branch have great chances
specifically in rural and semi-urban areas where customers to make this first experience positive…. But again, it
rarely have hands-on experience in computers and Internet. requires dedicated expert staff which most of our bank
It is worth mentioning that no direct question regarding branches lack (Banker 19).
communication was asked to respondents during the inter-
view. However, 13 out of 22 bankers agreed that communi- Another concerning issue which bank executives brought
cation with customers at the branch is a key effort to bring up during the study is using different communication
positive change in current trends. A typical comment from approaches for different segments of customers. Various
Banker 1 was: segments of bank customers exist based on their attitude
and expected benefits (Machauer and Morgner 2001). The
There is no better approach than interacting with cus- interview data suggest that with limited trained experts it is
tomers about modern technology-based banking chan- not feasible for banks to target all branch visiting customers
nels; it is as much important as handling their (cus- for migrating to online banking channels. One bank execu-
tomers) queries atthe branch. As banks have already tive from a private sector bank suggests that branch manag-
invested hugely in technology…. its acceptance is ers can segment customers based on customers’ frequency
pertinent to banks. of branch visit. High-cost customers who visit branch more
Most of the bankers in rural and semi-urban areas frequently can be targeted on the priority basis with high-
were highlighting the need for live demonstration at bank touch and demonstrative communication approach to reduce
branches and communicating the benefits of online banking the workload significantly. Thus, the challenge for banks is
channels to customers. But surprisingly, when asked about to identify the most appropriate mode of communication to
live demonstration practices at their institutions, there were interact with different segments of customers to convince
only a few bankers who agreed to have interactive screens in them to adopt digital banking channels.
the bank to educate customers about using digital banking.
A colleague from the same bank argued that: Redefining the role of branch staff
There is need to make strategical changes, with shrink- Many of the branch managers (16/22) reported that tech-
ing staff level and heavy branch footfall it is next to nology has redefined the role of branch staff in the digital
impossible for us (Bankers) to initiate personalise era. Bankers perceive that by equipping branch staff with
interactive sessions with customers regarding how to right soft skills and competencies in technology to solve the
use technology-enabled banking channels. Dedicated issues of customers and improve their banking experience,
digital tech experts in every branch especially in rural banks can expedite the online banking adoption in a more
branches can help customers to make maximum use of effective manner. Bank executives shared their perception
online banking channels (Banker 6). about pressing need for changing the role of bank staff due
Customer satisfaction was observed by respondents as an to technological interventions in the banking sector. Banker
important factor while demonstrating the use of online bank- 15 presented his views regarding internal challenges:
ing channels at the bank branch. Enduring relationship of I believe ourworkforce performs multiple jobs at a time
the bank with its customers is the result of regular commu- like advice customers on high-value products, handles
nication (Howcroft et al. 2002; Waite and Harrison 2002). daily transactions but still I am not sure our efforts are
Previous studies have already established the significance enough to equip our staff with right skills to optimally
of possessing communication skills along with technical utilize technology and branch space to develop a close
knowledge about the product by the sales force to provide relationship with customers and improve branch pro-
maximum satisfaction to the customer (Goff et al. 1997). ductivity.

114

Table 2  Coding criteria and theme identification

Construct from framework Identified themes from analysis Description Challenges

Perceived usefulness (PU) > adoption In-branch communication with customers’ Majority of interviewees (13/22) reported that Shrinking branch staff and heavy branch footfall
effective communication at branch level to Limited digital tech experts in branches
guide customers for using technology to ful-
fil their banking needs can bring a positive
change in customers’ perception and would
lead to digital banking adoption.
Computer self-efficacy > PEOU > adoption Digitally driven branches with human touch Interviewees believed that (15/22) live dem- Cost of transforming the existing bank branches
onstration in the digitally enabled branches with digitally enabled branches
with self-service kiosks can educate
customers about how to use digital banking
mediums and provides practical experience
to customers which in turn will result in
customers’ acceptance.
Branch service quality > Trust in E-Bank- Redefining the role of branch staff Respondents opined (16/22) that effective Lack of effective regular training sessions for
ing > adoption customer financial advisory service at branch employees to develop interpersonal
branch helps in attaining customers’ trust. skills
Quality of services delivered by branch staff Lack of resources (Time and staff) and long
influences the customers’ adoption of online queues at branches
banking services.
Trust in bank > Trust in E-banking > adoption Customer-centric initiative to strengthen Respondents believed that (12/22) understand- Attitude of branch employees and organisa-
relationship ing the needs of customers and delivering tional culture issues in public sector banks.
tailored products builds customers’ trust in
the bank and strengthens the bank-customer
relationship. Trust on digital banking
was reported as a function of customers’
perceived trustworthiness of the bank. If
customers trust the bank and its services,
then they would intend to use its other digi-
tal mediums as well.
S. J. Kaur et al.
Adoption of digital banking channels in an emerging economy: exploring the role of in-branch… 115

However, during interviews, it was observed that the Customer‑centric initiatives to strengthen
scenarios are quite different between public and private the relationship
sector banks in India. When asked “If there is any special
front desk for a relationship manager to provide advisory Another important observation during interviews with
services in the branch”, 85% respondents from public sec- bank executives was concerned with understanding indi-
tor banks responded negatively. Branch staff role in public vidual customers’ preferences and needs at the branch. Bank
sector banks was still found to be confined to handling executives described it as permanent pressure for improv-
queries of customers with no specific front counter for ing customer services to survive in the present volatile and
the relationship manager to extend personal advisory ser- competitive market. Prior studies have also observed that
vices to customers at the branch. On the flip side, private offline fulfilment for customer satisfaction is as significant
sector bank branches demonstrate financial advisory ser- as online service quality (Semeijin et al. 2005). Twelve bank
vices provided by trained personal advisor designated as managers asserted that understanding the needs of customers
the Relationship manager. and delivering tailored products to build customers’ trust in
One interviewee who had previous experience with a the bank, strengthens the bank-customer relationship. When
private sector bank explained: asked about how would customers’ trust in the bank helps
to sell digital banking products to customers, majority of
Technology has changed the way banking is done
bank executives responded that trust on digital banking is
within the branches, but when it comes to encourag-
a function of customers’ perceived trustworthiness of bank.
ing people to adopt technology in an engaging way…
If customers trust the bank and its services, then they would
public sector banks have a long way to go (Banker 5).
intend to use its other digital mediums as well.
Interestingly, public banks in India are very available in At the same time, bank executives from public sector
remote and rural areas, unlike private banks. They handle banks expressed concern over the attitude of branch employ-
much of total bank accounts in the country. We find that ees and organisational culture issues because they perceived
front desk staff in public banks lack adequate customer bond- that due to lack of motivation and heavy workload branch
ing. Since branch service quality influences the customers’ employees find it hard to provide individual attention to cus-
adoption of online banking services (Yap et al. 2010), there tomers which in turn negatively affects the bank-customer
is need for these banks to focus on training their staff with relationship. Such a comment came from Banker 10:
interpersonal skills to become more productive and effec-
We don’t have an active action plan to ensure the posi-
tive. This finding is also supported by Kaur et al. (2012) in a
tive frontline employee involvement with customers at
previous study in which they highlighted the significance of
the branch which is imperative to improve the overall
training the bank employees as per bank’s future strategies
performance of organisation and bank-customer rela-
and plans to improve their job commitment. In this regard
tionship in digital era.
one interviewee from major public sector bank confesses:
Interestingly, Banker 17 presented a completely different
In the era of technology, we need to establish a closer
perspective on this issue and recognised that much more
link between employees and customers if we want to
is needed to be done in India to make digital banking an
see positive results. The workforce at the branch needs
indispensable part of people’s life. When asked about the
to be trained digitally to educate customers about new
challenges in the way of establishing trust and the strong
banking products and channels (Banker 6).
bank-customer relationship he responded:
A colleague from the same bank argues that most of the
With limited resources at branches, it’s not feasible to
branch visiting customers of public sector banks belong to
handle a large pool of branch customers at once to con-
a low-income group and lack even basic knowledge about
vince them to adopt digital banking channel especially
banking activities and these customers generally engage staff
when majority of your customers lacks trust and com-
with regular activities which can easily be done online. It
petency to use technology for banking transactions.
was observed that lack of resources (time and staff) and long
queues at branches make the situation more critical for pub- The interviewee findings reveal that on the part of banks,
lic sector banks. However, proper training for branch staff efforts are required in the direction of segmenting the cus-
to develop a positive attitude towards technology (Lympero- tomers at the branch on the basis of their investments with
poulos and Chaniotakis 2004) and educating customers to the bank, banking needs, demographic profile, frequency
use digital banking channels can help to serve the purpose of branch visits and then targeting the high-cost customers
for both parties. on a priority basis by offering them right channel mix. For
instance, even previous studies conducted in the USA have
documented that 58% of transactions at bank branch are

116 S. J. Kaur et al.

generated by 18% of customers (Toit and Burns 2016). Bank- No doubt, all our branches need to be modernised and
ers perceive that customer relationship management (CRM) equipped with self-service kiosks and touch screens, but
at branch provides an opportunity to deepen the relationship timing is not right due to high capital expenses involved.
with customers which in turn helps to convince the custom- The best approach at this time can be to link digital
ers to adopt digital banking channels. Strong customer rela- banking channels to bank branches” (Banker 21).
tionship with the customer-centric approach is suggested to
create better chances for banks to reduce operational costs
and improve their market share. Most of the bank executives
emphasised that better customer relationship can make it pos-
Discussion of findings
sible for banks to create customer segments and target high-
Davis (1989) argues that perceived usefulness (PU) and per-
touch clients in bank branch to increase return on investment.
ceived ease of use (PEOU) are the most significant deter-
minants of technology adoption. TAM has established a
Digitally driven branches with human touch strong and positive relationship between PU and technol-
ogy adoption. Customers’ behaviour intention has found to
In the digital era, banks are not only embracing technology- be influenced by perceived usefulness in a study conducted
based banking channels to conduct transactions online but by Alalwan et al. (2017). Various other researchers have
also focusing on modernising the bank branches. Various also highlighted the significant impact of perceived useful-
previous studies have already established that bank branches ness on customers’ attitude and intention to use technol-
cannot be replaced in the present digital world (Baxter and ogy-enabled banking services (Wang et al. 2003; Juwaheer
Rigby 2014; Charniauski and Freeborn 2015; Brunier et al. et al. 2012; Wentzel et al. 2013; Loureiro et al. 2014). Our
2015). During the current study, 15 bank executives reported research findings indicate that effective in-branch communi-
that the banks can think of modernising branches with in- cation between branch staff and customers may significantly
branch digital capabilities so that they can educate customers influence customers’ attitude and intentions to use digital
about modern technologies using the same platform which banking channels. The study reveals that once customers
in turn helps to reduce the workload of branch staff. Previ- are communicated and informed personally about the useful-
ous studies have also demonstrated the importance of in- ness, convenience and ease of using digital banking chan-
branch self-service technology to persuade non-adopter to nels, they may perform all their future banking transactions
adopt online banking channels (Berger 2009). It is evident online (Sathye 1999; Pikkarainen et al. 2004).
that RBI’s guidelines (2017) (May 2017) regarding digital The proposed technological interventions and methods
banking outlets (e.g. SBI InTouch) have shifted the banking need to be simpler to understand; otherwise, customers
landscape in India. Banks in India are more inclined towards would resist the change and continue with the traditional
transforming existing branches than opening new ones. banking practices. Perceived ease of use has been identified
When asked about the target customer segment, the as an important factor positively influencing the attitude of
majority of respondents were of the view that as a digital customers regarding technology-enabled banking services
push initiative bank branch transformation intends to target (Marakarkandy et al. 2017). More specifically individual’s
predominantly the branch visitors who still prefer branch ability to use computer and technology positively influences
banking than digital channels. Few interviewees believed the adoption of technology (Nath et al. 2013). The research
that even in the case of tech-savvy customers, the human findings depict that live demonstration in the digitally ena-
touch is significant for customer satisfaction and behavioural bled branches with self-service kiosks can educate custom-
intentions (Makarem et al. 2009). A participant from private ers about how to use digital banking mediums which in
sector bank gave the example of security and performance- turn will result in customers’ acceptance. This finding is in
based risk issues and how educating and informing cus- line with the previous study conducted by Roy et al. (2017)
tomers about the security measures and benefits of digital where lack of self-efficacy (competence to use Internet and
banking channels through live demonstrations at the branch banking applications) was seen to negatively affect custom-
can build the trust of customers in digital banking (Martins ers’ perceived ease of use which consecutively was found to
et al. 2014). have the negative impact on customers’ adoption of Internet
Interestingly, while most of the bank managers recog- banking in India.
nised the significance of transforming the bank branches The extended TAM supports the notion that branch service
they also raised the concern over the cost of modernising quality influences the customers’ adoption of online banking
and equipping all or most of the branches with self-service services (Yap et al. 2010). There is a need for banks to focus
technology. One senior bank executive from a major public on training their staff with interpersonal skills to become more
sector bank commented: productive and effective. The findings of the study show that
Adoption of digital banking channels in an emerging economy: exploring the role of in-branch… 117

effective customer financial advisory service at branch helps to technology acceptance in the Indian banking industry.
in attaining customers’ trust. The quality of services deliv- However, our study is first to explore and understand the
ered by branch staff influences the customers’ adoption of significance of in-branch efforts of banks to migrate custom-
online banking services. Previous studies have (Patricio et al. ers to adopt digital banking channels. Impact of in-branch
2003; Yap et al. 2010) similarly highlighted that traditional communication with the customers about technology-driven
service quality at branch leads to customers’ satisfaction and efforts has hardly received any scholarly attention.
trust in Internet banking services. Further, offline fulfilment Various studies have reported a strong, positive relation-
for customer satisfaction is as significant as online service ship between perceived usefulness, ease of use and custom-
quality (Semeijin et al. 2005). Our research findings reveal ers’ attitude to adopt the technology (Wang et al. 2003; Juwa-
that customer-centric efforts at bank branch can improve the heer et al. 2012; Wentzel et al. 2013; Loureiro et al. 2014).
customers’ overall satisfaction and trust by developing and Our research indicates that effective in-branch communica-
strengthening the personal relationship with customers. In tion between branch staff and customers (Sathye 1999; Pik-
other words, understanding the needs of customers and deliv- karainen et al. 2004) and computer self-efficacy (Roy et al.
ering tailored products to customers builds customers’ trust 2017) developed through live demonstration in the digitally
in the bank and strengthens the bank-customer relationship. enabled branches may significantly influence the customers’
Trust on digital banking was reported as a function of custom- attitude and intention to use digital banking channels.
ers’ perceived trustworthiness of a bank (Fig. 2). The study reveals that branch service quality influ-
ences the customers’ adoption of online banking services
(Yap et al. 2010) by developing the trust of customers in
Theoretical implications of the study e-banking services. Indian banks mainly public sector banks
need to focus on training their staff with interpersonal skills
The most prominent outcome of the present study pertains to to become more productive and effective. This finding is
the significance given to the in-branch customers’ experience also supported by Kaur et al. (2012) in a previous study
and changing role of bank branches to encourage custom- in which they highlighted the significance of training the
ers to adopt digital channel for conducting future banking bank employees as per bank’s future strategies and plans to
transactions. This study proposed a model that highlights the improve their job commitment.
impact of in-branch customer engagement on their intention Our study supports the view that offline fulfilment for cus-
to adopt digital banking channels in India. The present study tomer satisfaction is as significant as online service quality
contributes to the literature by studying how personalisa- (Semeijin et al. 2005). Further, we add to the literature by
tion and in-branch initiatives can facilitate to build custom- establishing a direct relationship between customers’ trust in
ers’ initial trust towards digital banking channels. In prior the bank and its e-banking services. The study emphasised the
literature, some studies have been conducted on custom- significance of customer relationship management (CRM) to
ers’ behavioural factors (Malhotra and Singh 2010; Singh identify the customer segments and target high-touch clients
and Kaur 2011; Sinha and Mukherjee 2016) with regard in a bank branch to increase return on investment.

Fig. 2  Key in-branch efforts and associated challenges


118 S. J. Kaur et al.

Managerial implications that is possible with the transformation of existing branch

service model (Tang 2016). Migration of customers to digi-
In emerging countries, the challenge for the banking indus- tal banking channels in India calls for developing branch
try is to meet the needs of highly distinctive segments of transformation strategy with the focus on a customer-centric
customers in urban, semi-urban and rural areas. Against approach. However, the branch transformation is seen to face
all the sunny reports released by banking industry regard- various challenges, especially in the context of public sector
ing digital banking adoption in India, our research findings banks in India. These issues raise the urgent need for focus-
suggest that banks need to take serious in-branch initiatives ing on improving in-branch practices of banks to convince
to educate and make a majority of customers comfortable customers to migrate to digital banking channels.
with digital channels for banking payments and transactions. Due to COVID-19 maintaining physical distancing and
The present study elucidates the need to transform future providing in-branch services to customers is another chal-
bank branches by identifying cost-effective strategies. Trust lenge for banks in India with high number of branch visiting
on digital banking has been identified as a function of cus- customers. In this strange time, banks can put a restriction
tomers’ perceived trustworthiness of the bank. If customers on number of customers entering the branch at a time with
trust the bank and its services, then they would intend to flexible working hours to spread customer footfall and rotat-
use the other digital mediums as well. Understanding and ing staff. Additionally, visit by appointment only could be
segmenting the branch visiting customers on the basis of another alternative for banks to ensure the safety of custom-
how tech-savvy they are, their investments with the bank, ers and staff. The banks can also develop integrated services
banking needs, frequency of branch visits and then targeting for customers in rural areas where business correspondents
the high-cost customers on a priority basis by offering them and India Post channel can provide banking services using
right channel mix (customer-centric approach) can make digital tools at the door step of the customers with the
it possible for banks to increase return on investment and purpose of reducing the number of customers visiting the
develop strong bank-customer relationship. Hence, bank- branch.
ing regulators and industry should focus their attention to
develop strong customer relationship management (CRM)
practices in the branches to deepen the relationship with
Limitations of the study and future research
customers which in turn helps to build their trust in digital
banking channels. One of the major hurdle in adopting the
The study significantly contributes to the literature but with
innovative digital banking channel is the lack of custom-
few limitations which can be addressed in future research.
ers’ trust. Hence banks need to build the trust of customers
The present study concentrates on bank managers percep-
through providing them personalised banking services by
tions about in-branch efforts. For future research, it would be
identifying the different segments of customers and offering
fruitful to trace out the perceptions of customers regarding
them the right channel mix.
the impact of in-branch efforts on their adoption of digital
The study also identifies various integrated cultural and
banking channels. Further, insights from this study could
organisational obstacles particularly in public sector banks
be used to frame a model for the impact of in-branch initia-
which hinder the customers’ adoption of digital banking.
tives on customers’ adoption of digital banking that can be
The banks need to focus the marketing strategy on enabling
empirically tested. Future research can examine the impact
branches with digital capabilities, deploying more digitally
of COVID-19 on digital banking and mobile payments
trained employees in the branches to develop technologi-
acceptance in India as the current pandemic situation has
cal self-efficacy among customers to use innovative digital
encouraged customers to access remote banking services.
banking channels which in turn can help to reduce the digital
Another avenue for future research is exploring the potential
divide in India.
of modern agent network-based payment models in reach-
This study draws the attention of the bank managers
ing out financially excluded section and examining whether
towards the need to design appropriate in-branch commu-
these new models are opportunity or threat to the established
nication strategy by identifying various segments of branch
digital channels.
visiting customers and make special efforts for the training
of frontline branch staff (Cooper et al. 1994) to instil exper-
tise not only in banking technology but also in communica-
tion skills. Further, our interview data suggest that banks in Appendix
India are concerned about the high cost involved in branch
digitisation. Banks need to understand that return on invest- See Table 3.
ment in technology would occur in the long run only if the
large chunk of its customers migrates to digital channels and
Adoption of digital banking channels in an emerging economy: exploring the role of in-branch… 119

Table 3  Interview protocol/questions framework

Perception regarding technological interventions in the banking industry

1.  Changes in working experience due to technology
2.  Impact of digital banking on branch footfall
3.  Banking needs of branch visiting customers and employees attitude
Development of In-Branch Strategies
1.  In-Branch marketing strategy of bank
2.  Overall In-branch marketing budget
3.  Allocation of resources/culture in branch
4.  Customer Relationship Management (CRM) practices at branch
Implementation of In-Branch strategies
1. Identification of customer segments
2.  Resource constraints (if any)
3.  Branch staff training

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