Innovation in Banking from Traditional to DIgital

This thesis aims to analyse the digital transformation development of two banks: HSBC and ICBC. The paper covers an overview of digital banking development history, particularly exploring the two dimensions for a successful transition from traditional to digital Financial Service. The literature review gives valuable insight and provides evidence of digitalisation as cost-efficiency, long-term scale effect, and customer satisfaction. Therefore, the two banks, HSBC and ICBC, are examined according to the critical digitalisation approach. These are digitalisation strategy, Governance and Business organisation, Blockchain, customer's satisfaction, and 5G. Moreover, it covers also a brief financial performance analysis according to some important financial ratios. Comparing the two banks shows that the two banks adopt different ways and strategies to improve their digitalisation process. Moreover, they assume different organisational structure and different use of blockchain technology. The financial comparison shows that ICBC has better financial performances than HSBC in 2020. Besides, HSBC has suffered more the effect of the Covid-19 due to its global operational work. On the other hand, ICBC's domestic functional area leads the bank to obtain positive financial performances in line with the pre-covid situation. Moreover, banks must handle some challenges to remain competitive in the financial sector. Therefore, the employment of AI and Big Data is the core issue for banks, which do not have high technical knowledge; besides developing a better Mobile banking service. Other essential aspects are Cost, Customer, and Competition. In the end, the regulatory framework is a challenge that banks must pay attention to due to the reduction in distance barrier thanks to Internet Banking and anti-laundering and fraud prevention.