Using a survey of almost 280 banks (Regional Bank Lending Survey, RBLS), this paper proposes a composite indicator of the digital supply of financial services and provides early evidence on the digital transformation process that Italian banks experienced between 2007 and 2018. Moreover, the paper examines the correlations between the degree of digitalization, bank profitability and the structure of the branch network.
The adoption of digital technologies has gradually increased over time, accelerating after 2013, though it has played out differently across business areas: digitalization started in payment services and then spread to asset management, whereas it is still less frequent in lending. Digitalization is positively correlated with bank profitability and negatively correlated with the number of branches; the latter relationship signals a potential substitution effect between physical and digital channels.
