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The Critical Success Factors of the Stationary Distribution of German Retail Banks given the Challenges of Digitalization and COVID-19

The German retail banking market is facing challenges from multiple angles. The digital transformation has lead to the market entrance of an entirely new kind of competitor, the FinTechs, that excel at providing superior service quality through the usage of information technology, mostly without any physical presence at all. At the same time, customer behaviour has changed radically so that a majority of clients now no longer interact with their bank via the branch network at all. The emergences of the COVID-19 virus has only increased the pressure on the stationary distribution model of retail banks as safety and hygiene measures necessitated at least temporarily the complete closure of brick-and-mortar stores. Additionally, one potential outcome of the coronavirus could be a further acceleration of this already ongoing transformation. These challenges strike at the heart of retail banks, that long have distinguished and prided themselves in their extensive physical presence. Thus, the question of how best to ensure future success of their stationary distribution is not only a question of identity but also of survival.

The critical success factor method is a widely applied methodology to determine those areas that are most critical to the success of a business. However, only few examples can be found in the existing literature, that apply this method in the context of retail banking in general and the stationary distribution model in particular. Therefore, the goal of this study is to determine the critical success factors of the stationary distribution of German retail banks given the challenges of digitalization and COVID-19. Relatedly, due to the relative novelty of the COVID-19 pandemic, it also attempts to obtain a better understanding as to the possible long-term effect of the coronavirus on the retail banking industry.

In order to answer this question, interviews were conducted with the executives of 11 German retail banks.

Five critical success factors could be identified, namely Personnel, Location, Product, Brand and Processes.

Thesis Coach & Co-Reader