Financial Services Digitainability: Financial Inclusion and Efficiency in

EU Countries

AIVARS SPILBERGS

Department of Economics and Finance,

BA School of Business and Finance,

K.Valdemara 161, Riga, LV-1013,

LATVIA

Abstract: - Digitalization of financial services is one of the biggest challenges of the last decade, both in the EU

and globally. The rapid development of digital technologies undoubtedly creates a favourable environment for

significant progress in the financial sector, moreover, the Global Financial Crisis (GFC) and the pandemic have

served as additional catalysts. However, several aspects on the way to financial services digitainability are still

insufficiently explored. Considering the latest trends in the financial sector and advances in digital

transformation, this study aims to identify the key drivers for the implementation of digital financial services

and initiatives that managers should pursue to effectively transform business processes. The methodological

base of the research consists of an extensive analysis of current publications in such areas as digital

transformation, sustainable development, digital financial services, etc. The article investigates two aspects of

financial sustainability: financial inclusion and operational efficiency of financial institutions, based on

Eurostat data on financial services provided in the EU during 2011 - 2021, the Digital Economy and Society

Index variables, and European Central Bank data on operational expenses. Correlation and regression analysis

methods are used to study the relationships between variables under investigation, as well as statistical tests to

acquire necessary evidence for statistical inferences about the proposed hypotheses.

The results of the study provide the possibility to judge current trends in the use of digital financial services in

the EU countries, determine the main drivers of sustainable digital financial services, as well as to observe the

benefits of digital transformation in the financial sector.

Key-Words: - digital financial services, digital transformation, financial services digitainability, financial

inclusion, operational efficiency, EU countries

Received: February 12, 2023. Revised: June 10, 2023. Accepted: June 20, 2023. Published: June 30, 2023.

1 Introduction

Digital technologies have rapidly entered our lives

and significantly influenced the way information is

acquired, processed, and used, [1], [2], [3], [4], and

[5]. This also applies to financial services, which

have experienced drastic changes as the result of

technological development, [6], [7], [8]. Digital

technologies develop and transform products and

services, change business processes, and cause the

need not only to adapt but also to change the

business model to successfully use the

opportunities created by them. Financial

transactions, without which the economic

development of society is unthinkable, are of

course no exception.

Increasing access to mobile money accounts

and the use of digital payments can facilitate the

path to a digital economy, which in turn opens

additional opportunities for economic development.

In this context, income-generating activities, access

to new markets, joining platforms, or simply

obtaining important information such as market

price trends, fluctuations, etc. for business decision-

making should be noted.

Digitalization of financial services provides an

opportunity to significantly increase the financial

autonomy of citizens and organizations while

improving the operational efficiency of these

service providers. However, despite obvious

progress, for example, individuals in the EU aged

16-74 who have used online banking increased

during the last 10 years 61%, there are significant

opportunities for growth, because in 2021 only

58.3% used such a financial service, [9]. Moreover,

significant differences in the achieved development

levels are evident between the EU countries and it

is, therefore, necessary to assess the reasons.

Although the intensity of research in the field

of digital transformation has significantly increased

in recent years, however, as shown by publications,

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[10], [11], [12], [13], [14], [15], financial

sustainability activities are still insufficient to

ensure the UN Sustainable Development Goal

agenda, [16].

Considering the latest trends in the financial

sector and advances in digital transformation, this

study aims to identify the key drivers of digital

financial services and initiatives that managers

should pursue to effectively transform their

operations for sustainability. This article

investigates two aspects of financial sustainability:

financial inclusion and operational efficiency of

financial institutions, using the Digital Economy

and Society Index (DESI) variables, [17].

2 Literature Review and Hypotheses

Development

2.1 Defining Digital Transformation

The beginnings of digitization can be traced back to

the 20th century, in the second half of the last

decade, and it has shown particularly rapid

reversals during the last decade, as evidenced by

studies, [10], [18]. Researchers use different

definitions to characterize activities related to

digitalization and these are largely determined by

the object and/or subject of the study.

Verhoef et al. identifies three stages of

development in this area: digitization,

digitalization, and digital transformation, [2].

Researchers define digitization as the transition

from analog to digital form of information storage,

[1], [18], and the additional channel of delivery,

[19]. Digitalization is the next stage when digital

technologies are applied to optimize business

processes leading to improved process

management, [18], creating value for the customer,

and building customer loyalty by using data

generated by the customers themselves, [20], [21],

[22]. Digital transformation (DT) can be defined as

a fundamental change process that affects the

whole organization, its ways of doing business, [1],

[18], [23] and the value creation process, [1].

The whole DT is a comprehensive process

driven mainly by digital technologies and plays an

important role in achieving the goals of

organizations, institutions, or companies, as well as

having an impact on a country’s economy, society,

and environment.

[5], defined DT as the continuously increasing

interaction between technologies, business, and

society, which results in transformational effects

and changes in process velocity, scope, and impact,

[5]. They regarded DT as a vector, referring to a

dynamic activity and direction itself as digital

transformation.

DT in the financial sector is manifested by the

broad and deep use of information and

communication technologies (ICT) that

significantly changes the way customers are

attracted and retained, [20], [24], financial services

are provided, [25], [26], [27], [28], [29], [30], [31],

and customer value created, [32]. DT leads to

fundamental changes in business processes,

routines, and capabilities, and allows financial

services providers to enter new markets, [8], [31],

[33], [34]. At the same time, the risk structure of

the financial services providers is also changing,

[35], [36], [37], [38], [39]. A successful digital

transformation allows one to gain competitive

advantages and therefore can lead to successful

performance in a hyper-competitive financial

services environment, [40].

2.2 Digitainability in the Financial Sector

DT is considered one of the essential enablers of

sustainable development, [10], [41], it contributes

to the comprehensive progress of society by

improving information and services, incl. access to

education, [42], financial access, [43], [44]. DT is

changing the business case for both investors and

consumers, [45], the rapid digitization of the

economy and the approach of digital business are

driving the transition of traditional business models

to networked and integrated digital platform

business models, [12]. DT allows companies to

foster innovation and entrepreneurship, [46],

increase their market share, reduce energy waste,

recover, and reuse material, [47].

DT plays an important role in achieving the

United Nations Sustainable Development Goals

(SDGs), [16]. In [48], authors investigated the

relationship between digitalisation and SDGs, [48].

Research results show a positive impact of DT on

five SDGs, focused on business. [49], indicated,

that increasing access to digital technologies could

help countries reduce their poverty rates, [49].

Without the DT of business and social processes, it

is not possible to sustainably solve both economic

and environmental problems in the future, [50],

[51]. [52], propose a conceptual solution for how

digital readiness, digital technologies, and digital

business models could be sustainably linked to

innovation governed by the DT process, [52].

The term 'digitainability' was introduced to

highlight the interplay between digitalisation and

sustainability, [46]. Digitalization and sustainability

are two different dimensions, which are not always

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completely independent. Only if both are perceived

as priorities in management decisions,

digitainability opportunities can be effectively

realized.

Digitainability offers the opportunity to move

beyond optimization and cost savings due to

digitalization and sustainability initiatives, [46].

[53], explored the perspective on the

development of sustainable banking publications

over time and across academic categories, [53]. The

researchers point to the gradual convergence of

instrumental and ethical approaches to sustainable

banking and emphasize the importance of both the

public debate on the role of banks on the path to

sustainability and the business rationale for banks

choosing sustainable strategies.

[10], categorized the main gaps in SDGs

research and indicates growing expectations of the

added value that digitization brings to the

achievement of the SDSs, [10]. The findings

suggest that further multidisciplinary research,

dialogue, and concerted transformational efforts are

needed.

[29], investigated the linkage between financial

literacy, digital literacy, and digital financial

literacy and concluded that financial practitioners

need to design online and offline educational

resources to teach their clients how to access and

use digital financial services, [29].

[54], analysed the interfaces between digital

aspects and broader sustainability challenges for

humanity, in the context of the UN's 2030

Sustainable Development Goals, [54]. The authors

show how digital technologies have changed the

way people communicate, learn, work, and interact

and conclude that the sustainability of the use of

digital technologies must be based on the value of

equality, universal harmonious cooperation, and

self-determination.

2.3 Financial Inclusion

Although financial inclusion is not directly

included among the 17 goals proposed in the UN

Agenda 2030 for Sustainable Development, [16], it

is an essential basis for achieving several

Sustainable Development Goals, [15], [16], [44],

[48], [55].

Sha'ban et al. constructed a multidimensional

financial inclusion index for a global sample of 95

countries and revealed overall progress over the

period 2004-2015, [56]. Research results show a

positive relationship between financial inclusion

with GDP per capita, employment, bank

competition, human development, government

integrity, and internet usage.

[57], studied the relationship between the

understanding of the use of Fintech innovations and

financial inclusion. Research findings show that

performance and effort expectancy has a significant

relationship with the intention to use mobile money

services.

[36], investigated the importance of digital

financial inclusion, utilizing ICT techniques to

promote sustainable growth via economic stability,

[36]. Researchers argue that digital technology is

currently being used to deliver financial services

with reduced cost, thereby enhancing financial

inclusion.

[58], researched the rationale for the

development of digital payments in passenger

transport, [58]. Using the multiple linear regression

method, researchers determine the factors

influencing digital payments in passenger transport

and show that the level of digital payments depends

on the degree of mobile device usage for accessing

the internet on the move, as well as the level of

financial inclusion provided.

[43], studied the impact of financial inclusion

on the economic development of 27 EU countries

in the period from 1995 to 2015 and obtained

evidence that access to finance has a significant

positive impact on economic growth, and the

impact on economic output is more significant in

low-income countries and new EU member states,

[43].

[56], studied differences in financial inclusion

across age groups and countries, [56]. The authors

of the study identified challenges during the

pandemic that increased the need for online access

to financial services. The results of the study

indicate the problems and the need for solutions to

promote convergence and ensure the possibility of

considering financial inclusion as a public good and

an active tool for improving the quality of life.

Khan et al. investigated the impact of financial

inclusion on financial sustainability and economic

development in the G-20 countries, [59]. The study

shows that in the long term, financial inclusion has

a significant impact on financial efficiency,

sustainability, and economic growth.

[60], investigated the relationship between

financial inclusion and sustainable development.

Research findings support calls for greater financial

inclusion and faster achievement of Sustainable

Development Goals, [60].

[61], analysed the effect of financial inclusion

on economic growth, and banks’ financial

efficiency in high-, low-, and middle-income

countries and conclude that financial inclusion has

a positive impact on sustainable development in

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each level of income group in the case of most the

models, [61].

[44], point out that digital financial inclusion is

essential to ensure everyone can access digital

financial services and thus promote sustainable

economic growth, [44].

[62], examined the determinants of financial

inclusion and the impact of financial inclusion on

poverty reduction and income inequality, based on

a composite financial inclusion index, [62].

Research results support the role of financial

inclusion in reducing income inequality in

European countries.

2.4 DT and Operational Efficiency of

Financial Institutions

[63], investigated the effect of ICT on the profits

and risks of the EU banking industry. Research

results reveal that ICT exerts a positive role in

improving performance measures and that overall

financial stability in the banking industry is

enhanced by the intensive adoption of both ICT and

FinTech, [63].

[64], tested how the rapid advancement of DT

has impacted the price of financial services in

Korea and got evidence that the long-term effect of

the DT trend is negative - cost-saving for labour

input, capital expenditure, and the total unit cost of

financial intermediation. Researchers conclude that

DT contributed to enhancing consumer benefit,

mainly by achieving the operational efficiency of

labour and capital, [64].

[65], studied DT of the Chinese banking

industry, evaluated digital maturity and DT

experience, and discovered that investments in

digitalization have contributed to substantial

production efficiency improvement for commercial

banks, [65].

[66], analysed the effects that digitization has

had on the financial performance of banks in

Central and Eastern European Union countries

during the 2010–2021 period. The obtained results

show that an increase in the use of internet banking

generated positive effects on the performance of

banks, [66].

[67], investigated how innovation affects the

relationship between the digitalisation of the

company and its economic and financial

performance. Research results allow us to conclude

that it is not only important to digitalise the

business processes to improve its performance, but

that DT should also be aligned with a clear

innovation strategy that allows for improving the

company’s performance, [67].

[68], analysed a sample of 122 Japanese banks

from 2004 to 2018 and the investigations show that

financial inclusion is a driver of profitability even

in a developed economy, [68].

[69], constructed the dimensions of a DT

capability that contains three hub factors - sensing,

organizing, and restructuring. Study results

demonstrate that strategic orientation has a positive

impact on a DT capability and that DT capability

has a positive impact on companies’ operational

performance, [69].

2.5 Drivers of Digital Transformation

[70], propose the methodology for the

determination of the key drivers of digitalisation,

which can provide the most dynamic GDP growth

in the EU. Results of the research show that six

aspects are significant for socioeconomic growth,

e.g., broadband connectivity, digital skills, and e-

business environment, [70].

[71], analysed the adoption of digital financial

services by German households and got evidence

that a household's level of trust and comfort with

new technologies, financial literacy, and overall

transparency impact its propensity to switch to a

FinTech, [71].

[72], proposed five recommendations on how

institutions can develop the strategies needed for

DT and showed that DT should be a top

management priority and a defining trait of

corporate business strategy, [72].

[41], investigated the relationship between

digitalization and sustainable development using

the Digital Economy and Society Index (DESI).

Researchers draw conclusions about the increase of

convergence between the EU-28 countries in terms

of the level of development of the digital economy

and society, [41].

[73], indicated that the use of financial

technology influences financial behaviour, and

financial literacy, and the use of financial

technology influences satisfaction in finance.

Researchers also found that financial literacy and

the use of financial technology were mediated by

financial behaviour, [73].

[74], analysed the impact of human capital and

digitization on the well-being of the general

population, in eleven CEECs of the European

Union. Researchers used Human Development

Index as a proxy and showed that the digitization of

the economy and the developed human capital will

ultimately lead to an increase in the population’s

welfare, [74].

[75], examined the influence of DT in Europe

using DESI and four socioeconomic indexes:

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Social Progress Index, Corruption Perception

Index, Global Innovation Index, and Doing

Business. The study results show correlations and

intensity between the variable considered, [75].

[76], investigated the digital competencies needed

to develop a sustainable society. Research results

highlight the importance of digital literacy and

challenges related to DT which should be addressed

to fight the digital divide and foster the widest

possible social inclusion for the promotion of a

sustainable society, [76].

[2], identify three external drivers of digital

transformation: digital technology, digital

competition, and digital customer behaviour.

Researchers posit that DT requires specific

organizational structures and metrics used to

calibrate performance, [2].

[69], explored the relationship between a

strategic orientation and organizational

performance through digital competence at the

organizational level. Researchers point out the

importance of digital competence for successful DT

and that digital competence can ultimately achieve

value delivery through the improvement of

enterprise organizational performance, [69].

[77], investigated the impact of DESI

dimensions on SGDI by using panel regression

modelling and exhibit that DESI sub-dimensions

influence SGDI differently - connectivity, human

capital, and the use of internet services have a

larger impact on SGDI compared to the integration

of digital technology and digital public services,

[77].

[78], examined the factors that influence the

adoption of digital financial transactions (DFTs)

and identify fifteen factors that motivate the

adoption of DFTs as well as five inhibitors to

adoption. Researchers conclude that cost of use,

perceived danger, complexity, unwillingness to

change, and privacy concerns are major challenges

to DFT adoption, [78].

[79], examined factors that affected the

adoption of mobile finance and discovered that

performance expectancy, effort expectancy, social

influence, facilitating conditions, trust, and

perceived risk affect the intention to use mobile

finance, [79].

[80], investigated whether methodological

changes to the structure of DESI improve its ability

to capture the DT of EU economies. Results show

that connectivity is the dimension with the largest

impact on DT in the EU countries, [80].

[81], revealed that the use of digital payment

tools and platforms is associated with higher digital

literacy, at all levels of financial literacy, and more

informed personal finance choices, instead, are

associated with higher financial literacy, at all

levels of digital literacy. Researcher suggests that

digital and financial literacy should be considered

together when assessing the implication of

digitalization for individual investors, [81].

[5], believe that the drivers of DT should be

classified into 23 ‘DT interactions’ across six

categories and can help to better understand how

the changes unfold and how influence each other,

[5].

Based on the literature review the following

hypothesis was developed:

H1. There is significant progress in online banking

intensity in EU countries during the last ten

years.

H2: There is a relationship between online banking

intensity and the use of other financial

services.

H3. There is a positive relationship between online

banking intensity and human capital

development in EU countries.

H4. There is a positive relationship between online

banking intensity and connectivity in EU

countries.

H5. There is a positive relationship between online

banking intensity and the integration of digital

technologies in EU countries.

H6. There is a positive relationship between online

banking intensity and digital public services

development in EU countries.

H7. There is a positive relationship between online

banking intensity and the operational

efficiency of financial institutions in EU

countries.

3 Data and Methods

3.1 Online Banking Intensity Dynamic

To answer the questions that arose during the

research and justify the conclusions about the

proposed hypotheses, the author collected data

from four main sources: the Eurostat data, [82], for

online banking intensity, the World Bank [83], for

financial services intensity, DESI Database, [9], for

DESI indicators and the European Central Bank

Consolidated Banking Database, [84], for the

financial institutions' expenses:

- individuals 15+ have used online banking (OBI),

- account owners 15+ intensity (ACC),

- made digital payments 15+ intensity (MDP),

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- received digital payments 15+ intensity (RDP),

- savings at financial institutions 15+ intensity

(SAF),

- borrowed any money 15+ intensity (BOR),

- human capital development index (HCD),

- connectivity index (CON),

- digital public services development index (DPS),

- integration of digital technologies index (IDT),

- total costs, % of assets, in the EU banking sector

(TOC),

- staff costs, % of assets, in the EU banking sector

(STC).

The data were collected for 27 European Union

countries for the years 2011, 2016, 2019, and 2021.

The online banking intensity dynamic 2011 – 2021

is presented in Figure 1.

Fig. 1: Online banking intensity dynamic 2011 -

2021

Source: Calculated by the author based on Eurostat data

To assess the dynamics of online banking intensity

the author uses a chi-squared test and the test

statistic is calculated as follows:

󰇛󰇜





 (1)

were – observed (2021) online banking intensity

in i-th country,

– expected (2011, 2016, or 2019

accordingly) online banking intensity in i-th

country.

3.2 Online Banking Intensity Relationship

with other Financial Services Intensities in

EU Countries

To evaluate the relationship between the intensity

of online banking and other financial services

intensities in the EU countries, we used Pearson's

correlation analysis and the results obtained with

the RStudio function cor.test, [85].

In addition, we use regression analysis to estimate

the quantitative impact of changes in online

banking intensity on other financial services

intensity, as follows:

        (2)

        (3)

        (4)

        (5)

3.3 Online Banking Intensity Relationship

with key DESI Indicators

To evaluate the relationship between the intensity

of online and the DESI key indicators in EU

countries, we use regression analysis and equations

as follows:

  󰇛   󰇜   (6)

were – online banking usage intensity by

individuals in the EU countries,

– human capital development level in

the EU countries,

– Internet connectivity in the EU

countries,

– digital public services development in

the EU countries,

– integration of digital technologies in

the EU countries.

3.4 Online Banking Intensity Relationships

with the Operational Efficiency of Financial

Institutions

To evaluate the relationship between the intensity

of digital payments and the operational efficiency

of financial institutions in the EU countries,

regression analysis was used. To test the proposed

hypothesis, four regression equations were drawn

up:

󰇛󰇜        (7)

󰇛󰇜        (8)

were 󰇛󰇜– total costs (% of assets)

depending on online banking intensity,

󰇛󰇜– staff costs (% of assets)

depending on online banking intensity,

 – intercepts of the respective

regression model,

 – regression coefficients of the

respective regression model,

 – error terms of the respective

regression model.

0

20

40

60

80

100

BG RO EL IT DE PL PT HR HU SI SK EU MT CY ES AT FR LU LT CZ BE IE LV EE SE NL FI DK

2011 2016 2021

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The regression model’s calibration and evaluation

results were obtained with the RStudio, [85].

4 Research Results and Discussion

4.1 Online Banking Intensity Dynamic

In the EU in 2021, the intensity of online banking

usage was the highest in Denmark - 95% of the

population aged 15+ have used online banking -,

followed by Finland (93%), the Netherlands (91%),

Sweden (84%) and Estonia (82%). The indicators

of other Baltic countries Latvia (80%) and

Lithuania (72%) are also above average in

European Union (58%).

The fastest growth in usage of online banking

over the last ten years has been in Bulgaria, Greece,

Romania, Cyprus, and Croatia, which is largely

explained by the low intensity of digital payments

in 2011. Among the Baltic States, the fastest

growth in 2021 compared to 2011 was in Lithuania,

followed by Latvia and Estonia (see Table 1).

Table 2 summarizes the results of the chi-squared

test about online banking intensity differences in

the research period.

Table 1. Online banking intensity and growth (+%)

in EU countries

Country

2021

2021 vs 2011

2021 vs 2016

2021 vs 2019

Austria

71

61

34

13

Belgium

75

39

17

6

Bulgaria

15

400

275

67

Croatia

56

180

47

22

Cyprus

65

225

132

59

Czechia

73

143

43

7

Denmark

95

27

8

4

Estonia

82

21

4

1

EU

58

61

26

5

Finland

93

18

8

2

France

72

41

22

9

Germany

50

11

-6

-18

Greece

42

367

121

35

Hungary

56

167

60

19

Ireland

77

133

48

15

Italy

45

125

55

25

Latvia

80

51

29

11

Lithuania

72

80

33

11

Luxemburg

72

22

1

Malta

63

50

34

17

Netherlands

91

15

7

0

Poland

52

93

33

11

Portugal

53

141

83

26

Romania

15

275

200

88

Slovakia

58

71

29

5

Slovenia

57

84

63

21

Spain

65

141

51

18

Sweden

84

8

1

0

Source: Calculated by the author based on Eurostat data

Table 2. Chi-squared test statistics for online

banking intensity dynamic

Years

Chi-square stat

p-value

2021 vs 2011

847.3245

<0.001

2021 vs 2016

246.0149

<0.001

2021 vs 2019

50.9297

0.0035

Source: Calculated by the author based on Eurostat data

As can be seen from the data in Table 2, for online

banking intensity dynamic chi-squared statistics are

larger than chi-squared critical values (38.89) for

all three comparable periods and therefore we can

conclude that the increase in online banking

intensity comparing 2021 with 2011, 2016 and

2019 was statistically significant at a confidence

level higher than 95%. This conclusion is

confirmed by the p-values, which are summarized

in Table 2.

Chi-squared test results provide evidence for

confirming the first hypothesis.

4.2 Online Banking Intensity Relationships

with other Financial Services Intensities in

the EU Countries

The following Table 3 summarizes the results of

the correlation analysis between online banking

intensity and other financial services intensities in

the EU.

Table 3. Pearson correlations test statistics

Indicator

r

t-stat

p-value

LCI95%

UCI95%

Account

owners

0.7336

9.411

<0.001

0.6108

0.8220

Digital paym.

made

0.8206

12.520

<0.001

0.7317

0.8821

Digital paym.

received

0.7802

10.873

<0.001

0.6748

0.8544

Savings at FI

0.7967

11.491

<0.001

0.6979

0.8657

Borrowings

0.3031

2.7726

0.0070

0.0864

0.4924

Source: Calculated by the author based on Eurostat and

World Bank data

Since the tests of correlation coefficients

substantiate the statistical significance of the

relationship between the intensity of online banking

and other financial services intensity identifiers, the

author draws the conclusion that with increased

opportunities to use online banking, the proportion

of account owners in the population group 15+, the

intensity of made and received digital payments

and savings at financial institutions increases. On

the other hand, the relationships between the

intensity of online banking and borrowings are

weak.

The following Table 4. summarizes the results

of regression analysis between online banking

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intensity and other financial services intensities in

the EU.

Table 4. Online banking regression with other

financial services model’s statistics

Variable

R2

AdjR2

Std.Err

F-stat

p-value

Account

owners

0.5382

0.5321

6.7996

88.57

<0.001

Digital paym.

made

0.6735

0.6692

10.580

156.75

<0.001

Digital

paym.received

0.6087

0.6035

8.1749

118.21

<0.001

Savings at FI

0.6347

0.6299

10.2020

132.05

<0.001

Borrowings

0.0919

0.0799

9.8387

7.687

0.007

Source: Calculated by the author based on Eurostat and

World Bank data

Calculated regression models’ statistics justify the

conclusions that with changes in online banking

intensity, one can explain 53.2% of changes in

proportions of account owners, 66.9% of changes

in made digital payments intensity, 60.4% of

changes in received digital payments intensity,

63.0% of changes in savings at financial

institutions intensity and only 9.2% of changes in

borrowings.

From calculated regression coefficients

estimates, see Table 5, one can conclude that when

online banking intensity increases by one percent,

account owners’ intensity increases on average by

0.31% (95& confidence interval 0.24 – 0.37%),

made digital payments intensity increases on

average by 0.64% (0.53 – 0.74%), received digital

payments intensity increases on average by 0.43%

(0.35 – 0.50%), savings at financial institutions

intensity increases on average by 0.56% (0.47 –

0.66%), and borrowings intensity increases on

average by 0.13% (0.04 – 0.23%).

Table 5. Online banking regression with financial

services coefficients statistics

Variable

Estimate

Std.Err

t-stat

p-value

Account owners

0.3071

0.0326

9.4112

<0.001

Digital payments

made

0.6357

0.0508

12.5198

<0.001

Digital payments

received

0.4266

0.0392

10.8726

<0.001

Savings at FI

0.5627

0.0490

11.4912

<0.001

Borrowings

0.1309

0.0472

2.7726

0.007

Source: Calculated by the author based on Eurostat and

World Bank data

Regression analysis results provide some evidence

for confirming the second hypothesis with one

exception - relationships between online banking

intensity and borrowings intensity are weak.

4.3 Online Banking Intensity Relationship

with DESI Key Indicators

The following Table 6 summarizes the results of

regression analysis between DESI key indicators

and online banking intensity in the EU.

Table 6. DESI key indicators regression with online

banking models statistics

Variable

R2

AdjR2

Std.Err

F-stat

p-value

HCD

0.7243

0.7217

11.2203

278.481

<0.001

CON

0.2184

0.2110

18.8921

29.620

<0.001

DPS

0.6340

0.6305

12.9281

183.609

<0.001

IDT

0.5438

0.5395

14.4327

126.376

<0.001

Source: Calculated by the author based on Eurostat and

World Bank data

Calculated regression models’ statistics justify the

conclusions that with changes in the human capital

development index, one can explain 72.2% of

changes in online banking intensity, with changes

in the connectivity index one can explain 21.1% of

changes in online banking intensity, with changes

in digital public services development index one

can explain 63.1% of changes in online banking

intensity, and with changes in the integration of

digital technologies index, one can explain 54.0%

of changes in online banking intensity.

The following table summarizes the results of

regression coefficients statistics between DESI key

indicators and online banking intensity in the EU.

Table 7. DESI key indicators regression with online

banking coefficients statistics

Model

Variable

Estimate

Std.Err

t-stat

p-value

OBI

(HCD)

Intercept

-32.4116

5.5968

-5.7911

<0.001

HCD

1.9328

0.1158

16.6878

<0.001

OBI

(CON)

Intercept

14.5669

8.4056

1.7330

0.0860

CON

1.0567

0.1942

5.4425

<0.001

OBI

(DPS)

Intercept

-5.1155

4.9090

-1.0421

0.2998

DPS

1.0456

0.0772

13.5502

<0.001

OBI

(IDT)

Intercept

4.5491

5.0586

0.8993

0.3705

IDT

1.5834

0.1408

11.2417

<0.001

Source: Calculated by the author based on Eurostat and

World Bank data

From calculated regression coefficients estimates,

see Table 7, one can conclude that when the human

capital development index increases by one unit,

online banking intensity increase on average by

1.93% (95 & confidence interval 1.70 – 2.16%),

when the connectivity index increases by one-unit,

online banking intensity increases on average by

1.06% (0.67 – 1.44%), when digital public services

development index increases by one-unit, online

banking intensity increases on average by 1.05%

(0.89 – 1.20%), and when integration of digital

technologies index increases by one-unit, online

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banking intensity increases on average by 1.58%

(1.30 – 1.86%).

Regression analysis results provide evidence

for confirming the third, fourth, fifth, and sixth

hypotheses.

Figure 2 shows the regression between the

human capital development index and online

banking intensity in the EU.

Fig. 2: Human capital development index

regression with online banking intensity in the EU

Source: Calculated by the author based on Eurostat data

Figure 3 shows the regression between the

connectivity index and online banking intensity in

the EU.

Fig. 3: Connectivity index regression with online

banking intensity in the EU

Source: Calculated by the author based on Eurostat data

Figure 4 shows the regression between the digital

public services index and online banking intensity

in the EU.

Fig. 4: Digital public services index regression with

online banking intensity in the EU

Source: Calculated by the author based on Eurostat data

Figure 5 shows the regression between the digital

technologies index and online banking intensity in

the EU.

Fig. 5: Digital technologies index regression with

online banking intensity in the EU

Source: Calculated by the author based on Eurostat data

4.4 Online Banking Intensity Relationships

with Banking Sector Expenses in the EU

Countries

The following Table 8 summarizes the results of

regression analysis between banks’ expenses and

online banking intensity in the EU.

Table 8. Online banking regression with banks’

expenses models statistics

Model

R2

AdjR2

Std.Err

F-stat

p-value

TOC(OBI)

0.4989

0.4892

0.3214

51.7666

<0.001

STC(OBI)

0.4996

0.4900

0.1465

51.9204

<0.001

Source: Calculated by the author based on Eurostat and

ECB data

Calculated regression models’ statistics justify the

conclusion that both models are statistically

significant at a confidence level <0.01.

y = 1,9328x - 32,412

R² = 0,7243

0

20

40

60

80

100

20 30 40 50 60 70 80

y = 1,0567x + 14,567

R² = 0,2184

0

20

40

60

80

100

20 30 40 50 60 70 80

y = 1,0456x - 5,1155

R² = 0,634

0

20

40

60

80

100

20 40 60 80 100

y = 1,5834x + 4,5491

R² = 0,5438

0

20

40

60

80

100

20 30 40 50 60 70

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Table 9. Online banking regression with banks’

expenses coefficients statistics

Model

Variable

Estimate

Std.Err

t-stat

p-value

TOC

(OBI)

Intercept

2.2753

0.1224

18.5942

<0.001

OBI

-0.0142

0.0020

-7.1949

<0.001

STC

(OBI)

Intercept

1.1147

0.0558

19.9911

<0.001

OBI

-0.0065

0.0009

-7.2056

<0.001

Source: Calculated by the author based on Eurostat and

ECB data

All estimated regression coefficients are

statistically significant at level <1%, see Table 9.

The results obtained allow us to conclude that there

is a negative relationship between online banking

intensity and the operational efficiency of financial

institutions – when the intensity of online banking

increases, both banks' total costs to assets and staff

costs to assets decrease. With changes in online

banking intensity regression models can explain ca.

49% of both changes in banks' total costs to assets

and in banks staff to assets in the EU countries.

More, when online banking intensity increases by

one percent, banks' total costs to assets on average

decrease by 0.0142% to assets (95% confidence

interval from -0.0181% to -0.0101%), and banks'

staff costs to assets on average decreases by

0.0065% to assets (from -0.0083% to -0.0047%

respectively).

Regression analysis results provide evidence

for confirming the seventh hypothesis.

The Figure 6 shows a regression between banks’

total expenses and online banking intensity in the

EU.

Fig. 6: Banks’ total expenses regression with online

banking intensity in the EU.

Source: Calculated by the author based on Eurostat and

ECB data

Figure 7 shows the regression between banks’ staff

expenses and online banking intensity in the EU.

Fig. 7: Banks’ staff expenses regression with online

banking intensity in the EU.

Source: Calculated by the author based on Eurostat and

ECB data

5 Discussions

Providing sustainable financial services to

individuals, companies and organizations, and

society, in general, is one of the great challenges of

the first quarter of the 21st century, [15], [53]. As

research shows, the development and successful

implementation of digital technologies is one of the

essential factors for ensuring sustainability, [2], [5],

[6], [8], [13], [18], [24], [31], [48], which creates

an opportunity to provide customers with more

friendly access to financial services, [26], [28], to

reduce service costs, [69], and to create additional

added value for customers, [22], [32]. Therefore,

the digitalization of financial services promotes

financial inclusion, [34], [49], [57], [58], [62]. On

the other hand, as research shows, financial

inclusion is a factor contributing to the profitability

of financial service providers, [68], and one of the

driving forces of economic development, [43], [61],

thus contributing to the sustainable development of

society, [44], [60].

However, it should be remembered that digital

transformation is always a complex set of

measures, so it is important to be aware of possible

obstacles and barriers, [7], [72] as well as risks on

the way to sustainable digital financial services,

[36], [38].

Sustainability and digitization are two related,

yet different concepts, so their in-depth

understanding and awareness of each of their

advantages and their interaction, as well as

successful integration, can create additional

benefits in the way of implementation of

sustainable digital financial services, [10], [15],

[46], [50], [52], [76].

y = -0,0142x + 2,2753

R² = 0,4989

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

020 40 60 80 100

y = -0,0065x + 1,1147

R² = 0,4996

0,0

0,3

0,6

0,9

1,2

1,5

020 40 60 80 100

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6 Conclusions

Technological development creates opportunities to

radically change both financial services and

delivery channels, as well as business models and

processes in the classic financial sector,

opportunities for new business directions and

companies. However, the effective use of these

opportunities is associated with many limitations,

including economic and financial ones, public

sector and industry readiness levels, individuals'

digital financial literacy, society's attitude, etc.

Global shocks, such as the GFC and the

pandemic, as experience shows, can create

additional incentives for the faster development and

implementation of advanced technologies and thus

contribute to the achievement of UN Sustainability

goals.

To make use of limited resources as effectively

as possible, it is necessary to evaluate and prioritize

the factors affecting the process and prepare and

implement appropriate programs. In this context, it

is important to be aware of the widest possible

range of studies and their main conclusions,

because one study will never provide exhaustive

answers to all important questions:

- digitization and sustainability are two important

aspects, both in the context of the individual,

companies, and organizations and the entire

society, whose adequate perception and

inclusion in development programs can ensure a

maximum effect in the long term.

- a wide range of solutions and positive

experience stories are available, which can help

to successfully continue progress in the

development and implementation of digital

financial services.

- as a result of technology development,

opportunities have opened for new promising

business directions, incl. FinTech, and thus the

increased competition, has contributed to the

sustainable transformation of the financial

sector.

- digital solutions make it possible to successfully

solve financial inclusion issues both in

developed countries and especially in countries

with a low level of economic development and

thus to develop the national economy relatively

faster.

- studies have also highlighted several risks

associated with digital transformation, thus

providing an opportunity to learn from mistakes

and avoid potential losses.

The main conclusions of this study are:

- during the last decade, significant progress has

been achieved in the development and

implementation of digital financial services in

most EU countries.

- financial services are largely interconnected and

in a developed society there is a demand for a

wide range of them, which opens the

opportunity for service providers to benefit from

cross-sales and volume.

- it is important to be aware of the needs and

habits of customer groups and individuals so

that the offer of financial services and delivery

channels meet customer needs and preferences.

- at the current stage of development, the most

important factor affecting the intensity of digital

financial services in the EU is human capital

development, followed by the integration of

digital technologies. Consequently, responsible

institutions should prioritize the relevant

measures to more effectively deal with the

implementation of sustainable digital services

more.

- digitization is associated with significant

investments, but by successfully and far-sighted

solving the challenges of DT, financial services

companies could reduce their relative

operational costs, both total and staff expenses.

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