Proceeding Book of The 4th ICMEM 2019 and The 11th IICIES 2019, 7-9 August 2019, Bali, Indonesia ISBN: 978-623-92201-0-5 Published by Unit Research and Knowledge, SBM ITB 856 | Page THE IMPACT OF DIGITAL ADVANCEMENT IN BANKING INDUSTRY MARKETING: THE CASE OF INDONESIA Handy Andriyas, Batara Maju Simatupang, and Kevin Bastian Sirait a Faculty of Economics, Parahyangan Catholic University b Magister Management, Post-Graduate Program, STIE Indonesia Banking School Email: 2017811006@student.unpar.ac.id Abstract. This article investigates the impact of digital and technological advancement in the Indonesian banking industry based on the perspective of marketing. The application of technology in the marketing field enables the banks to gain a competitive advantage in introducing their product to the potential and current customers. On the other hand, these benefits are also exposing the banks' and its customer to the marketing fraud risk. To find the impact of digital and information technology (IT) utilization with the addition of marketing fraud risk, the questionnaire in this research is answered by the directors of the banks' that are classified to the Book 4 category in Indonesia. The linear regression analysis is implemented to find the relationship between the utilization of IT and marketing fraud risk to the impact of technological and digital advancement. Based on the analysis conducted in this research, it is found that the advancement of digital and technological advancement has a positive relationship with marketing fraud risk and IT utilization by the banks, and it is also found that marketing fraud risk may also increase if the banks increase their utilization on IT in regards to introducing their product to the current and potential customer. Keywords: Digital marketing; Banking product; Technological advancement, Marketing fraud risk INTRODUCTION In this era of connectivity between software and hardware, the effect of the advancement of the technology is not just limited to the behavior of the bank's customer but to the nature and the operational and the marketing mindset of the bank itself. By this time, technological implementation and adoption have become a crucial role for the banks to fulfill the customer need in the matter of banking and financial activity through the internet. The increases of changes and advancement of technology may affect the banks marketing capabilities in introducing their product to the potential customers and at the same, fulfilling their current customer banking and financial needs at the operational level. According to the report published by Das, Gryseels, Sudhir, & Tan (2016) of the McKinsey & Company Indonesia and the company of Frost & Sullivan (2018), the reports show that 73% of total internet users in Indonesia have accessed the internet through mobile devices with the mobile penetration rate of 150% in 2016. Based on the reports, most of Indonesia citizens can use mobile banking to conduct financial and banking activities digitally. The improvement in information and communication technology (ICT) has an impact on the behavior of bank's customers which put pressure on banks to adapt to these changes (Tornjanski, Marinković, Săvoiu, & Čudanov, 2015). The developments of ICT have a significant impact on bank’s marketing efforts (Dootson, Beatson, & Drennan, 2016), especially in digital banking that affect customer interface (Mbama & Ezepue, 2018). At the same time, the marketing approaches taken by the banks can be affected by the advancement of technology. The digital world or the internet becomes an essential tool in marketing; however, many marketing managers do not understand how to incorporate their marketing strategies with the potential advantages of the internet (Yannopoulos, 2011). The marketing approaches using the ICT must take into consideration by the banks to introduce their banking product to their potential customer, especially with the diversity of banking and financial demand in this digital era. The advancement of technology and its implementation have produced four challenges, which are (1) big data, (2) social media, (3) the expansion of channels and (4) the changes in consumer demographics (Leeflang, Verhoef, Dahlström, & Freundt, 2014). In the marketing perspective, the implementation of social media, channels and the shift of consumer demographic is part of the marketing implementation and development to inform and fulfill the demand of banking and financial activities of the potential and the current bank's customer. Fortunately, due to the advancement of technology, banks can find the spending pattern of customer transactions (Srivastava & Gopalkrishnan, 2015). In which, it enables the banks to offer a banking product to fulfill the customer demands and needs based on the customer profile and past transactions. The technique of finding the customer pattern from the large volume of information or data is called big data analysis. Furthermore, with the increased on the connectivity through technology, the banks can reach its customer via social media or mobile application to increase the customer insight on the bank's product.