E-banking impacts the profitability of banks

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Study reveals




| Update:
Dec. 08, 2019, 5:24 p.m.


E-banking has a positive and significant impact on the performance of the country’s commercial banks in terms of net interest margin (NIM), return on assets (ROA) and return on equity (ROE), according to a study.

The study titled “Does E-Banking Impact the Performance of Commercial Banks in Bangladesh: An Econometric Analysis” found that the bank’s NIM, ROA and ROE increased by 10%, 5.0% and 5.0 % respectively for the use of any type of e-banking services.

E-banking is the service of traditional banking activities using different types of electronic devices such as computer, mobile, telephone, automatic teller machine (ATM), point of sale terminal (POS), etc. . in line.

The research was conducted by Professor of Economics Department at Rajshahi University, Dr Md Abdul Wadud and MSS Researcher from the same department, Bhishan Chandra Barman, using data from 12 banks for the period 2009 to 2018. e-banking.

The study used three proxy variables – return on equity, return on assets, and net interest on margin to determine whether online banking has an impact on performance.

The research was presented at the recent annual banking conference organized by the Bangladesh Institute of Bank Management (BIBM).

The study found that if the number of years of experience of adopting electronic banking by commercial banks increases, the asset rate of banks improves.

“The more years of experience of adoption of online banking by commercial banks, the higher the ROA and NIM of banks, which leads to higher profitability,” the study concludes. .

The study indicates that earnings per share have significant positive effects on banks’ ROE and ROA.

He said that there is a significant negative relationship between expenditure management and the performance of commercial banks in terms of ROE.

The study also pointed out that inflation has a significant positive impact on the performance of commercial banks in Bangladesh for the three measures-ROE, ROA and NIM.

The study recommended that all banks adopt all forms of online banking to improve their performance.

The study also suggested that the authorities should invest more to implement comprehensive online banking technologies in their banks and arrange to provide full knowledge of the use of online banking to their employees and customers in order to achieve higher profitability.

At present, around 45 of the 57 banks in Bangladesh offer any type of online banking services.

But of the 45, around 10 banks, including City, EBL, Mutual Trust Bank, BRAC and Standard Chartered, have taken online banking to the next level by using apps so customers can access their bank accounts with confidence. security from their smartphone.

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