The Role of Digital Banking in Enhancing Banking Performance

Abstract

Digital banking is now a fundamental component of the banking business model. The paper looks at the role of digital banking, which involves internet banking, mobile banking, digital payments and API services, and how these can improve banking performance. The article constructs a conceptual framework based on the resource-based view, technology acceptance model, and the DeLone and McLean model of the success of information systems to understand the relationship between digital banking adoption and cost efficiency, customer outcomes, and financial performance. A quantitative, cross sectional design is suggested with the use of panel data and illustrative data of commercial banks to illustrate the analytical procedure. Illustrative results indicate that digital adoption is positively related to ROA, ROE and non-interest income and negatively related to cost-to-income ratio. Customer satisfaction and operational efficiency are found to be important mediators and cybersecurity risk serves as a moderator in the relationship. Finally, the paper discusses some implications for management and policy and future research. Note: Data in the tables are only examples and are included to illustrate the analysis format; author's actual data needs to be substituted for these prior to submission.

keywords: digital banking, banking performance, mobile banking, cost efficiency, customer satisfaction, financial technology.