The effect of electronic banking on banks performance

Abstract

Electronic banking has gained prominence in the banking sector following the introduction of the Ghana Interbank Payment and Settlement System. Today universal banks have adapted their banking operations and have introduced designated electronic banking as one of their business models. This study focused on effect of mobile and internet banking on banks performance using the performance and profitability ratios. The study was conducted using panel data extracted from the annual reports and financial statements of the selected commercial banks in Ghana. The objectives of the study were achieved using quantitative research design and deductive research approach. The study examined the relationship between electronic banking and banks’ performance, the effect of electronic banking on banks profitability and the impact of electronic banking on the efficiency of banks in Ghana. The study revealed that profitability of banks (return on assets and return on equity) has significant positive association with electronic banking variables (ATM, EXP and Internet banking). The study also revealed that electronic banking in the form of internet banking, automated teller machines have significant positive effect on the profitability of the selected banks. The study concluded that electronic banking and the profitability of banks has significant association and there is causal effect running from electronic banking to the profitability of banks. The study recommended that banks should increase the number of automated teller machines and also improve their internet banking to allow more of their clients to use them since they have significant influence on their performance.