The Impact of Internet Banking on US Large Banks

Abstract

Research has proved the growth in competitiveness of banks due to technological advancements and enhancements. The main agenda of this research is to investigate the effect of implementing Internet banking on the financial performance of Banks. Therefore, several research questions were prepared to cater the research objective, which involved measurement of value created by Internet banking facilities to bank, importance of Internet banking website to banks. The term Internet Banking is defined as a source of communication channel to deliver bank related products and services. The primary aura of attraction for consumers in Internet banking was continuous and convenient access to banking services. The first concern of this study is to measure the Post effects of Internet banking on bank's profitability level and how to measure its competitiveness with respect to bank's performance from finance point of view. The researcher has utilized a descriptive and evaluative approach to gauge a detailed and analytical effect of Internet Banking on the financial performance of a several bank in USA. The method in this regard is divided into two broad categories, which are regression analysis and financial ratio analysis. The data elected from FDIC website is entered into a statistical program named as Statistical Science Package for Social Science i.e. SPSS 6.0 version. The profitability of banks having transactional website do not appear to have any significant influence on profitability, which is evident from measurement if return on assets and return on equity ratios. The lowering ratio of loan to deposit for banks with transactional website is evident from results of regression analysis and ratio analysis. The ratio analysis looked at other performance measures aside from profitability and liquidity. It accounted for Credit Risk and Interest-Rate Risk. The ratio analysis demonstrated that the banks with a transactional site were less prone to credit risk but almost the same amount of interest-rate risk as the non-transactional site banks.

The Impact of Internet Banking on US Banks

Introduction

Internet is undoubtedly is a source of establishing connection between different mixed system across the world. It has totally changed the dynamics of business operations. It won't be wrong saying that Banks along with other public and private business Institutions should also take advantage of the advancements of information technology and the wonders of Internet associated to banking assistances and requirements of customers. Research has proved the growth in competitiveness of banks due to technological advancements and enhancements. Banks should design their business strategies in collaboration with technological objectives to add to its competitiveness and these banks are referred to as learning and growing institutions. Banks have successfully launched vast range of online financial services since 1995 (Ahenkora, K., 2012). There are numerous research conducted aimed at evaluating the effects of Internet banking on financial performance particularly its contribution to profitability of banks in USA.

However, with the emergence and excessive use of developed channels of online banking, the risks and exposure associated to it have also ...