E-banking impact on cost saving in the Iranian banks

E-banking transactions has been constantly increased in the Iranian banking network through different vehicles including ATM, POS, E-branches, internet and cell-phone as the real value and per capita transactions have respectively experienced almost 18.5 and 15 percent average growth during 2011-15. Accordingly, the ratio of E-banking transactions to GDP and broad money rose remarkably at about 23 and 12 percent in the same period.The impact of E-banking indicators on the banks’ operational cost ratios is econometrically examined by the panel data method, the estimation output highlights that credit and debit cards as key vehicles of E-payment positively influence the ratio of operational cost to total assets mainly due to big volume of issuing cards, low average transactions of each card, immaturity of technology, and the time lag of card holders’ acquaintance to adapt with the E-cards as new payment tool. Meanwhile, the ATM and branch terminals as more familiar vehicles of E- payment services negatively-significantly affect operational cost mainly because of higher average transactions of the each vehicle, the maturity and popularity of technology in the society.The estimation results also express that the ATM and branch terminals as more reliable and familiar vehicles of E- payment services negatively-significantly affect operational cost mainly because of higher average transactions of the maturity of technology, popularity and social penetration of each vehicle services. Furthermore, the negative impact of branch terminal variations on the ratio of operational cost to assets is remarkably recognized higher and more significant than the ratio of operational cost over total equity due to the counter-relationship between branch terminal and banks’ total assets. In this context, although the E-banking operational cost is primarily considered cost- intensive, the economies of scale provide an opportunity to diminish the average operational costs and surge the accessibility to E-banking products

Keywords:

E-Banking , Operational Cost , E-banking Indicators , Panel Data