Interplay between digital technologies and business performance in banking industry: Global and regional perspectives

Abstract

In order to remain competitive on both domestic and global market as well as to satisfy evolving consumers' needs, modern banks must not ignore the potential of digital and smart technologies. Taking into consideration the importance of digitalization as a new standard in business practice, the aim of this paper is to evaluate the impact of digitalization on the performance of banking sector globally and in SEE region. The main purpose of this paper is to test if the investments in information and communication technologies (ICT) contribute to the growth of profitability of banking sector as well as to the reduction of OPEX. In order to test the influence of investments in ICT on banking performance adequately, the static panel data models of fixed effects models were used. The results indicate that the influence of investments in ICT on OPEX defers on global and regional level. The results also indicate statistically significant positive relationship between investments in ICT and banks' profitability in SEE region.