Impact of Technology on the Performance of Commercial Banks in Bangladesh

Abstract

Among the financial service industry, the banking sector was one of the first to embrace rapid globalization and benefit significantly from IT development. Recently the private banks of Bangladesh are trying to imitate the banking structure of developed countries. There are 30 commercial banks listed in Dhaka Stock Exchange. The research is based on the data that was available in the annual report and websites of those banks. The study of the impact of technology on the performance of commercial banks in Bangladesh will provide us about the positive and negative impact of technology to the earnings of banking sector. Recently automation has become a trend for commercial banks of Bangladesh, at least it have to be automated at head-office level. The study includes ATM number, online branch number, mobile banking and online banking percentage. From the analysis, we can see that Basic Earning Power of commercial banks is declining from 2010. ATM number is growing rapidly than automating branch services. Mobile banking is a recent topic in our country, and it has positive impact on return. In the earlier period, adoption of technology was not essential to sustain in the market. But now-a-days, analysis shows that technologically advanced banks get higher return compare to others. The empirical model for the panel data analysis is fixed effect and random effect model. To determine which model is giving best result for the study, Hausman test has been done. In the panel data analysis, random effect model has given a good result than fixed effect model. Where we can see that, customers are more concerned about ATM number and online banking.