Information technology and productivity: a comparison of Japanese and Asia-Pacific banks

Abstract

Banks throughout Asia have achieved productivity improvement through information technology (IT) use. Retail and wholesale IT products positively influence productivity. IT use increases outputs and decreases costs. Both IT capital investments and IT human resources have a positive relationship to productivity. Japanese banks benefit less from IT use than Asia-Pacific banks. To improve, these banks should better utilize their IT human resources and capabilities and acquire more cost-effective IT from international sources. The positive impact of IT on productivity is difficult to determine in net profit and asset (predominantly loans) increases. However, both Japanese and Asia-Pacific banks can enhance productivity by increased spending on IT and better management of IT resources. This would increase their competitiveness through differentiation and customer service improvement, reduced costs, better risk avoidance, and maintaining the stability of their customer base and market share.