Internet banking and performance

Abstract

PurposeThe purpose of this paper is to provide an empirical study demonstrating the impact of internet banking, specifically the traffic rank and reach of the web site, on bank performance.Design/methodology/approachThe current study measures the impact of web site rank, percent of total internet users, and number of external links, using data from Alexa.com on bank performance, measured by deposits per branch, net income, return on assets, noninterest income to earning assets, and noninterest expense to earning assets, using data reported from the FDIC.FindingsResults show some support for the importance of web site traffic rank and reach. Specifically, the percent of total internet users and the number of external links were related to both domestic deposits and total global deposits per branch. Moreover, traffic rank and reach were related to net income and noninterest income to earning assets.Research limitations/implicationsOne limitation of this study is that it did not examine web site quality or e‐service quality directly.Originality/valueThe paper demonstrates that greater web site traffic is associated with a greater ability to find new, alternative sources of revenue beyond traditional loans, but that spending more on developing the web site does not necessarily mean the ability to spend less on traditional branch overhead. As such, this paper has value for bank managers and researchers alike.