Quantitative analysis of the impact of electronic banking on the financial performance of rural banks in Indonesia

Abstract

The rapid growth of electronic transactions has transformed the landscape of many industries, especially in the banking sector. This digitalization growth has brought about the need to understand the impact of the adoption of electronic banking in rural banks on the financial performance of rural banks in Indonesia. The aim of this research is to analyze the extent to which the adoption of e-banking influences consumer electronic trust (e-trust) and financial performance. The research method used is quantitative, involving data collection through questionnaires. Respondents in this study are managers of rural banks in West Java, Indonesia. The sample size used is 200 participants. Data collection took place over two months from May to June 2023. Data analysis was performed using Structural Equation Modeling (SEM) through SmartPLS 4 software. The research results indicate that the adoption of e-banking has a positive and significant impact on consumer e-trust and financial performance. Consumer e-trust has also been proven to mediate the relationship between e-banking adoption and financial performance. These findings provide profound insights into how e-banking plays a key role in building consumer e-trust and enhancing the financial performance of banking institutions. This research makes a significant contribution in the context of developing e-banking strategies in the banking sector. The implications of these findings can guide policies, strategies, and innovations in the banking sector to optimize the benefits of electronic banking, build consumer e-trust, and enhance financial performance in this digital era.