Measuring the Effect of Digitalization Efforts on Bank Performance
43 Pages Posted: 10 Oct 2019
Date Written: September 30, 2019
There is an ongoing debate on whether digitalization can increase bank performance and more specifically which technologies do so. The debate to date suffers from a lack of data. We suggest new measures of digitalization efforts in banks by using text mining methods on annual reports. Our results on all banks listed on the New York Stock Exchange imply that digitalization efforts improve performance for some successful cases but not in all cases. Practitioners should therefore carefully monitor the implementation of digitalization efforts. Considering technologies, business intelligence and IT infrastructure are most crucial in generating profits. Distribution channels are less important in comparison.
Keywords: digital banking, profitability paradox, text mining
JEL Classification: G21
Suggested Citation: Suggested Citation