Article Preview
Top1. Introduction
With the advent of new e-business technologies, banks have engaged in initiatives that link online or automation service processes across enterprises to save costs and improve operating efficiencies. Digital banking refers to the use of technology to conduct banking transactions in a smooth manner. Therefore, it includes commonly used terms such as electronic banking, internet banking and online banking (Alkhowaiter, 2020). E-business services enable banks to develop new marketing and sales channels to promote awareness of their service offerings to existing customers and to appeal to new customers. Internet banking services have exhibited robust growth over the last two decades in Taiwan. For instance, Bank Sinopac launched its first internet banking services with the product “Money Management Account (MMA)” in 2000, MMA is very popular e-business service and attracts a great deal for users, which creates an increased volume of both transactions and profits.
E-business services play an important role in bank performance, as this type of investment constitutes a substantial component of costs and strongly impacts bank operations and strategy. Humphrey and Berger (1990) made a first attempt to analyse payment instrument costs; their findings showed that cheques are the cheapest payment instrument from a private perspective, followed by cash, Automatic Clearing House (ACH) and Point of Sale (POS) bill payments. This shows that paper-based payment systems (physical cash) are more costly than electronic approaches. Furthermore, studies have argued that e-business services can allow banks to achieve both revenue growth and cost savings. This is an important issue for executives to determine which e-business services can improve efficiency and profitability. Executives also need to know how to promote e-business products among automated teller machines (ATMs), internet banking, telephone banking and digital payments (credit cards, mobile payments, mobile wallets, etc.).
Bank performance has long been a chief research topic for scholars and regulators to assess how well banks serve as pivotal intermediary institutions between finance and currency (Liao, 2018). This study proposes a framework of measuring efficiency that regarding a basic problem with the effects of e-business services. In doing so, it aims to extend the literature examining bank efficiency vis-à-vis e-business outputs by reflecting true efficiency instead of excluding e-business outputs in the DEA model. In conclusion, this study contributes to the existing literature in several ways. First, it remains unclear whether and how e-business services impact a broader set of operational performance over time. For instance, Benitez et al. (2018) found that e-business technology had a positive effect on operational competence in Spanish firms from 2008-2010. Cook et al. (2004) revealed that e-branches did not exhibit productivity gains when compared to both the best practices of traditional branches and the predecessors of e-branches. To my best knowledge, this is the first study attempts to extend knowledge on how the use of e-business technology impacts bank efficiency in Taiwan.
The second contribution stems from processes of speedy evolution and recovery in recent years that have undoubtedly given emerging Asian countries key roles in world economics. Studies have responded by analysing data of emerging Asian countries, such as Taiwan. By continuing the trend of examining emergent Asian economies, this study provides empirical evidence regarding how e-business services affects bank efficiency outside the developed countries. To the best of my knowledge, this is the first empirical study to investigate bank efficiency with e-business services in Taiwan.
Thirdly, in recent years, e-payment applications have become prominent in financial markets and have played an important role in the banking industry. This phenomenon is attracting a great deal of scholarly attention. However, exiting studies have mostly focused on the satisfaction and penetration for customer behaviour (user). Few studies have examined the impact of bank performance and efficiency (supplier). Thus, this study explores this issue.