The Impact of IT on the Banking Productivity

Jevtić, Boris and Kovačević, Vladan and Vučeković, Miloš (2014) The Impact of IT on the Banking Productivity. Economic analysis, 47 (1-2). pp. 193-204. ISSN 1821-2573

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Abstract

There has been much debate on whether the investment in Information Technology provides improvements in productivity and business efficiency of banks and, weather the usage of the opportunities of Digital Technologies to better serve customers and achieve firm goals the proliferation of technologies offers vast new opportunities. This paper investigates the impact of ICT capital on productivity in banks. For the analysis, data from various research reports, and reliable studies on banking efficiency and productivity and digitalization of their services are employed. The results obtained shed some light on the relative impact of ICT capital, and provide new insights about the structural dynamics between these factor inputs. We find that the banks as financial service sectors in developed countries are quite similar in terms of efficiency, and that efficiency and productivity depends more and more on ICT capital. Although, the financial services industry and banks in particular increasingly invest in technologies to improve their online banking and more recently their mobile payment solutions, the Serbian case, as banking sector in transition countries, shows slower implementation of new digital trends in operational activities of the banks. At the same time, banks use tools such as social networks, digital tools kits, online competitions, online advertising campaigns, mobile apps, location-based services and online market research to connect with customers. The paper also provides an overview of digital trends in general and the banking industry in particular and best practices how digital media tools are helpful to achieve marketing goals, and ultimately generate higher revenues at lower costs. The contribution of the paper can be seen also in: Deeping the understanding of (stationary and mobile) digital technologies in the marketing tool box; Further exploring the digital landscape and the types of digital customers in the banking industry, and in discussions the cases of the introduction of a mobile payment system.

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