THE IMPACT OF INTERNET BANKING ON BANK’S PROFITABILITY : THE CASE OF NORTH CYPRUS
Nesrin Özataç(Asst.Prof.Dr) Eastern Mediterranean University E-Mail: firstname.lastname@example.org
Jude Chimezie Nwobodo(MSc) Eastern Mediterranean University E-Mail: email@example.com
ABSTRACT The growth in information technology is becoming an important factor in the development of the banking industry. For the banks, technology has emerged as a strategic resource for achieving higher efficiency, control of operation, productivity and most importantly, profitability. The improvement technology has really prompted the banks to meet the customers’ expectation in Northern Cyprus as well. In this study, the data is drawn from the web-sites of commercial banks presenting the internet products and services. It investigates the profile of commercial banks that offer internet banking using univariate statistical analysis relative to other commercial banks with respect to profitability. The results show that there has been differences in the measures of expenditures and performance in banks that are providing internet services and no significant correlation between profitability and internet banking.
Keywords: Internet Banking, Profitability, North Cyprus, Efficiency, Banks
The outstanding development in modern technology together with the persistent merge of information technology had not only created severe awareness, but also had brought a great lot in banking operations as a whole. For the banking sectors, modernized technology has become known as a tactical way of realizing higher efficiency, control of operation, higher yield and most importantly, profitability.
Information technology adoption and its usage are becoming an essential feature in today’s development most especially in the banking sector. The use of Internet banking allows for detailed assesses of customers account, make necessary enquiries and undertake banking transaction. The usage of personal computers, easy access to the internet and World Wide Web have provided an easy channel for accepting orders and a medium for delivering products and services to the customers (RBI, 2001).
There is a paucity of studies related and investigated the current condition of internet banking operating in North Cyprus. Most of the studies related with internet banking are on the U.S. and the European banking systems due to the availability of data. As there is no study on Internet Banking in terms of Profitability on North Cyprus. Therefore this paper is the first study that reflects the current status of internet baking by Turkish Republic of Northern Cyprus (TRNC) Public, Private and Foreign Branch Banks operating in North Cyprus.
There are several written documents that studied the adoption, growth and customer’s satisfaction in regard to internet banking. For instance, Jenkins (2006) surveyed the factors that affect the adoption of internet banking services by domestic commercial banks in North Cyprus (TRNC). The study found out that there are no domestic banks in TRNC that was offering internet banking services while just two foreign branch banks, IS Bank and HSBC were the only banks as of then that were offering internet banking. These not withstanding, there are still lots of scope that are available for internet banking expansion in North Cyprus.
Abeido (2004) investigated North Cyprus banks with only 85,000 prospective internet users with 23 Private and Foreign commercial banks. He concluded that the potential market in North Cyprus for internet banking services is minute. Yet the penetration of internet banking services increased remarkably from 8.7% of total banks in 2004 to 30% of total banks in 2006, of which the number of users has increased by 10% giving room for more recent analysis and inference. This is because as customers become more familiar and contented with internet banking services, internet banking...
References: Furst, Karen, William W. Lang, and Daniel E. Nolle, (2000), .Who offers Internet banking. Quarterly Journal, Office of the Comptroller of the Currency, vol. 19, no. 2, June, 29-48.
Sullivan, R.J. (2000), How has the adoption of Internet Banking Affected Performance and Risk at Banks? A look at internet banking in the Tenth Federal Reserve District, Financial Industry Perspectives, Federal Reserve Banks of Kansas City, December.
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