Chapter-1 - Part 1

THE IMPACT OF INTERNET AND MOBILE BANKING ON THE FINANCIAL PERFORMANCE OF PRIVATE BANKS
THE IMPACT OF ONLINE BANKING
ON THE FINANCIAL PERFORMANCE OF PRIVATE BANKS
Submitted by:
Basibas, Rhancee
Crisostomo, April Joy
Romero, Rae Anne Joy
Submitted to:
Dr. Neri Pescadera
November 16, 2019
1
PREFACE
Customers are the main contributors to every business ' growth and survival, and this also
applies to the banking sector. Therefore, the need arises not only to satisfy the customers, but als
o to retain them, as this can lead to increased profitability and better bank performance.
Technology affects each individual's life in the present age, and internet banking is one of
today's fastest-growing innovations in banking practice. In addition, consumers are switching
very rapidly from traditional banking to online banking due to various advantages such as cost
and time efficiency. Therefore, the increasing importance of internet banking, with its effect on
business efficiency and profitability, needs to be studied carefully.
The study has been completed under three chapters.
The first chapter deals with the theoretical study and historical background of internet banking an
d different factors affecting customer satisfaction and bank’s profitability. In the second chapter,
related literature and studies have been reviewed. The third chapter presents details about the
research design and methodology followed in the study. It includes formulation of hypotheses on
the basis of core studies, generation of scale items, data collection technique, data purification,
reliability, validity and limitations of the study.
The study is expected to be useful to all the concerned including researchers and policy
makers.
2
ACKNOWLEDGEMENT
We acknowledge our deep sense of gratitude and sincere regards to our advisor Dr. Neri
Pescadera for his guidance, caring, patience, help and providing us with an excellent atmosphere due to
which we have been able to complete our research work. We also extend our sincere thanks to our
loving parents whose blessings are always with us. Finally, we are grateful to almighty God, who has
always blessed us with heaven choicest blessings and his prime power that the research got successfully
accomplished. We also take pledge to work for the good of mankind and help others.
3
TABLE OF CONTENTS
Title Page 1
Preface
Acknowledgement 3
Title of Contents 4
CHAPTER
I. The Problem and Its Background 5
a. Introduction 5–7
b. Background of the study 7–8
c. Statement of the Problem 9
d. Hypothesis 10
e. Significance of the Study 10 – 11
f. Scope and Limitations 11 – 12
g. Definition of Terms
II. Review of Related Literature and Studies 15 – 24
III. Methods of Research and Procedure 25 – 28
IV. References 29
4
CHAPTER 1
THE PROBLEM AND ITS BACKGROUND
Introduction
Internet banking is a service that allows the customers to conduct the financial
transactions electronically, with the use of internet. It is accessible via the bank’s website using
computers and laptops. Nowadays, mobile banking also became popular which is an internet-
based facility provided by banks that enables the customers to execute bank transactions, via
mobile or tablet devices. It is accessible via a downloaded mobile application in an Android or
IOS operating systems. These e-banking facilities described allow customers to have a 24/7
account access online ranging from checking of account balances, paying of bills, sending of
money, prepaid reloading and many more with just a few clicks on hand-held devices anywhere.
These are by-products of the new innovations to withstand the increasing demand of internet
usage and gadget ownership of the people.
In the Information Technology era, the internet has dramatically improved the lives of the
people, the same goes with how banking transactions are being conducted. E-banking is just a
few clicks away. In the US, while financial institutions took steps to implement e-banking
services in the mid-1990s, many consumers were hesitant to conduct monetary transactions over
5
the web. It took widespread adoption of electronic commerce, based on trailblazing companies
such as America Online, Amazon.com and eBay, to make the idea of paying for items online
widespread. By 2000, 80 percent of U.S. banks offered e-banking. Customer use grew slowly. At
Bank of America, for example, it took 10 years to acquire 2 million e-banking customers.
However, a significant cultural change took place after the Y2K scare ended. In 2001, Bank of
America became the first bank to top 3 million online banking customers, more than 20 percent
of its customer base. In comparison, larger national institutions, such as Citigroup claimed 2.2
million online relationships globally, while J.P. Morgan Chase estimated it had more than
750,000 online banking customers. Wells Fargo had 2.5 million online banking customers,
including small businesses. Online customers proved more loyal and profitable than regular
customers. In October 2001, Bank of America customers executed a record 3.1 million electronic
bill payments, totaling more than $1 billion. In 2009, a report by Gartner Group estimated that 47
percent of U.S. adults and 30 percent in the United Kingdom bank online.
Internet banking is not something new in the Philippines. What's new now are the ways
on how internet banking can be accessed and that is through the different modern devices such as
laptops, tablets, smartphones and other gadgets. According to the AVP for Electronic Channels
Group Bank of the Philippines Islands (BPI), Carlo Gatuslao said that first experiments with the
internet banking happened in about late 1980's. Even then internet banking was not popular in
the Philippines. It was on the mid 1990's that some banks abroad successfully implemented
transactional internet banking, then the internet banking started to become popular followed by
most banks setting up own webpages. It was only around 1999 to 2000 when major banks in the
Philippines were able to successfully implement internet banking. Earlier, internet banking was
6
just browser-based or can be only accessed through desktops or laptops. Now, it is already
accessible via phone or mobile devices as long as it has internet connection.
In a study conducted by McKinsey & Company on digital banking in Asia in 2015, the
Philippines proved to be the country with the lowest digital-banking penetration among emerging
economies in Asia, indicative of Filipinos’ conservative and traditional temperament when
handling finance matters. But, overall, people across the region are shifting to so-called e-
commerce channels and are increasingly more open to use Internet or mobile platforms when
making financial transactions.
Banking environment has become highly competitive today. Smartphones in hand,
customers across Asia including the Philippines are changing how they bank, growing more open
to exploring and using digital channels for their financial needs. This openness to digital
channels will reward those banks that can meet customers’ expectations thus will add value to
their financial performance.
Background of the Study
Banks are among the most important financial institutions in the economy. They are
considered as financial-service firms, producing and selling professional management of the
public’s fund as well as performing many other roles in the economy.
7
The increased adoption and penetration of Internet has recently redefined the playground
for the banking industry. Majority of the banks today in the Philippines have online banking sites
and mobile applications that can easily be downloaded and installed. E-banking has emerged as a
strategic resource for achieving higher efficiency, control of operations and reduction of cost by
replacing paper based and labor-intensive methods with automated processes thus leading to
higher productivity and profitability. However, the actual impact of the e-banking on bank
performance mainly on the bank profitability has remained an unstudied issue after the adoption
of the e-banking facilities in the Philippines formally regulated by the Bangko Sentral ng
Pilipinas in 2000 under the Electronic Commerce Act.
This study therefore, seeks to investigate the impact of internet banking to the
performance of the top 5 private banks in the Philippines focusing on the profitability in terms of
return on bank’s assets (ROA) and return on equity (ROE) after the implementation of online
banking.
For the purpose of this study, the terms “online banking”, “internet banking” and “e-
banking” are used interchangeably are synonymous with one another.
8
Statement of the Problem
This research attempts to find evidences on “The Impact of Internet Banking on the
Financial Performance of the Top 5 Private Banks in the Philippines” in terms of profitability.
More specifically, it seeks to find answers to the following questions:
1. What are the internet banking facilities being offered?
1.1 Online Banking
1.2 Mobile Banking
1.3 Both Online and Banking
2. What year did the top 5 private banks started implementing internet banking?
3. Is there a significant change between the range of profits of the top 5 private banks
before the implementation of internet banking?
4. Is there a significant change between the range of profits of the top 5 private banks
after the implementation of internet banking?
5. Is there a significant relationship between the application of internet banking and
profitability?
6. What is the impact of internet banking to the top 5 private banks profitability
performance?
9
Hypothesis
In view of the internet banking and its possible impact on the financial performance of
the top 5 private banks in the Philippines in terms of profitability, this study hypothesized that:
Internet and mobile banking have no significant impact on the financial performance of the top 5
private banks in the Philippines in terms of profitability after the consolidation and analysis of
data on the following variables:
1. There is no significant change between the range of profits of the top 5 private banks
before the implementation of internet banking.
2. There is no significant change between the range of profits of the top 5 private banks
after the implementation of internet banking.
3. There is no significant relationship between the application of internet banking and
profitability
Significance of the study
For the individual, companies, and stakeholders: The study will be beneficial in terms of
monitoring, managing, and controlling their bank accounts 24/7. It is also the fastest and
convenient way to regularly check their transactions.
10
For the Private Bank Sectors: The study will help the advantages and disadvantages of
Internet and Mobile Banking in terms of profitability. Further, the study will be the basis for the
enhancement of their Mobile Banking services to maintain customer and good financial
statement.
For the Central Bank of the Philippines (BSP): The study will help to evaluate the
importance of online banking systems to the banking and finance industries in the computer age
and advancement of technology. Further, to determine the effect of online banking of the
financial performance of the private banks.
For the University: The study aims to contribute new knowledge for the expanding of
studies about the banking sector and the use of advance technologies to improve overall
customer experience in online banking.
Scope and Limitations
This study focused only on internet and mobile banking systems of 5 banks in the
Philippines to efficiently assess impact on financial performance in terms of profitability for the
3 year period after implementing the internet banking. It is not the task of this paper to cover the
whole banking industry in the Philippines. Furthermore, for the purpose of this study, a
11
comparative analysis will be conducted on the financial performance before and after launching
the internet and mobile banking systems.
The study covers the top 5 private banks in terms of their total assets in the Philippines
according to the latest report of Central Bank of the Philippines (BSP), namely, (1) Banco De
Oro, (2) Metropolitan Bank and Trust Company, (3) Bank of the Philippine Islands (4)
Philippine National Bank and (5). To address the research problem, research survey was used.
However, no actual interviews were conducted with the respondents.
The study covered the financial data of the banks before and after the adoption of the
internet and mobile banking systems in assessing the profitability measures of Return on Assets
(ROA) and Return on Equity (ROE).
Additionally, the researchers did not include the cyber security of the banking industries
and the issues about internet connection in the Philippines.
12
Definition of Terms
Bank
The financial intermediary that offers the widest range of financial services – especially credit,
savings and payment services – and performs the widest range of financial functions of any
business firm in the economy.
Electronic Banking
Refers to the provision of banking products and services through electronic channels, which
included phone banking, credit cards, ATMs and direct deposits.
Internet Banking
Refers to as a remote delivery channel for banking services, including traditional services, such
as opening of deposit account or transferring funds among different accounts, as well as new
banking services such as electronic bill presentment and payment, which allow a client to receive
and pay bill over a bank’s website.
Profitability
The state or condition of yielding a financial profit or gain. It is often measured by price to
earnings ratio.
13
Return on Asset (ROA)
This shows the percentage of how profitable a company's assets are in generating revenue. Net
Income/Total Assets: ROA is the ratio of a company's annual revenues to its total assets and
always displayed as a percentage. Return on Assets measures and displays how lucrative a
company could be in comparison to the firms’ total assets. Also for management efficiency,
ROA gives a detailed idea as to how it uses its fixed assets to produce incomes.
Return on Equity (ROE)
Measures the rate of return for ownership interest (shareholders' equity) of common stock
owners. It measures the efficiency of a firm at generating profits from each unit of shareholder
equity, also known as net assets or assets minus liabilities. ROE shows how well a company uses
investments to generate earnings growth. ROEs 15-20% are generally considered good. Net
Income/Share holder’s Equity: Return on equity is another profitability ratio that that evaluates
profitability of any company, especially for big sized company, by giving a detailed information
of how much income or earnings a company makes with the total money shareholders of that
company invested. The ratio is always in percentage.
14
CHAPTER 2
REVIEW OF RELATED LITERATURE AND STUDIES
This chapter presents the literature and studies reviewed by the researchers that have
significant bearing on this study.
FOREIGN LITERATURE
In modern age, the Internet is rapidly turning out to be a global communication tool. It
has also become an important source of knowledge and information. Due to the wide use of
Internet., many banking and financial institutions launched Online or Internet Banking as part of
their financial services.
Internet Banking is the wave of the future. It provides enormous benefits to consumers in
terms of ease and cost of transactions. But it also poses new challenges for country authorities in
regulating and supervising the financial system, and in designing and implementing
macroeconomic policy (Saleh & Schaechter, 2002).
According to a publication entitled, Internet Banking: Developments and Prospects
(Furst, Lang and Nolle, April 2002 p.47-48), among institutions offering Internet Banking, large
banks are more likely than small ones to offer a broad range of services on the Internet.
Projections based on the banks’ plans indicated that 45 percent of all national banks in the U.S
15
would offer Internet banking by the beginning of 2001. On the demand side, the authors cited,
although only one out of five banks offered Internet banking, the estimates here indicated that by
far most banking customers have accounts with institutions that offers it. Thus, the availability of
Internet banking was sufficient to accommodate sudden and rapid growth that has occurred in
other information-intensive industries.
In a report entitled “The Emerging Digital Economy” (2003), the following comparisons
were made to highlight the rapid progress of the digital revolution. The Internet’s pace of
adoption has surpassed all other technologies that preceded it. In 1971, forty-eight years after the
first Personal Computer (PC) was introduced; 50 million people were using one. It was in 1993
that the graphical user interfaces the World Wide Web (WWW) was released, giving non-
technical users the ability to navigate the internet.
Online banking was first introduced in the early 1980s (Kalakota and Whinston, 1997), in
which consumers were provided with an application software program that operates on personal
computer (PC) which can be 9 dialed into the bank via a modem, telephone line and operated the
programs remotely on the consumer PC. However, the lack of Internet users, and costs
associated with using online banking, stunted its growth. It was only in the late 1990s that
Internet Banking really caught on as the Internet explosion had made consumers more
comfortable with making transactions over the web.
16
Internet Banking is where a customer can access his or her bank account via Internet
using personal computer (PC), mobile phone, and web browser. In addition, Internet Banking as
banking service that allows customers to access and perform financial transactions such as fund
transfer, viewing of savings account balances, and bills payment. As a result, the account holders
can no longer visit the bank personally and wait for long queuing to process their banking needs.
Based on Forrester Research, Internet was the dominant channels besides the branch in
2007. See Figure 2.1.
Centeno (2004) argued that speed, the convenience of remote access, 7/24 availability
and price incentives are the main motivation factors for the consumers to use Internet Banking.
Guerrero et al. (2007) examined the usage of Internet Banking by Europeans and their results
indicate that ownership of diverse financial products and services, attitude towards finances and
trust in the Internet as a banking channel influence clients’ usage of Internet Banking. Durkin et
17
al. (2008) made note on the simplicity of the products offered via Internet Banking facilitates the
adoption of Internet Banking by consumers.
The use of technology has several advantages ranging from regulation, operational costs,
accessibility of services will accrue to the institution and customers that adopt the technology
that will in turn influence the firm’s financial performance (Nzau, 2013). The electronic banking
reduces an institution’s paperwork and has proper documentation for their records as a whole
(Ngumi, 2014).
Years have passed since the birth of online banking and research shows that it is 100
times more cost-effective for banks to run on cyberspace than to have an actual bank teller to
process over-the-counter transactions. Traditional Banking and Internet Banking perform the
same functions. The only difference is how the transactions are executed.
LOCAL LITERATURE
From the website https://www.businessinsider.com/banking-industry-trends, Online
Banking is the most prevalent trend in banking industry today. In today’s era of unprecedented
convenience and speed, consumers do not want to have the trek to a physical bank branch to
handle their transactions specifically on the Millennials and the older members of Generation Z,
who have started to become dominant players in workforce (and the biggest earners).
18
According to the AVP for Electronic Channels Group Bank of the Philippines Islands
(BPI), Carlo Gatuslao said that first experiments with the internet banking happened in about late
1980's. Even internet banking was not popular in the Philippines. It was on the mid 1990's that
some banks abroad successfully implement transactional internet banking. About that time,
internet banking started to become popular. Then most banks at that time started to put up their
webpages.
It was only around 1999 to 2000, major banks in the Philippines were able to successfully
implement internet banking. Before internet banking was just browser-based or can be only
accessed through desktops or laptops. Now, you can access internet banking with your phone or
mobile devices as long as it has internet connection.
Bangko Sentral ng Pilipinas (BSP) denotes that Internet Banking innovations have also
come in like phone banking, internet banking, and mobile banking. Their common denominator
is to further improve consumer convenience by allowing banking transactions from the office,
home, and indeed wherever the costumer can use a personal computer or mobile phone on a 24/7
basis.
However, internet banking has not yet completely replaced the brick-and-mortar
structure, although there are only banks on the Internet. Indeed, we have already licensed one of
the pioneers of Internet-only banking in the Philippines. What we see today is more like brick-
and-click, the incorporation of e-banking into a more traditional banking structure.
19
FOREIGN STUDIES
Egland, et al (1998) are among the first to conduct the initial imperative survey that
evaluated effects of Internet banking on the United States banks and evaluated the performance
and structural uniqueness of these banks. But the study could not highlight any evidence or
linkage on key distinctions in the performance of the banks rendering Internet banking services
to their customers as compared to those not offering Internet banking. Their findings and that of
Sullivan (2000) are much same. He found no strong proof of an advantage of Internet banking in
the case of U.S click-and-mortar banks.
Referring to the study of Furst, et al (2002a), they made available a relative documented
work of Internet and non-Internet banks which are based in the U.S. and established that
establishments offering Internet banking are more profitable than those not offering Internet
banking. They claimed in the study that national chartered U.S. banks experienced a huge Return
On Equity by using the click-and-mortar business form and that different sizes of banks offering
Internet banking do not rely mainly on their internet profiting activities and deposits than non-
Internet banks do; but he later again in 2002 concluded that internet banking was not a
significant factor to have an effect on bank’s profitability.
Furst, et al (2002b) examined the reasons explaining the decision for which banks adopt
Internet banking. The findings showed that, new, large and efficient banks that are located in
developed areas (Main Cities), and which incur higher cost 9 on their fixed assets (like land and
building), are mostly likely to embrace Internet banking.
20
From the consumers’ perspective, Internet banking provides a very convenient and
effective approach to manage one’s finances as it is easily accessible 24 hours a day, and seven
days a week. Besides, the information is current. For corporate customers, sophisticated cash
management packages offered through Internet banking provide them with up to the minute
information, allowing for timely funds management decisions (Kalakota and Whinston 1996).
Unninthan (2001) described the impact of e-banking adaptation on Australian and Indian
banking sectors with the help of qualitative and quantitative analysis. The researcher found that
Australia had a strong platform for e-banking growth with 37.7 per cent of population willing to
engage in e-banking mostly in urban areas due to literate young working population with
discretionary income. However, India by comparison was played by weak infrastructure, low PC
penetration and consumer reluctance in rural sector. But the professionals are compelling the
government and bureaucracy in the country to support and develop new initiatives at a faster
speed of internet banking. However, in both the countries, e-banking was a successful strategic
weapon for banks to remain profitable in a volatile and competitive market place.
Abaenewe et al (2013) from their analysis of effect of internet banking has significantly
impact on return of equity. Beck et al,(2005) in assessing the effect of privatization of Nigerian
banks from 1990-2001,controlled for the age of the banks ,since longer established banks might
enjoy performance advantages over relative newcomers. Their results for the Nigerian market
indicate that older banks did not perform as well as newer banks, which were better able to
pursue new profit opportunities.
21
Mahotra and Singh (2009) studied the impact of internet banking on Indian banks
performance and found that there is no significant association between adoption of internet
banking by banks and their performance. They also concluded that internet banking has a
negative and significant impact on profitability of private sector banks particularly new private
sector banks.
Hasan, Maccario and Zazzara (2005) investigated the impact of internet banking on the
performance of commercial banks in Italy. Hasan et al (2005) adopted return on assets (ROA)
and return on equity (ROE) as performance indicators. Findings showed that internet banking has
significant effect on both ROA and ROE of commercial banks in Italy. Hence, the study
concluded that internet banking significantly affects commercial banks performance in Europe.
Onay, Ozsoz and Helvacioglu (2008) investigated the impact of internet banking on the
performance of commercial banks in Turkey from 1996 to 2000. The study adopted a sample of
14 commercial and savings banks and the profitability measures include return on assets (ROA),
return on equity (ROE) and Margin of Interest which served as the dependent variables. Findings
revealed that (i) In the first year of adopting internet banking, there is no positive performance
between internet banking and profitability of commercial banks. (ii) In the second and third
years, some improvements in performance were seen such that return on equity (ROE) had a
positive and significant relationship with internet banking. However, return on assets (ROA) had
a positive but insignificant relationship with internet banking.
Francesca and Peter (2008) conducted a comparative analysis of the effect of electronic
banking on performance in four European countries namely UK, Spain, Finland and Italy. The
study adopted panel data method from 1995 to 2004 using 46 banks. The dependent variables
22
were return on assets (ROA) and return on equity (ROE). Findings revealed that banks involved
in only on line banking services and those involved in mixed internet banking services do not
have any clear differences. However, the study showed that internet banking has a significant
effect on both return on assets (ROA) and return on equity (ROE).
LOCAL STUDIES
From the survey conducted by Business World – commissioned study Hunting in 1999,
showed that banks in the Philippines were cautious adopters of technology and going to some IT
investments starting 2000. (www.bworld.com.ph).
Data from Bangko Sentral ng Pilipinas (BSP) show that as of March 2003, the most
common type of e-banking service offered by Philippine banks is internet banking. The report
indicated that 21 out of the 30 banks which have been approved by BSP to offer these through
internet. Meanwhile, 17 offer electronic banking services through fixed line telephones and 16
through mobile phones.
It was year 1990 when businesses started using the internet in their operations. This also
marked the beginning of its popularity among individuals. More and more companies reached
and served their clients through the use of internet. Fortunately, banks were also given
opportunity to utilize the technology. The implementation of Electronic Commerce Act allows
them to offer their products and services using alternative channels. Moreover, this is a value-
added tool attract new clients and retain the existing ones while, at the same time, helping banks
23
to lessen overhead costs. Banks are required by BSP to seek approval before they provide such
electronic banking services.
The impact of E-banking on general bank performance and operation is observed in most
part of the world. Many researchers reported that E-banking system is undergoing process for
transformation with better performances in any banks (Idowu, 2002). In Philippines, many
aspects appeared with the growth in banking sector side to side with the internet banking while
others see internet banking is being unsuccessful due to frequent network failure and transactions
errors (Idowu, Alu & Adagunodo, 2002). The impact of internet banking guideline is examined
to determine if there is a significant impact on its financial performance.
24
CHAPTER 3
METHODS OF RESEARCH AND PROCEDURE
This chapter presents the way the study will be conducted. It details the method of
research to be used, the sampling technique, the description of the respondents, the
instrumentation, the data gathering procedure and the statistical treatment of data.
This study will determine the impact of internet banking in the financial performance of
the top 5 private banks in the Philippines in terms of profitability.
Method of Research
The researchers will be using the descriptive method of design. Descriptive studies are
valuable in providing facts on which scientific judgements may be based. They provide essential
knowledge about the nature of objects and persons. It is usually used when the objective of the
study is to provide a systematic description that is factual and accurate as possible.
Calderon (2002) defined descriptive method as a purposive process of gathering,
analyzing, classifying and tabulating data about prevailing conditions, practices, beliefs,
processes, trends and cause – effect interpretation about such data with or without the aid of
statistical methods.
The researchers will utilize a survey questionnaire in this study to the get the pertinent
data needed.
25
Sampling Technique
The researchers determined the sample size for this study by using the purposive
sampling. According to Shaughnessy and others (2000), a purposive sampling is a type of non-
probability sampling in which investigator selects the elements to be included in the sample
based on their special characteristics.
This study will focus on the top 5 private banks in the Philippines in terms of their total
assets as of June 30, 2019 according to the data of Bangko Sentral ng Pilipinas which are the
following:
1. BDO Unibank Inc
2. Metropolitan Bank & TCO
3. Bank of the Philippine Islands
4. Philippine National Bank
5. China Banking Corporation
Description of the Respondents
The respondents of this study will be the Bank’s Head of Finance Managers and Head of
IT Department or as assigned by the bank who can provide accurate information which can
represent the bank.
Instrumentation
The main instrument to be used in the collection of the data will be a survey
questionnaire. To test the validity of the instrument, questionnaire will be pre-tested to at least 1
26
private bank that is not included as participants of the study. Validation will be done to check the
concreteness and understandability of the questionnaire to be used.
The questionnaire will be divided into two parts. Part I will contain the bank’s data on
internet banking facilities, the internet banking year of implementation and the factors which
influenced the bank’s decision to adopt and implement internet banking. The part II will contain
the bank data profits for the before and after the internet banking implementation.
Data Gathering Procedure
The researcher will be writing a letter of request to the bank’s Head Office to seek
permission to allow the researchers to conduct the study so that official documents and relevant
data pertaining to the study will be made available by the bank.
The researchers will be personally handling the questionnaire to the respondents based on
the approved schedule by the bank’s Head Office. The researchers will explain the purpose of the
questionnaire and will ask will personally ask the questions.
The researcher will retrieve the questionnaire as soon as they were finished answering
then will summarize and tabulate the data.
27
Statistical Treatment of Data
After gathering the data, it will be compiled and tabulated accordingly and the following
formula’s will be used:
1. Frequency and Percentage Distribution. This tool will be used to analyze the respondent’s
account information and in presenting of a part to the whole.
2. Ranking. This will be used to average the data in an array which is from highest to
lowest.
3. Mean. This will be used in analyzing and presenting the average of the responses.
4. Weighted Mean. This will be used to compute the arithmetic mean that gives different
observations an equal weight in accordance with their unequal relative importance.
28
REFERENCES:
 Customer Perception towards the Internet Banking Services Performed by the Turkish
Banking System by Dilara Aydın Eastern Mediterranean University February 2014
Gazimağusa, North Cyprus
 ADOPTION OF ONLINE BANKING IN MANILA: WHAT THE COMMERCIAL BANKS SHOULD

LEARN TO BE COMPETITIVE; International Journal of Information Technology and
Business Management 28 th February 2013. Vol.10 No.1 © 2012 JITBM & ARF. All rights
reserved;
 Abdullai , Kenya Hussein Mohamed and Micheni , Elyjoy Muthoni. Effect of Internet
Banking on Operational Performance of Commercial Banks in Nakuru County
 Effect of Internet Banking on Operational Performance of Commercial Banks in Nakuru

County, Kenya. International Journal of Economics, Finance and Management Sciences.
Vol. 6, No. 2, 2018, pp. 60-65. doi: 10.11648/j.ijefm.20180602.14
 THE EFFECT OF IMPLEMENTING CORE BANKING SERVICES ON PROFITABILITY. CASE

STUDY: ALL BRANCHES OF A PRIVATE BANK IN MASHHAD; http://sceco.ub.ro/
 Nwobodo , Jude Chimezie. Internet Banking in Terms of Profitability: The Case of

Northern Cyprus Banks by Eastern Mediterranean University June 2011 Gazimağusa,
North Cyprus
 Impact of Information Technology on the Profitability of Banks in India; International

Journal of Pure and Applied Mathematics Volume 118 No. 20 2018, 225-232 ISSN: 1314-
3395 (on-line version) url: http://www.ijpam.eu
 THE IMPACT OF INFORMATION TECHNOLOGY ON FINANCIAL PERFORMANCE: THE

IMPORTANCE OF STRATEGIC CHOICE; European Journal of Information Systems, vol.10,
no.4, 2001
29
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THE IMPACT OF INTERNET AND MOBILE BANKING ON THE FINANCIAL PERFORMANCE OF PRIVATE BANKS

THE IMPACT OF ONLINE BANKING

ON THE FINANCIAL PERFORMANCE OF PRIVATE BANKS

Crisostomo, April Joy

Romero, Rae Anne Joy

Dr. Neri Pescadera

November 16, 2019

today's fastest-growing innovations in banking practice. In addition, consumers are switching

business efficiency and profitability, needs to be studied carefully.

The study has been completed under three chapters.

d different factors affecting customer satisfaction and bank’s profitability. In the second chapter,

reliability, validity and limitations of the study.

I. The Problem and Its Background 5

b. Background of the study 7–8

c. Statement of the Problem 9

e. Significance of the Study 10 – 11

f. Scope and Limitations 11 – 12

II. Review of Related Literature and Studies 15 – 24

III. Methods of Research and Procedure 25 – 28

THE PROBLEM AND ITS BACKGROUND

mobile or tablet devices. It is accessible via a downloaded mobile application in an Android or

usage and gadget ownership of the people.

accessible via phone or mobile devices as long as it has internet connection.

economies in Asia, indicative of Filipinos’ conservative and traditional temperament when

making financial transactions.

Banking environment has become highly competitive today. Smartphones in hand,

their financial performance.

Background of the Study

considered as financial-service firms, producing and selling professional management of the

public’s fund as well as performing many other roles in the economy.

Pilipinas in 2000 under the Electronic Commerce Act.

banking” are used interchangeably are synonymous with one another.

Statement of the Problem

More specifically, it seeks to find answers to the following questions:

1. What are the internet banking facilities being offered?

1.1 Online Banking

1.2 Mobile Banking

1.3 Both Online and Banking

before the implementation of internet banking?

after the implementation of internet banking?

5. Is there a significant relationship between the application of internet banking and

data on the following variables:

before the implementation of internet banking.

after the implementation of internet banking.

3. There is no significant relationship between the application of internet banking and

Significance of the study

convenient way to regularly check their transactions.

financial performance of the private banks.

customer experience in online banking.

Scope and Limitations

the internet and mobile banking systems.

However, no actual interviews were conducted with the respondents.

(ROA) and Return on Equity (ROE).

and the issues about internet connection in the Philippines.

business firm in the economy.

included phone banking, credit cards, ATMs and direct deposits.

and pay bill over a bank’s website.

Return on Asset (ROA)

Return on Equity (ROE)

company invested. The ratio is always in percentage.

REVIEW OF RELATED LITERATURE AND STUDIES

significant bearing on this study.

their financial services.