The impact of digitalization on banks' capital : a case study of Poland

Abstract

PURPOSE: Over the past decade, the banking sector has undergone significant changes due to the impact of digitalization. The digital revolution has changed both the way banks interact with their customers and the very operation model. Digitalization is becoming a key factor determining the competitiveness and stability of banking institutions. Technological transformations are fundamentally changing conventionally approaches to financial management in banks, opening up new opportunities to improve their efficiency. The purpose of this article is to study the impact of digitalization on bank capital drawing on the example of Polish banks.

DESIGN/METHODOLOGY/APPROACH: The OLS (Ordinary Least Squares Method) method was used to build an econometric model of the impact of e-banking development indicators of bank capital. Three synthetic indicators characterizing the development of e-banking in Poland were used. The first indicator reflects the number of Internet banking clients, the second – the intensity of using e-banking services, and the third – the cost of e-banking transactions. The data of the National Bank of Poland and the Polish Bank Association for 2012-2023 was used.

FINDINGS: The intensity of service use and the value of transactions indicate that the effective use of online banking channels is crucial for improving the capital position of banks. Banks investing in the development of digital tools and encourage customers to actively use online banking can increase their equity. Banks should focus on increasing the activity of existing customers and the value of transactions rather than solely on attracting new users.

PRACTICAL IMPLICATIONS: The practical implications of the study is to help increase the competitiveness of banking institutions and create innovative approaches to bank capital management, taking into account the impact of digitalization.

ORIGINALITY/VALUE: The results confirm the positive impact of the development of Internet banking on the increase of bank capital. It is also proved that the growth of banks' capital is related to the quality and intensity of the use of online banking services rather than to their quantity.