Today’s dynamic markets are forcing firms to design increasingly complex channel strategies involving multiple channels such as Internet banking and mobile banking. The study tests the hypothesis that e-banking such as Internet banking and mobile banking reduces cost and ultimately enhances profitability for banks. To reach these goals, this study used existing database such as Internet banking performance, mobile banking performance, and financial performance of 122 branches of Nonghyp from January 1st 2008 to December 31th 2008. SPSS and Structural Equation Modeling on the basis of the results of existing objective data were done to analyze. As a result, two among four hypotheses were rejected and the others were supported. The results are as follows. First, Internet banking and mobile banking performance had no effect on profitability. Second, Internet banking and mobile banking performance had positive effects on cost reduction. Our analysis suggests that Internet banking and mobile banking do contribute to cost reduction but do not affect profitability. The implications are that the primary objective of Internet banking and mobile banking have been accomplished, but has not reduced the stage in which the benefits overcome the burden of initial investment. The significance of this study is that it tries to maintain the rigor of the model by analyzing existing database.

Today’s dynamic markets are forcing firms to design increasingly complex channel strategies involving multiple channels such as Internet banking and mobile banking. The study tests the hypothesis that e-banking such as Internet banking and mobile banking reduces cost and ultimately enhances profitability for banks. To reach these goals, this study used existing database such as Internet banking performance, mobile banking performance, and financial performance of 122 branches of Nonghyp from January 1st 2008 to December 31th 2008. SPSS and Structural Equation Modeling on the basis of the results of existing objective data were done to analyze. As a result, two among four hypotheses were rejected and the others were supported. The results are as follows. First, Internet banking and mobile banking performance had no effect on profitability. Second, Internet banking and mobile banking performance had positive effects on cost reduction. Our analysis suggests that Internet banking and mobile banking do contribute to cost reduction but do not affect profitability. The implications are that the primary objective of Internet banking and mobile banking have been accomplished, but has not reduced the stage in which the benefits overcome the burden of initial investment. The significance of this study is that it tries to maintain the rigor of the model by analyzing existing database.

Internet Banking, Mobile Banking, Profitability, Cost reduction