Striving in Banking Industry in Indonesia Through Technology Information Investment Effectiveness

Abstract

Digitalization in the banking industry has rapidly sped up, especially during this pandemic era. Customers’ needs and expectations push banking companies to invest in technology even more, forcing banks to select and implement the technology prudently and effectively. This study aims to analyze the effect of information technology investment effectiveness in the banking industry in Indonesia. The data in this study was obtained from 33 banks listed on the Indonesia Stock Exchange (IDX), from 2015-2020. Data analyzed using Eviews 9. The results of this research show that there is a relationship between information technology investment on bank performance that is measured by two parameters, the first one is a financial performance using return on asset (ROA) and the second one is bank efficiency using cost efficiency (CEFF). The effectiveness of information technology investment in this study was measured by Total Investment Per Employee (TIPE), Employee Expense per total Asset (EEAR), the total number of Automatic Teller Machine (ATM), and Investment Computer Software (ICS). The results are, for TIPE and total of ATM have a positive and significant relationship on bank performance whereas the EEAR and ICS have a negative and significant relationship to bank performance. This study provides implications and unique insights about the role of management in managing the information technology investment effectiveness for bank performance.