The Impact of Digital Banking Policy on Efficiency among Bank Branches

2015 is Taiwan’s “First Financial Mobile Year”, the study examines 68 domestic branches governed by S bank by using an input-oriented DEA model to know branch tellers’ efficiency, and use an output-oriented DEA model to analyze the branch efficiency. Lastly, the Tobit regression model analyzes the impact of external environment variables, including the coverage of mobile banking and the academic degree of the branch manager. The coverage of mobile banking is the percentage of each branch’s bank accounts, which customers have activated the mobile banking function to the number of all bank accounts. The study use the number of tellers as input, the foreign exchange commission and the number of transactions as output sets, then use an input-oriented DEA model to analyze the efficiency of tellers, then evaluate the possible reduce number of tellers by means of slack variable analysis. The study finds out that of all the 68 branches, 3 branches’ tellers are technical efficient, 7 branches’ tellers are scale efficient. More than half braches, 45 of them are increasing returns to scale, the rest 15 branches are decreasing returns to scale, which means there are space of improvement. The external environment variables results show that the coverage of mobile banking has a significant negative impact on branch''s technical efficiency and scale efficiency while the academic degree of the branch manager does not have statistically significant impact on branch efficiency. It means S bank did not lower the cost while raising up the coverage of mobile banking, so the advantages of digital banking are not yet displayed. In the future, it should continue to improve the functions of mobile banking, as well as completely considerate of the division work with entity branch, to obtain the benefits of digital banking.