The Impact of Digital Banking on the Profitability of Deposit Money Banks : Evidence From Ghana

Digital banking refers to the act of performing banking and financial transaction without the use of physical cash, coins or bills. The fundamental objective of the study was to find out the impact of digital banking on the profitability of deposit money banks in Ghana. Secondary data spanning from 2012 to 2018 were collected from the annual payment system reports of the central bank of Ghana. Cheque codeline clearing, Ghana automated clearing house, Ghana interbank settlements, Gh-Link, and mobile money payments in value were the independent variables. Return on assets (ROA) was the dependent variable employed in the study. Partial least square (PLS) regression was the statistical tool used for the analysis with the aid of Origin2018 scientific software.The results of the study indicated that Gh-Link and E-zwich distinguished themselves from the rest of the variables by explaining 95.87% of the variations in the profitability of Ghanaian banks. It was further found that a positive relationship existed between cheque codeline clearing; Ghana automated clearing house, Ghana interbank settlement, GH-Link, and the profitability of Ghanaian Banks. Mobile money and E-zwich, on the other hand, had a negative relationship with the profitability of the banks. It was therefore recommended that the banks should make more efforts in the form of education and marketing to win more customers to patronise the digital banking products for profit maximization. The implication of this study is that policymakers henceforth will have a fair idea when formulating policies concerning Fintech in the future