For financial companies, converting or capturing data digitally allows them to let computers process the data autonomously with an increasing degree of smartness and faster than humans can, regardless of fatigue, distractions and noise (Deliya, 2016).
In this paper we analyze the effects of the digitalization of the financial sector on bank performance in Europe in the years 2000-2015. Through a generalized least squares (GLS) regression model, we test the relationship between the main indicators of investments in Intellectual Property Products and Information and Communication Technology (ICT) equipment and the bank interest spread at the national aggregate level. Our main indicators are research and development, software and database, ICT equipment, and a number of branches and ATMs. The sources we use for this data are World Development Indicators (WDI) and Eurostat.
We collect data at the aggregate national level. The principal findings of our analysis are interesting in several respects. Mainly, we discover that investments in digitalization for companies in the financial sector have a positive effect on profitability. Additionally, we find evidence that the presence of Automatic Teller Machines (ATMs) in the area enhances income for banks and financial companies; conversely, the presence of physical branches with dedicated staff has no effects, negative nor positive.