Financial Innovations and Technological Changes Affect the Commercial Banks’ Efficiency and Returns on Assets (ROA)? Empirical Evidence from Pakistan

Abstract

This study investigates the impact of financial innovations specifically mobile banking, electronic funds transfers (EFT), and debit/credit cards on the efficiency and return on assets (ROA) of commercial banks in Pakistan. Motivated by the rapid digital transformation of the banking sector and the need to understand its effect on core performance metrics, the research employs a positivist, deductive approach using primary data collected from 101 commercial bank employees. Quantitative analysis was conducted through Pearson correlation and multiple regression methods. The findings reveal a significant and positive relationship between all three innovations and profitability, ROA, and customer deposits. Debit/credit cards had the most potent effect on ROA, while EFT showed the most significant influence on deposit mobilization. These results corroborate global evidence and fill a research gap in the Pakistani context by providing empirical support for the role of technological innovation in enhancing banking performance. The study offers practical insights for bank executives and policymakers to priorities digital investments and regulatory support for sustainable financial innovation.
Keywords: Financial Innovation, Mobile Banking, Electronic Funds Transfer, Debit/Credit Cards, Profitability, ROA, Bank Efficiency, Customer Deposits, Commercial Banks, Pakistan