The Impact of Digital Banking Monetization on Bank Earnings Sustainability

Gulchexraxon Ostonakulova^1,*
1Tashkent State University of Economics, Tashkent, Uzbekistan
Email: gulchexraxonostonakulova@yandex.com

Abstract

Although research on digital banking monetization with financial performance is growing, few studies have focused on the sustainability of bank earnings through the perspective of digital revenue models. The purpose of this study is to examine the role of digital banking monetization and platform transaction income in achieving earnings sustainability in responding to the digital banking transformation. Collected banking data were subjected to a detailed regression analysis to estimate the conditional probability that a bank has a sustainable earnings structure, given the presence of one or more of its digital banking services. In order to analyze digital monetization and earnings sustainability while also including selection-related factors, certain financial indicators and control variables were combined with the dataset set defined by the sample selection process, which resulted in the Heckman selection model. The results show that banks’ favorable perceptions of the profitability of their digital banking services show digital monetization positively influences the formation of their earnings stability through the mediating effect of digital transaction income toward interest income diversification, fee-based revenues, and platform service charges. The results also show the positive impact of digital transaction revenues and platform service income on earnings stability during the digital banking expansion period. Moreover, understanding the contribution of digital banking monetization for earnings sustainability in relation to the platform-based model of banking is a contribution to financial research that may help future banks achieve faster digital transformation.

Keywords: Digital banking monetization; Earnings sustainability; Platform transaction income; Fee-based revenue diversification; Digital banking platforms; Heckman selection model; Banking digital transformation