The aim of this thesis is to examine the value that the adoption of the transactional website has added to banks’ financial performance and market value, over both the short run and long run. Following the literature, this thesis defines the transactional website as a banking website that allows customers to (i) access information and (ii) conduct the most basic transactions via the site, at least bill payments and funds transfer.
This thesis begins with a novel data including 307 fully listed commercial banks in the US that launched their transactional website between 1996 and 2010. Following this, conceptual models are proposed based on the resource-based view. This combination allows the consideration of the impact of transactional website adoption based on its internal strengths and the reaction of the market and investors.
Subsequently, event study and financial measures are the principal methodologies applied. It is the first time that the two metrics of Cumulative Abnormal Return and Buy-and-Hold Abnormal Return are incorporated into digital banking literature, allowing the exploitation of market responses and investor behaviour. Furthermore, this thesis employs financial measures, along with a series of regressions, to examine the strategic role of transactional website adoption, via its strategic attributes. Strategic attributes, under the ground of resource-based view, will be the root of the sustainability of firms’ strategy. It is because they can (i) deliver superior performance and competitive edge, and (ii) preserve value and limit competition. In the banking literature so far, the adoption of the transactional website is only verified to be profitable, efficient, and innovative but not strategic and sustainable.
The results bring new stories about transactional website adoption. Most importantly, the activation of transactional websites delivers value to both banks’ financial performance and their market value in both the short- and long-term intervals, complying with the value mindset and sustainability mindset. Furthermore, it satisfies the conditions of the resource-based view by virtue of its six features, namely value, appropriability, durability, inimitability, embeddedness, and interconnectedness. These features are proved via the way transactional website adoption strengthens the profitability and efficiency as well as generates isolated mechanisms to limit competition (e.g., cumulative experiences, the interconnectedness between transactional website adoption and mobile website adoption). Additionally, this thesis provides new findings of the impact of the size factor, timing factor and vicarious learning behaviour. Of which, small banks and latecomers tends to achieve more superior performance from their activation of transactional websites. Furthermore, public information on the previous transactional website adoptions becomes an important mechanism for investors’ enhancement in evaluating of other website events afterward.
Such evidence suggests that it is time for banks to pay more attention to the value delivered by their transactional website enablement. At the same time, investor behaviour, market response, and multi-channel combination are also what banks should focus on to drive their success in implementing transactional website initiatives.