Impact of Cyber Security Cost on the Financial Performance of E-Banking: Mediating Influence of Product Innovation Performance

Abstract

Purpose of Study: The study objectives are to: a) conduct a meta-analytical review to analyze the association among cybersecurity costs, such as prevention and detection costs (PDC), response costs (RC), development costs (DC), and indirect costs (IC), on the e-banking product innovation performance (PIP) and financial performance (FP), b) to evaluate the causal association of cyber security costs, i.e., (PDC, RC, DC, and IC) on PIP and FP; and c) investigate the mediating effects of PIP in a relationship between PDC, RC, DC, IC and FP. 
 Methodology: The study sample was the managerial cadre employees of various electronic banks (e-banks) working in Pakistan. The survey was conducted by distributing the questionnaire among the employees of e-banks working in Pakistan. The collected data were estimated via multivariate statistical techniques.
 Findings: The results of the study showed that a) the costs associated with cybersecurity, specifically PDC, RC, and DC, have a statistically significant effect on PIP and e-banking FP, whereas IC has a negative significant influence on the PIP and FP, b) the PIP has a statistically significant effect on e-banking FP, and c) the PIP partially mediates an association between PDC, RC, DC, and FP, whereas, PIP insignificantly mediates in a relationship amongst IC and e-banking FP. 
 Application of Study: The study will applicable in the modern electronic banking (e-banking) systematic risk control and information security solution.
 Novelty: The study is novel in the context of cyber security costs, including (PDC, RC, DC, IC) by measuring its influence on PI and e-banking FP.