Development of E-banking has modified the structure of banking business and banking performance, efficiency, risk and challenges which have also been articulately recognized based on the international best practices. E-banking brazenly expedites and streamlines financial transactions via enhancing technology and expanding the bank services in comparison with conventional banking. Accordingly, online access to the banks’ products, financial statements, payment services and even credit scoring has considerably improved bank-customer relationships in the context of lending and borrowing practice, deposit composition, investment opportunities, trade finance options as well as account management diversification. The impact of recent E-banking developments on banking is statistically tested for the banking network of Iran using Dynamic Panel Data approach. Results indicate that the ratio of ATMs and Electronic Cards to bank assets positively and significantly influence profitability ratios. Meanwhile, the ratio of online branches and Pin Pads to the banks' assets negatively and significantly affects profitability although the transaction volumes have surged for the banks under study.

JEL Classification: G21, G23, G32, F34

Keywords: E-Banking, Risks, Banks' Soundness Indicators