System Dynamics Modeling the Impacts of Business Models on Business Performance in Virtual Banking Industry

Abstract

Virtual banking industry is growing, while there is difference among growing rate of each bank. Virtual banks have two revenues mainly. Those are interest income and fees & commissions income. In this article, we classify virtual banks in three business models (asset management type and service fee type and ATM-related fee type) from the viewpoint of the revenue structure, and develop a dynamic model expressing impacts of business models and transition of them on business performance. By applying system dynamics, we build simulation model which consists of (1) model of asset management, (2) model of remittance service provider, and (3) model of ATM service provider. Moreover, we validate the developed model by comparing the simulation results with trends of actual business performance.