This study empirically examined whether banks' information technology (IT) expenditures have a significant effect on financial performance measures—cost reduction, revenue growth, and profit growth—as well as on market share as a competitiveness indicator. The relationship between IT expenditure and market share and financial performance was found to vary significantly by level of financial informatization, bank size, and financial strategy group, summarized as follows. 1) In banks with high levels of informatization, IT expenditure achieved labor cost savings but relatively increased non-labor costs, failing to reduce total costs. However, bank IT expenditure was found to have a positive effect on market share and profitability enhancement. 2) IT expenditure had a positive effect on market share and profitability enhancement in large banks rather than small banks, while it had a negative effect on cost reduction. 3) In retail banking groups compared to wholesale banking groups, IT expenditure increased total costs but had a greater effect on market share and profitability enhancement. The implications of these findings can be summarized in two points. First, the study presents evidence that effective implementation of financial informatization strategies as part of financial reform to strengthen competitiveness in the banking industry can achieve labor cost reduction, market share expansion, and profitability improvement. Second, it provides evidence that financial informatization needs to precede when pursuing strategies of scaling up and retail banking as means of enhancing competitiveness and profitability. Therefore, this study is significant in that it presents evidence that can help determine the direction of financial reform in Korea.