Despite the rapid change in the acceptance of electronic banking services in the last decade, the effect of electronic banking on bank performance, especially the reduction of operational costs of banks, is still debated. The aim of the current research study is to investigate the impact of electronic banking development on the reduction of operational costs of Shahr Bank branches in Tehran, Iran. This study is applied in terms of its purpose and descriptive-correlation in terms of its method, and since information related to past events is used, it is a post-event study. The statistical population of the study includes the branches of Shahr Bank located in Tehran in the period from 2016 to 2021. The regression model and the correlation coefficient of the effects of the research variables were used to test the research hypotheses. The results showed that environmental and organizational readiness has a significant impact on the development of electronic banking, and the development of electronic banking leads to a reduction in operational costs (including advertising costs, accessory costs, postal costs, maintenance costs, telecommunication costs, communication costs, depreciation costs, and personnel costs) and increased profitability; therefore, it is suggested that banks consider the use of new tools and methods such as electronic banking in order to improve the quality of services and reduce costs.