This study enhances the awareness of stakeholders about the technological development in financial institutions and its role to improve performance & growth of banking sector. This study also creates understanding about Interest Rate Spread (IRS), which is a prominent indicator of efficiency of the banking sector. IRS, in an economy, has crucial implication for the growth and development, as numerous authors suggest a critical link between efficient intermediate and economic growth. Efficient intermediation benefits the real economy by allowing higher expected return for saver and providing more opportunity by cheep investible fund. This study measures the impact of technological development along with other traditional variables on IRS. The result reveals that implementation/adoption of new technology has significant role in IRS. This study also provides guidance to the stakeholders for the improvement of banking sector in Pakistan.