Digital Transformation and Banking Profitability: The Mediating Role of Operational Efficiency (Owner)

Summary

• The study analyzes a panel of 31 commercial banks listed on the Indonesia Stock Exchange (IDX) across 155 observations from 2020 to 2024.p.1
• Industry data shows that early digital technology spending elevated the BOPO ratio to 83.53% in 2021 while ROA stood at 1.84%.p.2
• Banking operational efficiency subsequently recovered in 2022–2023 as the industry BOPO declined to 76.21% and ROA rose to 2.74%.p.2
• Descriptive statistics across the 155 observations reveal a mean digital transformation ratio (DT) of 0.427058 and a mean ROA of 0.025156.p.5
• In Equation 4, the Weighted R-squared value of 0.473583 confirms that the combined model accounts for 47.36% of the variance in ROA.p.8
• The cluster bootstrap test with 5.000 replications recorded an indirect effect of DT on ROA through BOPO of 0.032252, which is statistically insignificant with a p-value of 0.396.p.8

Key insights

1. Digital transformation exerts a direct, positive, and statistically significant effect on bank profitability measured by ROA.p.1
2. Operational efficiency (BOPO) does not mediate the relationship between digital transformation and bank profitability.p.1
3. Operational cost ratio BOPO exerts a strong negative effect on ROA with a regression coefficient of -0.224352 in the full model.p.8
4. Capital adequacy ratio (CAR) displays a positive relationship with ROA, reflecting its role as a strategic buffer.p.9
5. Technology investments by IDX-listed banks boost financial returns primarily through direct revenue generation rather than cost reduction.p.9