Quantifying The Digital Revolution: An Investigation on the Impact of Digital Banking on Key Indicators of Financial Performance in Indonesia

Intan Nurul Awwaliyah (), Arnis Budi Susanto, Ema Desia Prajitiasari and Abisyah Umar Gozali
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Intan Nurul Awwaliyah: University of Jember, Faculty of Economics and Business
Arnis Budi Susanto: University of Jember, Faculty of Economics and Business
Ema Desia Prajitiasari: University of Jember, Faculty of Economics and Business
Abisyah Umar Gozali: University of Jember, Faculty of Economics and Business

A chapter in Proceedings of the 4th International Conference on Economic, Business, and Accounting Studies (ICEBAST 2025), 2025, pp 212-231 from Springer

Abstract: Abstract Digital economic and financial transactions have grown significantly due to increasing public preferences for online transactions. This has led to the need for digital bank transformation in the banking sector. This study aims to determine and analyze the impact of digital bank transformation on the financial performance of the banking sector in Indonesia. Financial performance is indicated by profitability, liquidity, risk, and efficiency ratio, each represented by Return on Assets (ROA), Loan to Deposits Ratio (LDR), Non-Performing Loans (NPL), and Operational Efficiency Ratio (OER), respectively. The study employed a comparative descriptive method and analyzed five commercial banks that had undergone digital transformation over the last three years. Results showed significant differences in financial performance, specifically in terms of profitability, liquidity, and risk, before and after the transformation. However, there was no evidence of different performance in terms of efficiency. This research provides valuable information for banks and financial institutions to understand the impact of digitalization on their financial performance in Indonesia. However, further research is recommended to increase the observation period and the number of banks analyzed. A comprehensive analysis, including other aspects such as capital, and utilizing tools like panel data analysis, can provide more insights.

Keywords: digital bank; transformation; financial performance; comparative analysis (search for similar items in EconPapers)
Date: 2025
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DOI: 10.2991/978-94-6463-956-8_17

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