Assessing the impact of digital transformation on business performance in South Africa’s banking industry

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University of the Witswatersrand, Johannesburg
Background: The Fourth Industrial Revolution and the recent outbreak of the Covid-19 pandemic have created a strong interest in digital transformation. Organisations have been focused on advancing their technological capabilities, thus increasing their IT investment capabilities. In the banking sector, the implementation of digital technologies has introduced the existence of digital banks and other non-financial organizations that have tapped into the financial services, such as fintech and retailer organisations. This has been gradually leading to a diluted market share, which was previously dominated by South Africa’s traditional banks. Digitising has therefore become an important aspect of organisations’ growth strategy. Purpose: This research study aims to investigate the impact of digital transformation on the financial performance of the traditional South African banks. Methodology: This study uses the quantitative research method where financial performance, is measured by return on assets (ROA) and digital technology (data analytics, artificial intelligence, cloud computing, and the Internet of Things). The data was collected using secondary data accessed from the traditional South African banks, namely; ABSA, Standard Bank, FNB, and Nedbank’s annual reports and full-year consolidated financial statements, from the year 2014-2021. Findings: Findings from this research study indicate that there is a strong relationship between digital technology and business performance, meaning that digital transformation does have an impact on the business performance of the traditional South African banks. Further, the relationship between the variables, digital technology and business performance is negative. This has been found by previous literature to be due to the initial costs of investment in digital technology. Research limitations/implications: Digital transformation is an important concept that continues to be explored by researchers and organisations. Therefore this research is relevant to many industries in the market, which presents an opportunity for it to be expanded to other industries. The impact of digital transformation on other performance factors such as operational performance can be studieS
Assessing the impact of digital transformation on business performance in South Africa’s banking industry
Fourth Industrial Revolution, Covid-19, IT investment capabilities, Banking sector, Non-financial organizations, Return on assets (ROA), UCTD, South Africa, Digital transformation