Publication Details
Abstract
Purpose: This study seeks to examine the effect of digital transformation on boosting the performance of banks in Iraq, specifically private commercial banks.
Methodology: Descriptive–Analytical method of work used in the study, to carry out it according to the period 2015-2023, using secondary data obtained through the annual reports of the Central Bank of Iraq, and annual reports of three private banks – Bank of Baghdad, Middle East Bank, and National Bank of Iraq – which were audited. ATMs, POS terminals, mobile POC, electronic cards are the digital indicators and Return on Assets (ROA), Return on Equity (ROE), profit margin and return on available money are the banking performance indicators for digital transformation. The hypotheses were tested by Pearson correlation analysis.
Findings: There are substantial differences in the level of digital transformation standardized across the three banks. National Bank of Iraq had the highest average with respect to ATM (107.7), POS (84.0) and mobile POCs (5,211). Followed by the Bank of Baghdad (ATMs: 55.1, POS: 46.3, Cards: 119,985). Meanwhile, the lowest growth rates were recorded at the Middle East Bank. A statistically significant and positive relationship was obtained in Bank of Baghdad's (ATMs: r = 0.897 and ROA: r = 0.456) and National Bank of Iraq's (ATMs: r = 0.855 and ROA: r = 0.452) digital transformation and banking performance through correlation analysis. The Middle East Bank, on the other hand, had weak or negative correlations.The successful banks with more digital expansion – good profits - the banks that have less digital investment – losses.
Originality/Value: This study analyzes a unique and under-represented environment (Iraqi rentier economy) to demonstrate that improving the banking performance of digital transformation is achievable only if provided by strategic alignment and good management.