article · Competitiveness Review An International Business Journal incorporating Journal of Global Competitiveness
Digital transformation significantly improves the financial performance of commercial banks in Tunisia. An examination of operational data from twelve banks spanning 2010 to 2020 reveals that technological adoption directly enhances profitability, specifically measured through return on assets and return on equity. Targeted financial investments in modern payment tools, digital service channels, and robust internet security systems yield measurable operational gains. Financial institutions providing digital services demonstrate superior overall performance, marked by stronger financial stability, heightened operational transparency, and increased earning potential. Adopting these technologies is vital for commercial viability within modern competitive markets, offering strategic insights that may serve as a relevant reference model across other African banking sectors.
Understanding how technology investments translate into balance sheet gains helps financial institutions justify modernization costs. By showing that investments in digital channels, payment systems, and cybersecurity enhance profitability and stability, this research offers evidence to guide banking leaders, regulators, and investors in formulating digital transformation strategies across emerging economies.
This applied empirical research directly informs strategic technology investments by commercial banks, digital payment vendors, and financial regulators. Financial institutions can use these findings to prioritise software and security infrastructure purchases, focusing capital on digital channels and cybersecurity to secure measurable improvements in return on equity. The insights are ready for immediate strategic use by executive teams and banking boards evaluating digital upgrade programmes.
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Purpose The concept of digitization covers a wide range of initiatives to achieve sustainable development. This paper aims to determine the impact of bank digitization strategies on financial performance in an African country. Design/methodology/approach This study used the generalized least squares estimation method to analyze data from a sample of 12 Tunisian banks from 2010 to 2020. The reason for selecting this method was its ability to address issues of heteroscedasticity and autocorrelation. Findings This study indicates that digital transformation has a positive effect on Tunisian banks financial performance, as measured by return on assets and return on equity. Specifically, investing in payment tools, digital channels and internet security leads to improved performance for banks. These findings suggest that banks that offer digital services perform better, as they are able to increase profitability, maintain financial stability and improve transparency. Research limitations/implications This study is important for central bank, regulators, policymakers and investors. Overall, this study emphasizes the need for banks in Tunisia to embrace digital transformation to improve their performance and remain viable in the modern business landscape. Originality/value This study ponders the effect of Tunisian banks’ digital transformation on financial performance. Tunisia context serves as model for other African countries. Tunisian banks should prioritize investments in digital technologies to stay competitive in the market.
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DOI: 10.1108/cr-10-2022-0147
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