Bank Digitalization and Financial Performance: Proposing a Model Integrating Operational Efficiency and Macroeconomic Factors

Abstract

Digitalization has become a strategic driver of transformation in the banking sector, with the potential to enhance operational efficiency and financial performance. Despite growing interest in the digital transformation of banks, the literature has not yet jointly integrated digitalization, the Cost-to-Income Ratio (CIR), and macroeconomic factors to explain bank performance, a precise gap that this paper addresses, particularly in emerging economies.

This theoretical and conceptual paper proposes, on the basis of a literature review, a framework for analyzing the mechanisms through which digital transformation may influence bank profitability, without claiming empirical validation at this stage, with a particular focus on the mediating role of the Cost-to-Income Ratio (CIR) and the influence of the macroeconomic environment.

The proposed framework is developed through a narrative, rather than systematic, review of the literature, drawing primarily on peer-reviewed academic sources relevant to the three pillars of the model, aiming to identify the main theoretical mechanisms and relationships highlighted in previous studies. This approach leads to the development of an integrative conceptual model designed to examine the hypothetical relationships between digitalization, the Cost-to-Income Ratio, and financial performance measured by Return on Assets (ROA).

The model also incorporates Gross Domestic Product (GDP) as a moderating variable and inflation as a macroeconomic control variable. The objective of this paper is to propose a conceptual framework for analyzing the theoretical mechanisms through which digital transformation may contribute to improving banks' financial performance in the Moroccan context, and to provide a foundation for future empirical validation.

Classification JEL : G21 - O33 - D24 - E44 - C33

Paper type : Theoretical and conceptual research, based on a literature review