Digital Transformation, Performance, and Valuation of Indonesian Digital Banks
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Abstract
This study examines how digital transformation affects the financial performance and market valuation of Indonesian digital banks, an important issue because banking digitalization is expected to improve efficiency, profitability, and investor perception, while prior empirical findings remain mixed. This study contributes by developing a composite Digital Transformation Index (DTI) based on monthly active users, digital product count, and information technology expense intensity. Using secondary data from five digital banks listed on the Indonesia Stock Exchange during 2017–2024, this study applies PRE–POST difference testing, two-way fixed effects panel regression, and stepwise mediation analysis. The findings show that DTI increased significantly after transformation. DTI has a significant positive effect on ROA and a significant negative effect on PBV, but does not significantly affect BOPO, NIM, ROE, or PER. Financial performance does not mediate the DTI–valuation relationship. These findings indicate that the benefits of digital transformation remain selective and require stronger monetization, efficiency, and profitability strategies.
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