Articles

The Interplay of Digital Maturity, Financial Performance, and Stock Returns in Indonesian Publicly Listed Banks

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Indonesia’s banking sector is undergoing a digital transformation driven by Industry 4.0. This study examines how digital maturity and financial performance, measured by Return on Assets (ROA) and Net Interest Margin (NIM), influence the stock performance of publicly traded Indonesian banks. Employing a quantitative approach, this study measures digital maturity by analyzing the frequency of technology-related terms in annual reports using NVivo software. Panel data regression with EViews software is then used to assess the impacts of digital maturity, ROA, and NIM on stock performance. The study reveals a positive and statistically significant relationship between ROA and stock returns, while digital maturity and NIM do not exhibit statistically significant effects. These findings suggest that investors prioritize financial strength and efficient asset management over digital activities when evaluating bank performance. The study concludes that digital maturity alone does not significantly influence stock returns, highlighting the need for banks to effectively translate digital initiatives into tangible financial benefits and clearly communicate these outcomes to investors. This research contributes to the existing body of knowledge on digital transformation and financial performance in the banking sector, offering valuable insights for investors and bank management decision making.

Digital Transformation and Corporate Valuation: Unveiling the Influence of Digital Maturity in Stocks Return in Indonesian FMCG Industry

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This research investigates the impact of digital transformation on corporate valuation in the Indonesian FMCG industry, focusing on the influence of digital maturity on stock returns. The study examines how technologies like AI, IoT, and data analytics affect financial performance and market perception. Using a quantitative approach, digital activity disclosed in annual reports from 2019 to 2023 for companies listed on the Indonesia Stock Exchange is analyzed. Key variables include digital maturity, profitability, sales growth, and stock return data. Findings reveal a negative and insignificant correlation between digital maturity and stock returns, suggesting higher digital maturity does not lead to better stock performance. The relationship is mediated by non-significant changes in financial performance metrics, indicating digital transformation may not enhance operational efficiency and market competitiveness. Data analytics and process automation showed less significant effects on performance. The study offers insights for corporate managers, investors, and policymakers on the strategic and cautious application of digital technologies.

Accelerating the Digital Transformation in Bank XYZ

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In current fast-paced and highly competitive business climate, organizations progressively recognize the necessity of embracing digital transformation. Due to developments in technology and the unprecedented effects of the COVID-19 pandemic, the banking sector is one of the sectors that has experienced significant disruptions. Digital transformation has become increasingly crucial for banks to remain competitive, sustain business continuity, and meet shifting customer demands. However, the mere adoption of digital technologies is insufficient. In order to adapt with the digital era, it is essential to assess the effectiveness of digital transformation initiatives. As Bank XYZ started and continued to undergo their digital transformation, the company has measured its digital maturity the prior year and the result leaned toward the “Digital Master” stage. However, there could be indications that the digital transformation has not been implemented optimally. Using the Digital Mastery and the Digital Transformation Compass framework, the research emphasizes the importance of accelerating digital transformation for Bank XYZ through digital maturity and digital transformation evaluation to analyse its digital transformation progress while recognizing areas for improvement.

The result shows that the current digital maturity result display the same trend as the year prior that the company has reached the “Digital Master” stage affected by the current composition of senior executives and the availability of strategic agenda that drives the digital transformation within the company. However, when the digital transformation was analysed further, the transformation progress is still in the moderate level. It can be concluded that that while initiatives have been implemented, there are improvements need to be made with the aim of advancing Bank XYZ’s digital transformation process. This research proposes business solutions that focuses on enhancing synergies withing the organization to accelerate the digital transformation.