The Impact of Banking Digitalization on Operational Efficiency and Its Implications for Profitability: A Case Study of Bank Bjb’s Garut Branch

Abstract

This study aims to identify and analyze the impact of banking digitization on operational efficiency and profitability levels, as well as to examine the mediating role of operational efficiency at Bank BJB’s Garut Branch. The study employed a quantitative approach with an explanatory design, utilizing survey methods, case studies, and a cross-sectional time frame. Primary data were collected via a questionnaire administered to employees at Bank BJB’s Garut Branch and analyzed based on 91 responses. The instrument utilized a five-point Likert scale. Tests were conducted using validity and reliability tests, classical assumptions, linear regression, t-tests, F-tests, the coefficient of determination, and mediation analysis using the PROCESS Model 4 with 5,000 bootstrap samples and a 95% confidence interval. The results indicate that banking digitalization has a positive and significant effect on operational efficiency (B=0.884; β=0.785; t=11.963; p<0.001) with R²=0.617. Banking digitization also has a positive and significant effect on profitability after controlling for operational efficiency (B = 0.576; β = 0.423; t = 4.414; p < 0.001). Operational efficiency has a positive and significant effect on profitability (B = 0.551; β = 0.456; t = 4.757; p < 0.001). The second model explains 69.0% of the variation in profitability. The indirect effect of digitalization on profitability through operational efficiency is 0.487 with a 95% bootstrap interval [0.278; 0.698]. Since this interval does not include zero and the direct effect remains significant, operational efficiency is shown to partially mediate the relationship between banking digitalization and profitability. The main findings indicate that digitalization creates value through two channels: improved process efficiency and direct benefits to profitability