A Study on Impact of Digital Transformation on Retail Banking Productivity

Abstract

Purpose: This paper examines the impact of digital transformation on labor productivity in retail banking activities at the Joint Stock Commercial Bank for Investment and Development of Vietnam.
Design/methodology/approach: Digital transformation is measured by a composite index constructed from indicators capturing the extent of digital transactions, business process digitalization, and the share of budget allocated to digital transformation. Labor productivity in retail banking is proxied by revenue per employee and profit per employee. The study employs the autoregressive distributed lag model combined with the error correction model (ARDL–ECM) for quarterly data of 2012–2025.
Findings: The empirical results indicate that digital transformation has a positive and statistically significant long-run impact on labor productivity, with more pronounced effects observed for revenue-based productivity. In contrast, short-run effects are less consistent, particularly for profit-based productivity, reflecting the influence of initial investment costs and organizational adjustment processes.
Originality/value: These findings provide useful empirical evidence for bank management and policymakers in designing and implementing digital transformation strategies aimed at enhancing labor productivity in retail banking.