The Role of Organizational Innovation in Improving the work of Financial Institutions in light of Digital Transformation (An Applied Study on a Sample of Financial Institutions)

Abstract

This research aims to study the role of organizational innovation in improving the work of financial institutions in light of digital transformation, by analyzing the relationship between organizational innovation practices and the level of adoption of digital technologies and their impact on financial and operational performance and the quality of services. The study was based on the problem of the discrepancy between the acceleration of digital transformation and the weak recruitment of organizational innovation within some financial institutions, and the consequent limitations in improving performance. The research was based on the descriptive analytical approach supported by quantitative methods, based on secondary data extracted from the financial reports and annual statement of several financial institutions operating in the Iraqi environment. A set of statistical tools was used, including descriptive statistics, multiple linear regression, time-cross-sectional data analysis (Panel Data), and modelling of structural equations (SEM), in addition to the Hausman test, in order to test research hypotheses and verify the strength of relationships between variables. The results showed that there is a positive and statistically significant impact of organizational innovation in improving the financial and operational performance of financial institutions, and it also turned out that digital transformation plays an intermediate role in enhancing this relationship. The comparison before and after the digital transformation confirmed the improvement of profitability indicators, operational efficiency and quality of services. The study concludes that integrating organizational innovation with digital transformation represents a critical strategic choice to enhance competitiveness and sustainability in financial institutions.