The impact of digitizing banking services on the operational efficiency of banks: An analytical study of the Iraqi banking sector for the period 2017-2023

Abstract

The research aims to explain the impact of digitizing banking services on the operational efficiency of banks. Digital technologies are considered crucial in the financial and banking sectors, leading to substantial changes in digital banking services. These advancements have taken on significant dimensions within the global banking industry, including Iraq. The research problem arose with the slow pace of the Iraqi banking sector in keeping up with digital advancements and innovations, especially the limited adoption of advanced financial technologies, including digitization in the provision of banking services. Therefore, the importance of the research lies in shedding light on the methods and types of indicators used to measure these variables. Moreover, knowing the extent of development and commitment of Iraqi banks to the level of digitization of their banking services. In general, the research attempts to answer the following questions: Does digitizing banking services contribute to improving operational efficiency? What are its main determinants, especially in light of the interest shown by monetary authority decision-makers in this regard? The research depends on three hypotheses that show the correlation and influence between the two variables. To test the validity of these hypotheses, data were collected from the Central Bank of Iraq for the period 2017–2023. The research adopted both inductive and deductive approaches, using descriptive and quantitative analyses through SPSS 27 and AMOS 28. The research reached several conclusions, most importantly: increasing the trend towards digitizing banking services leads to enhanced operational efficiency and positively impacts it. This is achieved by delivering banking services through modern channels, which reduces costs, accelerates service delivery, ensures necessary quality, and requires less effort. All of these factors benefit both banks and customers, encouraging greater customer engagement with banks, thus increasing revenues. Based on the conclusions drawn from the research, it is evident that there is an urgent need to accelerate the digitization of banking services and enhance operational efficiency within Iraq's banking sector. Therefore, helpful recommendations were made in line with these conclusions.