The Impact of Internal Audit Function Quality and ERM Maturity on Financial Performance: The Moderating Role of IT Governance in The Banking Sector

Abstract

Fast-moving developments in financial technology (FinTech) and digital banking have reshaped the way banks operate, so that sound governance arrangements now matter more than ever for sustaining financial results. Alongside this shift, the quality of the Internal Audit Function, the maturity of Enterprise Risk Management (ERM), and Information Technology (IT) Governance have grown in importance as supports for technology-enabled oversight, risk supervision, and organizational resilience. Banking offers a fitting setting for such an inquiry, since the industry works under tight regulation, carries considerable financial and operational exposure, and depends on information technology to run core services for its customers. The present research therefore examines how Internal Audit Function Quality and ERM Maturity affect Financial Performance, and whether IT Governance moderates those effects within the Indonesian banking sector. A quantitative design was applied, with questionnaire data gathered from 100 banking practitioners and processed through IBM SPSS Statistics 29 together with the PROCESS Hayes Macro. Results show that Internal Audit Function Quality and ERM Maturity each exert a positive and significant influence on Financial Performance. IT Governance was further found to reinforce both linkages, which highlights how digital governance contributes to organizational outcomes. This work adds to the existing literature by supplying empirical proof that IT Governance amplifies the value of Internal Audit Function Quality and ERM Maturity, pointing to the merit of an integrated governance approach for sustaining financial performance in banks undergoing digital transformation.