THE IMPACT OF DIGITALIZATION ON ORGANIZATIONAL PERFORMANCE: EVIDENCE FROM THE TURKISH BANKING SECTOR

Abstract

Digitalization has transformed the banking industry by reshaping customer interactions, operational processes, and organizational decision-making systems. The rapid adoption of digital banking technologies, FinTech innovations, and automated decision-making (ADM) applications has created new opportunities for banks to improve efficiency, profitability, and competitiveness. This study examines the impact of digitalization on organizational performance in the Turkish banking sector from a decision-making perspective. Digitalization is conceptualized through two dimensions: The growing adoption of Digital Banking Services and the use of automated decision-making systems in banking operations. An explanatory sequential mixed-method research design was employed. In the quantitative phase, secondary banking sector data covering the period from 2011 to 2025 were analyzed using the Autoregressive Distributed Lag (ARDL) approach to investigate the relationship between digitalization indicators and profitability measures. In the qualitative phase, semi-structured interviews were conducted with senior banking professionals to explore managerial perceptions regarding digital transformation and automated decision-making. The findings reveal a positive relationship between digitalization and organizational performance. Increased digital banking activities, including mobile banking usage and transaction volumes, were associated with improved profitability. Qualitative findings further indicate that digitalization enhances organizational performance through operational efficiency, customer acquisition, process automation, and improved credit decision quality. The study also highlights the growing role of ADM systems in supporting risk assessment and lending decisions while emphasizing the continued importance of human oversight. The findings contribute to the literature by integrating FinTech adoption and automated decision-making within a single framework and providing evidence from an emerging banking market. The study concludes that digitalization represents a strategic capability that supports sustainable organizational performance in the banking sector.