Driving Digital Transformation: Analyzing the Impact of Internet Banking on Profitability in the Saudi Arabian Banking Sector

Abstract

This study examines the impact of Internet Banking on banking profitability in Saudi Arabia in a sample of conventional and Islamic banks. The study uses Return on Assets (ROA) and Return on Equity (ROE) as key metrics to measure profitability in a sample of 10 Saudi conventional and Islamic banks observed over the 2013–2022 period. The used regression analysis reveals a significant effect of Internet Banking on the profitability of both conventional and Islamic banks, as indicated by the ROA and ROE metrics. These findings have implications that underscore the strategic importance of adopting Internet Banking, emphasizing its substantial contribution to the financial performance of both conventional and Islamic banks in the Saudi Arabian banking landscape. This study offers critical insights into the strategic significance of Internet Banking for Saudi Arabian banks’ profitability and future planning, in line with the 2030 Vision goals. This research also supports informed decision making in the digital era, emphasizing the pivotal role of Internet Banking in shaping the future of the Saudi Arabian banking industry.