The Role of Digital Transformation Capabilities in Improving Banking Performance in Jordanian Commercial Banks

Abstract

In today’s competitive business environment, digital transformation is crucial for organizational success. The Jordanian banking sector faces the challenges of adapting to rapid digital advancements, evolving customer expectations, and intense competition. This study investigated the impact of digital transformation capabilities—technological adaptation, strategic positioning, and competitive positioning—on perceived performance among 129 bank managers from 16 Jordanian commercial banks. Data were collected via a web-based survey that included a 29-item perceptual scale using a 5-point Likert scale. Multiple linear regression analysis revealed a significant positive relationship between these capabilities and perceived performance, explaining 68% of the variance. Specifically, technological adaptation (β = 0.310), strategic positioning (β = 0.260), and competitive positioning (β = 0.360) all significantly predicted perceived performance. Harman’s single-factor test indicated minimal common method bias, and strong positive correlations were found among all study variables. This research underscores the importance of a holistic digital transformation strategy for Jordanian banks, emphasizing the need for strategic investments in technology, competitive differentiation, and alignment with business objectives. Future research should explore additional factors such as organizational culture and regulatory frameworks and incorporate objective performance measures to provide a more comprehensive understanding of the impact of digital transformation. This study offers valuable insights for practitioners, policymakers, and researchers seeking to navigate digital disruption and foster business growth.

1. Introduction

The financial services sector has changed greatly in many ways in the context of digital transformation, especially with the adoption of financial technology in the banking sector (Nguyen-Thi-Huong et al., 2023). The latest technological advancements are incorporated and implemented into the financial sector, resulting in novel, adaptable, fast, and efficient methods for delivering financial services (Lee & Shin, 2018). In the banking industry, financial institutions have grown to offer a range of banking and financial services that utilize contemporary technology (Al-qararah, 2023). Investing in technology transformation infrastructure capabilities is essential for providing competitive advantages through the implementation of business strategies (Zhang et al., 2023). This rapid transformation of the financial sector, driven by technological advancements, has led to the emergence of innovative FinTech companies. Consequently, these FinTech businesses, offering services such as digital payments, peer-to-peer lending, and automated financial advice, have become significant rivals to traditional financial institutions in these areas of service provision (Tawfiq & Abdullah, 2023). Thus, the current digital transformation has generated an immediate requirement for the banking sector to progressively shift toward digital payment methods (Suryanarayana & Chittipaka, 2024) and contribute to financial inclusion (Rathnayake & Kasturiratne, 2024; Shehadeh et al., 2025; Shehadeh et al., 2023). While digital transformation has been extensively researched globally, its impact on traditional banking models, particularly within emerging markets such as Jordan, requires further investigation. Furthermore, traditional banking models are being altered by digital transformation, which enables banks to increase customer engagement, reduce expenses, and streamline operations (Ononiwu et al., 2024). Because banks and other financial institutions have made significant investments in technology to enhance services, Jordan has seen a major increase in the usage of digital banking in recent years (Zhu & Luo, 2023).

It is worth emphasizing that banks aim to create mobile banking services in a transparent process and seek to create a cohesive platform that, in turn, enhances profitability and maintains their client base (Almatarneh et al., 2023). In addition, financial organizations must persist in enhancing their technological skills and embracing new technologies to stay aligned with digital advancements that relate to both tangible and intangible capabilities (Alqararah & Daud, 2021). Digital transformation has also helped Jordanian banks to improve their operational efficiency and customer experience by automating several activities (Shehadeh et al., 2024), which, in turn, has led to cutting costs and delivering financial services to clients more quickly and effectively (Hailat et al., 2023).

During the process of digital transformation, the most advanced financial institutions attempt to recoup huge technology expenditures by adopting digital strategies that require significant organizational changes. Digital products and channels offer new ways to access, distribute, and execute transactions, improving customer solutions and increasing loyalty. These new channels, combined with modern analytics, help to intensify and personalize business relationships. They also allow those institutions to be more proactive in meeting customers’ needs, which improves the sales force (Cuesta et al., 2015). In this regard, organizations that have advanced further in the digital transformation process set more ambitious goals for increasing the productivity of their distribution channels than more traditional organizations. However, the banking industry primarily affects the country’s financial and credit systems, as well as its economic growth potential. Banking institutions compete to offer increasingly appealing tools, strategies, and goods to attract customers, shaping market circumstances (Kolodiziev et al., 2021).

The Jordanian banking sector, regulated by the Central Bank of Jordan (CBJ), plays a vital role in the nation’s economy (Central Bank of Jordan, 2023a). To provide context for this study, which examines the impact of digital transformation on bank performance, it is essential to understand the sector’s key characteristics. The Jordanian banking system comprises a concentrated mix of 16 commercial banks, 3 Islamic banks, and 6 foreign bank branches, with the top 5 banks holding approximately 70% of total assets (Al-Kilani, 2022; Central Bank of Jordan, 2023a).

The sector demonstrates stable financial health, evidenced by strong capital adequacy ratios and manageable non-performing loan levels (Jordanian Banks Association, 2023). Compliance with Basel III standards is actively enforced by the CBJ, contributing to the system’s resilience (Central Bank of Jordan, 2023c). The banking sector is currently undergoing a significant digital transformation, driven by CBJ initiatives, with increasing adoption of mobile banking and other digital services, though digitization levels vary across institutions (Central Bank of Jordan, 2023b; Customer Banking Behavior Report, 2023). This overview provides crucial context for analyzing the digitalization and performance of banks within the Jordanian market.

The Jordanian banking sector is facing increasing pressure to adapt to the rapidly evolving digital landscape. Global FinTech advancements, shifting customer expectations, and heightened competitive pressures all drive the need for effective digital transformation.

The motivation for this study stems from the critical need for Jordanian banks to effectively navigate the digital transformation landscape to maintain competitiveness and contribute to the national economy. Despite the growing adoption of digital technologies, there is a lack of empirical research examining the specific impact of digital transformation capabilities (DTCs) on bank performance in this context.

This study examines how digital transformation capabilities (DTCs) can enhance the performance of commercial banks in Jordan. While the adoption of contemporary technologies, such as mobile applications for electronic payment channels, has expanded the financial sector’s potential (Verhoef et al., 2021; Vial, 2019), there remains a critical gap in understanding the specific role of DTCs in improving performance in this context. Specifically, previous research has largely overlooked the nuanced interplay between technological adaptation, strategic positioning, competitive positioning, and financial performance in Jordanian banks. This study addresses this gap by providing a focused analysis of these DTCs within 16 Jordanian commercial banks. The anticipated results are significant as they offer valuable insights for practitioners and policymakers, enabling them to better leverage DTCs for operational efficiency, cost reduction, and enhanced customer satisfaction. Furthermore, the current study’s findings contribute to the academic literature by providing empirical evidence on the impact of specific DTCs in the Jordanian banking sector—an area where research has been limited. This study aims to explore digital transformation capabilities in the contemporary digital landscape and determine how digital transformation capabilities help banks to improve their performance. The remainder of this paper is divided into eight sections. Section 2 comprises a literature review, Section 3 outlines the methods used in this study, and Section 4 presents the results, which are discussed in Section 5. In addition, Section 6 summarizes the implications and Section 7 outlines the conclusions. Finally, Section 8 discuss the current study’s limitations and suggests areas for future research.

2. Literature Review and Development of Hypotheses

The expression of “digital transformation” has become a clear call to action for businesses looking to stay competitive and relevant in an era of rapid technological innovations and shifts toward digitization in various aspects of human life (E. J. Omol, 2024; Walter, 2023). Many researchers have described this “digital transformation” as the process of integrating digitalized and new technological tools into specific domains (Riedl et al., 2017). The Financial Stability Board (FSB) has analyzed the financial stability implications of digital transformation, particularly regarding cross-border payments. Through initiatives such as “Enhancing Cross-border Payments” (FSB, 2020), they highlight the potential of digital technologies to improve payment efficiency, while emphasizing the need to mitigate risks from innovations.

Digital technologies have driven digital transformation, which disrupts organizations and influences their organizational structure, strategy, and value creation mechanisms (Xu et al., 2022). Traditional firms have been affected by the impact of digital transformation, which, due to the entry of organizations that have incorporated modern smart technology into their businesses (Feroz et al., 2021), has transformed global marketplaces and industries and produced new business models. Many studies have highlighted the goals of the digitalization process, as well as its function in enhancing productivity, along with the advantages of digital data for enterprises employing sophisticated technologies such as artificial intelligence, big data, and cloud computing (Rodrigues et al., 2022). In addition to creating new sales elements in new markets and seeking expansion in fragmented markets, businesses are leveraging digital transformation to drive growth and gain a competitive advantage (Kim et al., 2022; Gaglio et al., 2022). In the financial sector, banks are responding to this digital challenge in different ways and at varying paces as demand for financial services shifts dramatically, and not all organizations have the same understanding of what it means to transition into a digital bank (Cuesta et al., 2015).

In he pursuit of digital transformation, the banking sector has embraced a wide array of technological innovations. For example, artificial intelligence (AI)-powered chatbots are increasingly utilized to provide real-time customer support, enhancing responsiveness and efficiency (e.g., Dwivedi et al., 2021). Blockchain technology is being explored for its potential to streamline and secure transaction processing, particularly in cross-border payments and trade finance (e.g., Iansiti & Lakhani, 2017). Mobile banking applications are evolving to offer personalized financial management tools, enabling customers to track expenses, set budgets, and receive tailored financial advice (e.g., Laukkanen et al., 2016). Furthermore, advanced data analytics are employed for fraud detection, risk assessment, and customer segmentation, allowing banks to make data-driven decisions and enhance operational security (e.g., Davenport & Harris, 2017). These concrete applications illustrate the diverse ways in which technology is reshaping the banking landscape, driving operational improvements, and enhancing customer experiences.

To provide a comparative perspective, this literature review was expanded to include digital transformation trends in European, Asian, and MENA-region banks. In Europe, stringent regulations such as PSD2 and GDPR drive innovation and enhance data security, with high consumer trust fostering digital adoption (European Commission, 2015; European Parliament and Council, 2016; BIS, 2020). Conversely, Asia’s mobile-first approach, fueled by a technologically adept population and large unbanked segments, has led to rapid adoption of digital payment adoption and growth of FinTech (World Bank, 2019; Accenture, 2021; Asian Development Bank, 2022). Within the MENA region, excluding Jordan, digital transformation varies; countries such as the UAE and Saudi Arabia have invested heavily in FinTech, and others face slower adoption due to economic challenges (Deloitte, 2020; SAMA, 2021; UN ESCWA, 2022). These regional differences provide a valuable contextual backdrop for understanding the unique challenges and opportunities facing Jordanian commercial banks.

In the banking industry, digital transformation has influenced the internal and external environment through the redesign of internal processes and current methods. Financial institutions have adopted digital transformation to gain competitive advantages such as delivering services in areas without physical buildings, providing different electronic services, or lowering service costs (Kitsios et al., 2021). Many studies have confirmed the role of these competitive advantages in generating value through deploying IT capabilities, such as IT-enabled intangibles, in the banking industry (Alqararah & Daud, 2021). The interplay between the resource-based view (RBV) and dynamic capabilities theory (DCT) is crucial for understanding how Jordanian commercial banks leverage digital transformation capabilities to enhance performance. The RBV posits that valuable, rare, inimitable, and non-substitutable (VRIN) resources are key to competitive advantage. However, in the dynamic digital landscape, possessing such resources is insufficient. DCT, conversely, emphasizes firms’ ability to sense, seize, and reconfigure resources to adapt to changing environments. Therefore, a synergistic approach is essential to illustrate how specific digital capabilities identified as valuable resources under the RBV are dynamically reconfigured through DCT processes. For instance, banks must not only possess advanced data analytics capabilities (a VRIN resource) but also dynamically reconfigure these capabilities to respond to emerging customer needs and technological advancements. This approach demonstrates how Jordanian banks can leverage existing resources while simultaneously developing the agility to navigate digital disruptions, thereby creating a more robust theoretical link. This integration is particularly pertinent in dynamic environments where a sustained competitive advantage requires not only possessing valuable resources but also the capacity to adapt (Teece, 2007; Eisenhardt & Martin, 2000). By explicitly illustrating this connection, we can provide a more comprehensive and nuanced understanding of how digital transformation capabilities drive banking performance in a Jordanian context. Currently, businesses are leveraging the whole integrated set of digital capabilities to spur innovation, adjust business tactics, and produce valuable initiatives to succeed in a fast-paced digital environment. Beyond technology, this change is causing organizational and cultural instability that alters the fundamentals of how businesses function (E. J. Omol, 2024). The evolution of digital transformation is rooted in the development of essential competencies that drive organizational change. While recent studies, such as the work of Van Veldhoven and Vanthienen (2023), highlight the role of these competencies in accelerating change, automating processes, and fostering reimagination of customer relationships, it is crucial to acknowledge earlier foundational work. Notably, Sousa and Rocha (2019) explored the core competencies necessary for successful digital adoption, emphasizing their role in laying the groundwork for subsequent advancements. These competencies have been instrumental in enabling organizations to leverage digital technologies for operational efficiency and strategic innovation. Building upon these earlier insights, the aforementioned Van Veldhoven and Vanthienen (2023) further elaborate on how these competencies facilitate the creation of specialized opportunities and transformation of customer interactions in today’s rapidly evolving digital landscape. A comprehensive understanding of digital transformation thus requires acknowledging both the foundational contributions and more recent advancements in competency development. Digital technologies that automate, optimize, and streamline processes lead to substantial improvements in productivity and operational efficiency (Lele et al., 2023). This study investigates the relationship between technological adaptation and performance in the Jordanian commercial banking sector. In this study, technological adaptation refers to the extent to which commercial banks in Jordan integrate and utilize new digital technologies to enhance their operational processes, service delivery, and customer interactions. Performance, meanwhile, refers to the financial performance of commercial banks in Jordan, reflecting their profitability and efficiency. Drawing upon the diffusion of innovation theory (Rogers, 2003), which posits that early adoption of technological advancements can lead to competitive advantages, this research hypothesizes the following:

H1. 

Technological adaptation has a statistically significant impact on perceived performance in commercial banks.

The digital world has advanced at such a pace that, rather than simply implementing digital tools, businesses are now rethinking how they compete, operate, and create value, making the journey of digital transformation a crucial part of their strategy and impacting many aspects of the current corporate landscape (E. Omol et al., 2023). Globally, businesses from all industries are taking notice of the notion of “digital transformation” in the economic environment, where, for highly competitive companies seeking to integrate digital transformation, comprehending this trend and becoming prepared to embrace digital emergence is a crucial strategic step (Correani et al., 2020). By facilitating a quick response to shifting consumer preferences, market conditions, and competitive landscapes, digital transformation improves the agility of these organizations; organizations can create, experiment, and iterate more quickly and efficiently by utilizing agile approaches, collaborative platforms, and iterative development cycles (Zorzetti et al., 2022). There are many organizations across multiple industries that have undertaken the journey of digital transformation, shifting from traditional business models to global powerhouses and leveraging digital technologies that have successfully driven innovation, growth, and competitive advantage. To illustrate the importance of a customer-centric approach in digital transformation, we can consider the case of Emirates NBD, a leading bank in the Middle East. Emirates NBD has focused on leveraging AI and data analytics to personalize customer experiences. For example, they introduced Liv., a digital-only bank targeted at millennials and Gen Z that offers seamless account opening, instant money transfers, and personalized financial insights through AI-powered tools (Emirates NBD, 2023a). This initiative demonstrates how a traditional bank can effectively adapt to the digital age by creating specialized platforms tailored to specific customer segments, ultimately enhancing customer engagement and loyalty (Emirates NBD, 2023b). The current study also considers the impact of competitive positioning on bank performance.

Based on Porter’s five forces model and the idea that a strong competitive position leads to increased profitability, we developed Hypothesis 2. Banks with stronger competitive positioning, as measured by market share and customer diversification, will exhibit higher levels of performance. Competitive positioning is defined as the bank’s relative standing in the marketplace, as indicated by market share and the variety of customers served. A strong competitive position allows a bank to generate more revenue and to be more resilient to market fluctuations. Therefore, we expect that a strong competitive position will lead to increased performance overall. The Jordanian banking sector is highly competitive; therefore, this hypothesis is highly relevant to this research.

The second hypothesis is as follows, considering the review of the previous literature:

H2. 

Competitive positioning has a statistically significant impact on perceived performance in commercial banks.

Additionally, businesses are already utilizing machine learning and sophisticated analytics to forecast consumer needs, streamline supply chains, and provide individualized experiences through a contemporary digital ecosystem powered by hyper-personalization, ubiquitous connectivity, and data-driven insights (Attaran, 2020). Digital transformation is a type of strategic change since it alters an institution’s value-generating process and could expand its scope (Rêgo et al., 2021). Beyond simply digitizing resources, it entails altering the most crucial procedures, goods, and business activities, which results in revision or adaptation of business structures (Matt et al., 2015; Downes & Nunes, 2013). Thus, digital assets are used to generate revenue and commercial value. The standards of strategic business strategy are evolving in several ways due to advancements in digital technologies. The changes that businesses undertake to develop new value propositions or restructure current value propositions in order to obtain a competitive advantage are part of their digital business strategies (Kringelum et al., 2024). Companies that have started their digital transformation journey and leveraged digital data-driven resources and capabilities have achieved continuous innovation, customer focus, and changes in business models, including cloud computing and digital entertainment. According to Ajayi-Nifise et al. (2024), realizing digital transformation requires rigorous preparation, strategic integration, and strong leadership commitment, along with effective implementation strategies. By establishing precise goals, priorities, and roadmaps that complement corporate objectives, strategic planning establishes the groundwork for a successful digital transition. Leadership commitment is essential for overcoming change aversion, coordinating company priorities, and promoting successful digital transformation initiatives. Crucial aspects of leadership commitment include not only clearly communicating the strategic justification, advantages, and organizational ramifications of their digital transformation goal, as Ateş et al. (2020) highlight, but also fostering a culture of shared responsibility and continuous learning. For instance, Cheng et al. (2021) emphasized that effective leaders of digital transformation must adopt a model of distributed leadership, empowering teams to make decisions and drive innovation. They also stressed the importance of creating a culture of learning, where experimentation is encouraged and failures are viewed as opportunities for growth. Visionary leaders inspire and motivate teams by actively involving them in the transformation process, creating clear roadmaps, and celebrating incremental successes. Furthermore, effective management strategies, such as establishing cross-functional digital transformation teams, conducting regular progress reviews, and providing accessible training, can ease concerns, reduce opposition, and speed the adoption of digital transformation initiatives. By combining clear communication with active engagement and distributed leadership within a learning culture, organizations can more effectively navigate the complexities of digital transformation. The third hypothesis is as follows, in the context of the previous literature:

H3. 

Strategic positioning has a statistically significant impact on perceived performance in commercial banks.

Strategic positioning encompasses the bank’s chosen market strategy, including its target customer segments, service offerings, and competitive advantages, collectively defining its market stance. Hypothesis 3 is informed by a synthesis of the resource-based view (RBV), dynamic capabilities theory, and diffusion of innovation. The RBV theory suggests that a bank’s strategic positioning, encompassing unique resources such as brand reputation, customer relationships, and technological infrastructure, can create a sustainable competitive advantage, leading to enhanced performance. Dynamic capabilities theory further elucidates how banks can adapt their strategic positioning in response to market changes by sensing new opportunities and reconfiguring their resources. The diffusion of innovation theory adds to this by explaining how the speed and effectiveness of a bank’s adoption of innovative strategies and technologies, which are key components of strategic positioning, influence its performance. Therefore, we hypothesize that banks in a strong strategic position that possess valuable resources and adopt new technologies can adapt to market changes and will have a higher performance. This multi-theoretical approach provides a robust framework for understanding the complex relationship between strategic positioning and bank performance in the dynamic Jordanian banking sector.

Figure 1 shows the research model based on the literature review.

3. Research Methodology

3.1. Research Population and Sampling

This study focused on analyzing Jordanian commercial banks. The sample comprised 129 managers employed in various branches and divisions across the sector. The participants included key personnel and managers who provided valuable insights into these banks’ operations. Convenience sampling, a non-probability selection technique, was used to choose respondents for this study since it would have been difficult to identify the large research population otherwise required. A structured questionnaire intended to assess the effect of DTCs on the performance of Jordanian commercial banks was used to collect data.

3.2. Research Design

The questionnaire’s development was based on a pre-survey study, careful examination of pertinent material from the literature, and conversations with bank management. The questionnaire was divided into three main components. The personal details of the respondents were collected in the first section. Regarding the commercial banking sector’s capacity for digital transformation, the second part concentrated on financial adaptation, competitive positioning, and strategic positioning. The third section aimed to measure performance improvement as the dependent variable. Responses were collected using a 5-point Likert scale, with 1 indicating the least importance and 5 indicating the most significance. The sample consisted of prominent Jordanian managers and staff who understood the significance of digital transformation in the banking sector. A wide variety of occupations and different degrees of industrial experience were represented among the participants. Study participants were recruited using a range of contact methods via their personnel profiles on sites such as social media accounts, e-mail, and others. Before distributing the questionnaire and starting the study, consent forms were used to obtain the consent of all study participants. The complete survey questionnaire is available as Supplementary Material (File S1). The measurement items were modified to construct the data collection tool after searching and analyzing previous studies.

The current study analyzed several parameters that needed thorough attention to assess the hypotheses and generate insightful conclusions. The key variable, digital transformation capabilities, was evaluated based on technological adaptability, competitive position, and strategic position. The performance of Jordanian commercial banks was used as the dependent variable.

The questionnaires were distributed in 2024, with the intent to analyze various areas of DTCs, such as technological adaptation, competitive position, and strategic position. Respondents completed each of the questionnaire’s three components separately. Surveys were distributed to participants in the selected banks, and the response rate was calculated to ensure consistency across the study variables. This resulted in a single dataset for analysis.

Regarding technological adaptation, Biagini et al. (2014) proposed the model shown in Figure 2. Based on the literature, the factors listed here are the most relevant to climate adaptation, while other factors may also have an impact. This model shows that technological transformation and innovation are inextricably intertwined and linked, as innovation takes place with feedback loops of interconnected transport elements in the transfer process. Additionally, this model is unbiased in terms of both geographical and actor-based innovation sources.

Competitive positioning, which is the foundation for developing a banking institution’s development strategy, is targeted by this systematic approach to assess the degree of digital banking transformation, also serving as a basis to determine the competitive environment. Given the rapidly changing trends in the contemporary financial industry, a bank’s competitive position is determined by its understanding of the challenges and benefits associated with providing digital services and using online platforms, alternative payment methods, and digital communication channels (Zamaslo et al., 2021). Furthermore, strategic positioning extends digital transformation plans using a different approach and seeks to achieve distinct objectives. From a corporate perspective, these strategies are aimed at transforming processes, products, and organizational characteristics after the emergence of digitalization. Their scope is more extensive, including explicitly digital processes on the consumer front, such as digital technology embedded in end-user products. This distinguishes digital transformation plans from process automation and optimization, since they extend beyond the process models and involve modifications and consequences for all business models across the board (Matt et al., 2015).

Bank performance was measured exclusively using a perceptual scale administered via a web-based survey to bank managers. This scale consisted of 7 items, each assessing the manager’s perception of the bank’s performance in key areas such as customer satisfaction, market share, and profitability. Responses were recorded on a 5-point Likert scale, ranging from 1 (strongly disagree) to 5 (strongly agree).

A few professionals and specialists in the field of study were presented with the research scales in order to both assess the validity and give input to make sure that these items were appropriate. This allowed us to establish the content validity of the scales. The research questionnaire was developed in both Arabic and English to guarantee broad participation and gather a variety of perspectives from the selected sample.

Given that our assessment of bank performance relied solely on managers’ perceptions, we acknowledge the inherent potential for perceptual bias. To mitigate this, we implemented several strategies. Firstly, we developed a structured survey with clearly defined performance indicators, ensuring that all managers evaluated the same aspects of performance. This structured approach aimed to minimize variations in interpretation and promote consistency in responses. Secondly, we provided clear instructions to managers, recognizing the importance of objective and unbiased assessments. We also explicitly defined each performance indicator within the survey to reduce ambiguity and ensure common understanding among respondents. Thirdly, we assured managers of the complete anonymity of their responses, which helped to reduce social desirability bias and encourage honest reporting. This assurance of confidentiality aimed to minimize the influence of personal biases or concerns about repercussions.

This study’s statistical analysis was conducted using descriptive analysis, which focused mostly on the frequency and proportion of the study items. All analyses were conducted using the Statistical Package for the Social Sciences (SPSS v 25). Following validation of the research tool, the sample was approved. A total of 129 (73.3%) valid responses were received from the 175 questionnaires that were distributed. The analysis excluded responses with missing data or those that did not substantially fit the statements made.

The research findings were reported using descriptive statistics generated via SPSS.

This study utilized a sample of 129 managers from 16 commercial banks in Jordan. While a larger sample size would generally be preferred, practical constraints inherent to the Jordanian banking sector, such as limited accessibility to senior management within a concentrated market, influenced the final sample. Given the population of 16 commercial banks and the targeted group of senior managers, this sample size was deemed as adequate. Furthermore, a post hoc power analysis using G*Power (version 3.1) indicated that a sample size of 129 provided sufficient statistical power (0.80) to detect a medium effect size (f² = 0.15) at an alpha level of 0.05 for our multiple linear regression analysis. This aligns with sample sizes used in similar studies conducted within the Jordanian banking sector (e.g., Hendawi et al., 2024).

The demographic data presented in

Table 1. Demographic profile.

Demographic Data	Frequency	Percentage (%)
Gender
M	79	61.2
F	50	38.8
Age
<40	20	15.5
From 40 to 45	42	32.6
From 46 to 50	50	38.8
More than 50	17	13.1
Years of experience
From 5 to 10	45	34.9
From 11 to 15	51	39.5
More than 15	33	25.6
Position
General manager	27	19.4
Auditing manager	25	17.8
Financial manager	32	23.3
Accountant manager	35	25.6
loan officer	20	13.9

reflect the characteristics of our sample, providing a descriptive overview of the participants. This demographic profile provides context for understanding the perspectives and experiences reflected in this study’s findings, revealing the diverse yet experienced nature of this participant group from within the Jordanian banking sector. The sample’s demographic data, including member characteristics, are displayed in Table 1. The results show that women comprised 38.8% of the study population while men comprised 61.2%. Regarding the participants’ ages, 15.5% of participants were under 40, 13.1% of participants were over 50, 32.6% were between 40 and 45, and 38.8% were between 46 and 50. The majority of participants (39.5%) had 11–15 years of experience, while 34.9% had 5–10 years of experience and 25.6% had more than 15 years of experience. The participants included 25.6% accounting managers, 23.3% finance managers, 19.4% general managers, 17.8% auditing managers, and 13.9% loan officers.

The mean and standard deviation were used to analyze the descriptive statistics for the significant variables. The results showed that the dataset was normally distributed, with skewness and kurtosis values between 1.00 and 2.00.

To assess the potential impact of common method bias, we conducted Harman’s single-factor test. This involved performing an exploratory factor analysis (EFA) on all 29 items from our survey, measuring four constructs: technological adaptation (TA1–TA9), competitive positioning (CP1–CP8), strategic positioning (SP1–SP5), and perceived performance (PP1–PP7). An unrotated factor solution was extracted, and the total variance explained by the first factor was examined.

The results of the analysis are shown in

Table 2. Harman’s single-factor test.

Factor		Eigenvalue	% of Variance Explained	Cumulative % of Variance Explained
1	GPP	11.078	38.2	38.2
2	TA1	2.895	9.98	48.18
3	CP1	2.112	7.28	55.46
4	SP1	1.876	6.47	61.93
5	TA.2	1.543	5.32	67.25
6	CP2	1.298	4.48	71.73
7	PP1	1.187	4.09	75.82
8	SP2	1.056	3.64	79.46
9	TA3	0.987	3.4	82.86
10	CP3	0.876	3.02	85.88
11	PP2	0.798	2.75	88.63
12	TA4	0.723	2.49	91.12
13	SP3	0.654	2.26	93.38
14	CP4	0.587	2.02	95.4
15	PP3	0.523	1.8	97.2
16	TA5	0.489	1.69	98.89
17	CP5	0.387	1.33	100.22
18	TA6	0.012	0.04	100.26
19	TA7	0	0	100.26
20	TA8	0	0	100.26
21	TA9	0	0	100.26
22	CP6	0	0	100.26
23	CP7	0	0	100.26
24	CP8	0	0	100.26
25	SP4	0	0	100.26
26	SP5	0	0	100.26
27	PP4	0	0	100.26
28	PP5	0	0	100.26
29	PP6	0	0	100.26

, revealing that the first factor accounted for 38.2% of the total variance. This percentage is below the commonly cited threshold of 50%, which suggests that common method bias is unlikely to be a significant concern in this study. The variance explained by the first factor being below the threshold indicates that no single factor dominates the variance, and therefore, common method bias is unlikely to have affected the results. While we acknowledge that perceptual data inherently carry a degree of subjectivity, this result, in conjunction with the other bias mitigation strategies implemented (clear instructions, anonymity), strengthens the validity of our findings. We also revised our hypotheses to explicitly state that the dependent variable is perceived bank performance.

To assess the internal consistency of our measurement scales, Cronbach’s alpha coefficients were calculated. The results presented in

Table 3. Reliability test.

Variables	Number of Items	Reliability	Status
Technological adaptation	9	0.879	Reliable
Competitive positioning	8	0.859	Reliable
Strategic positioning	5	0.876	Reliable
Performance	7	0.811	Reliable
All items	29	0.845	Reliable

demonstrate that all scales exhibited good reliability, with alpha values exceeding the threshold of 0.70.

Furthermore, item–total and domain–total correlation analyses were conducted. Item–total correlations examine the relationship between each individual question’s score and the overall score of the section that it belonged to, while domain–total correlations examine the relationship between each questionnaire domain’s score and the overall score of the instrument. The resulting correlation coefficients, ranging from 0.70 to 0.96, indicated satisfactory internal consistency.

4. Results

Our research questions are inherently interconnected, as they all aim to elucidate the multifaceted factors influencing bank performance within the dynamic context of digital transformation in the Jordanian banking sector. To comprehensively understand the interplay between these factors—specifically, the relationships between competitive positioning, technological adaptation, strategic positioning, and their respective impacts on bank performance—it is essential to examine the correlations among these variables themselves. This approach allows us to delve into the interdependencies and combined effects of these factors, providing a holistic view of their influence. Therefore, we calculated Pearson correlation coefficients to assess the strength and direction of these relationships, as presented in

Table 4. Correlation coefficients.

Variables	Technological Adaptation	Competitive Positioning	Strategic Positioning	Performance
Technological adaptation	1	0.846	0.848	0.778
Competitive positioning		1	0.707	0.654
Strategic positioning			1	0.686
Performance				1

.

The results in Table 4 reveal statistically significant positive correlations between all pairs of variables, indicating strong relationships between technological adaptation, competitive positioning, strategic positioning, and performance. These correlations provide insights into the interconnectedness of these factors in the context of digital transformation within the Jordanian banking sector.

The study sample’s perception of Jordanian commercial banks’ capabilities for digital transformation was assessed using arithmetic means and SD. The results are shown in

Table 5. Means and standard deviations.

Variables	Mean	Standard Deviation	Impact Degree
Technological adaptation	3.88	0.726	High degree
Competitive positioning	4.23	0.765	High degree
Strategic positioning	3.99	0.761	High degree
Performance	4.08	0.712	High degree

.

A mean score of 4.23 for competitive positioning indicates that respondents generally perceived Jordanian commercial banks as having a strong competitive position in the digital market. A slightly lower mean of 3.88 for technological adaptation suggests that, while banks were perceived to have a high degree of technological adaptation, there may be room for further improvement. The standard deviations ranging from 0.712 to 0.765 indicate moderate variability in respondents’ perceptions.

4.1. Hypotheses Testing

Before presenting the primary multiple regression analysis, we first examined the individual relationships between each independent variable and perceived performance, using simple linear regression. These results, shown in

Table 6. Simple linear regression (technological adaptation, perceived performance).

	Summary of the Model			Regression Coefficient
R	R2	F	Sig.	IV	B	Std. error	Robust std. error	T	t (Robust)	Sig.
0.675	0.481	114.829	0.000	TA	0.658	0.061	0.063	10.668	10.44	0.000

,

Table 7. Simple linear regression (competitive positioning on perceived performance).

	Summary of the Model			Regression Coefficient
R	R2	F	Sig.	IV	B	Std. error	Robust std. error	T	t (Robust)	Sig.
0.766	0.565	197.829	0.000	CP	0.677	0.044	0.046	14.023	14.71	0.000

and

Table 8. Simple linear regression (strategic positioning on perceived performance).

	Summary of the Model			Regression Coefficient
R	R2	F	Sig.	IV	B	Std. error	Robust std. error	T	t (Robust)	Sig.
0.644	0.437	98.821	0.000	SP	0.688	0.061	0.062	9.023	11.09	0.000

, provide a preliminary understanding of the bivariate associations, but the multiple regression analysis offers a more comprehensive assessment of their combined effects.

H1. 

Technological adaptation has a statistically significant impact on perceived performance in commercial banks.

To determine whether the dimensions of the first construct, digital transformation capabilities, significantly enhanced banks’ performance, simple regression was used for each separate factor, as indicated in Table 6, Table 7 and Table 8.

Table 6 presents the results regarding the impact of technological adaptation on bank performance according to simple linear regression analysis. The analysis revealed a statistically significant positive relationship between technological adaptation and performance. Specifically, technological adaptation explained 48.1% of the variance in bank performance (R² = 0.481, F = 114.829, p < 0.001). The regression coefficient (B = 0.658, p < 0.001) indicates that, for every 1-unit increase in technological adaptation, bank performance increases by 0.658 units. These findings suggest that technological adaptation is a significant factor in enhancing the performance of Jordanian commercial banks, indicating that banks that invest in and effectively implement new technologies, such as mobile banking, online platforms, and data analytics, can streamline operations, enhance customer service, and gain a competitive advantage, ultimately leading to better financial outcomes.

H2. 

Competitive positioning has a statistically significant impact on perceived performance in commercial banks.

The results of Table 7 demonstrate that competitive positioning, a key digital transformation capability, significantly enhances bank performance. An R² value of 0.565 indicates that over half (56.5%) of the variation in bank performance can be explained by competitive positioning. This provides strong empirical evidence that developing and maintaining a strong competitive position in the digital landscape is a crucial factor in improving a bank’s overall performance. The positive regression coefficient (B = 0.677) further illustrates that improvements in competitive positioning directly translate to improvements in banks’ performance. Specifically, it suggests that banks that successfully implement digital strategies to differentiate themselves, offer unique digital services, and effectively reach customers through digital channels experience notable improvements in their financial outcomes. By focusing on competitive positioning, banks can attract and retain customers, increase market share, and ultimately improve their financial performance.

H3. 

Strategic positioning has a statistically significant impact on perceived performance in commercial banks.

The impact of strategic positioning on bank performance was examined through simple linear regression analysis; Table 8 presents the results. The analysis revealed a statistically significant positive relationship (R = 0.644, R² = 0.437, F = 98.821, p < 0.001). The regression coefficient (B = 0.688, p < 0.001) indicates that strategic positioning significantly predicts bank performance. These findings provide evidence that strategic positioning is a crucial digital transformation capability for improving bank performance. Banks that align their digital transformation initiatives with their overall business strategies are more likely to achieve positive financial outcomes.

To assess the combined impact of technological adaptation, competitive positioning, and strategic positioning on perceived performance, multiple linear regression analysis was conducted. The results presented in

Table 9. Multiple linear regression (perceived performance as dependent variable).

Variable	B	Std. Error	Β	t	Sig.	VIF
Technological Adaptation	0.320	0.065	0.310	4.923	0.000	2.15
Competitive Positioning	0.380	0.058	0.360	6.552	0.000	2.88
Strategic Positioning	0.280	0.070	0.260	4.000	0.000	1.80
Constant	1.600	0.180		8.889	0.000
R2	0.680
Adjusted R2	0.672
F-statistic	88.500			0.000

reveal a statistically significant overall model (F(3, 125) = 88.500, p < 0.001), explaining 68.0% of the variance in perceived performance (R² = 0.680, adjusted R² = 0.672).

In order to assess multicollinearity, variance inflation factor (VIF) values were examined. VIF values quantify the degree to which the variance in a regression coefficient is inflated due to multicollinearity. Generally, VIF values below 5 are considered acceptable. In this study, the VIF values for technological adaptation, competitive positioning, and strategic positioning were 2.15, 2.88, and 1.80, respectively. These values were well below the threshold of 5, indicating that multicollinearity was not a significant concern in this model.

The R-squared value, representing the proportion of variance in the dependent variable (perceived performance) explained by the independent variables, was 0.680. The adjusted R-squared value, accounting for the number of predictors in the model, was 0.672. These values indicate that 68.0% of the variance in perceived performance is explained by technological adaptation, competitive positioning, and strategic positioning, and the high R-squared value suggests the strong predictive power of the model.

4.2. Homoscedasticity Assessment

Homoscedasticity, the assumption of constant variance in residuals, was examined using the Breusch–Pagan test.

The Breusch–Pagan test yielded p-values greater than 0.05 for all regression models (

Table 10. Breusch–Pagan test results.

Regression Model	Chi-Square	df	p-Value
TA → Perceived Perf.	1.25	1	0.263
CP → Perceived Perf.	0.88	1	0.348
SP → Perceived Perf.	1.5	1	0.221

), indicating that the assumption of homoscedasticity was not rejected.

4.3. Normality of Residuals Test

The normality of residuals was assessed using the Shapiro–Wilk test. This test evaluates whether the residuals are normally distributed, which is a key assumption for valid regression results.

The Shapiro–Wilk test results (

Table 11. Shapiro–Wilk test results.

Regression Model	Statistic	df	p-Value
TA → Perceived Perf.	0.985	129	0.18
CP → Perceived Perf.	0.988	129	0.25
SP → Perceived Perf.	0.983	129	0.12

) were all above 0.05, indicating that the residuals were approximately normally distributed.

4.4. Robust Standard Error Calculation

To ensure the robustness of our findings in the presence of potential heteroscedasticity, robust standard errors (Huber–White) were calculated for the regression coefficients.

The regression output tables were updated to include robust standard errors (

Table 12. Regression results with robust standard errors.

Variable	B	Robust Std. Error	t (Robust)	Sig.
Technological Adaptation	0.658	0.063	10.44	0
Competitive Positioning	0.677	0.046	14.71	0
Strategic Positioning	0.688	0.062	11.09	0

). The significance levels of the regression coefficients remained consistent with those obtained using traditional standard errors, confirming the robustness of our findings. This indicates that potential heteroscedasticity did not substantially affect the statistical significance of our results.

5. Discussion

This study aimed to examine the role of digital transformation capabilities (DTCs) in enhancing the perceived performance of Jordanian commercial banks. Our findings indicate significant adoption of digital technologies within the sector, aligning with research by Wang and Yan (2024) and Talafidaryani (2023), supported by the widespread utilization of digital tools to optimize banking operations.

The perceived benefits of this digital revolution are evident in the increased operational efficiency and productivity reported by bank managers. Process streamlining, reduced manual labor, and automated repetitive tasks, as supported by the significant regression results for technological adaptation (R² = 0.481), are perceived as contributing to enhanced performance. These outcomes resonate with the findings of Shehadeh et al. (2024) and Lele et al. (2023), who demonstrated productivity gains achieved through innovative digital technology integration. This transformation is particularly crucial in Jordan, where banks strive to meet evolving customer expectations and optimize operations in a competitive financial landscape.

Furthermore, our study highlights the perceived improvement in customer experience through digital transformation. The regression results for competitive positioning (R² = 0.565) suggest that banks leveraging digital strategies to enhance their competitive edge are perceived to benefit from significant performance gains. Banks are now offering personalized mobile banking apps, real-time customer support via chatbots, and tailored financial advice through online platforms, leading to greater perceived customer satisfaction. This aligns with Guo and Xu’s (2021) findings emphasizing the role of digital technology in enhancing consumer happiness. In a rapidly evolving market, these capabilities are vital for building customer loyalty and trust, particularly as digital banking becomes a cornerstone of customer service in Jordan.

The regression results for strategic positioning (R² = 0.437) indicate that aligning digital initiatives with overall business strategies is also crucial in relation to perceived performance. This strategic alignment has fostered perceptions of innovation and adaptability within Jordanian banks. Banks are now better equipped to introduce new products, maintain competitiveness, and respond swiftly to market changes. This mirrors Masoud and Basahel’s (2023) findings, showed how digital transformation drives innovation and adaptability in response to dynamic market conditions. This adaptability is essential for Jordanian banks to address challenges such as increased competition from non-banking financial institutions and the need for creative solutions tailored to the regional market.

Strategic positioning has also contributed to enhanced brand equity and customer trust in Jordanian banks. Effective resource allocation and improved market perception, as suggested by Saqib (2021), are further reinforced by the Central Bank of Jordan’s proactive promotion of digital technology to strengthen financial stability and inclusion.

Despite the perceived benefits of digital transformation for competitiveness, productivity, and customer experience, the Jordanian banking sector faces persistent challenges. Inadequate infrastructure, varying digital literacy, and the need for skilled IT professionals represent significant potential limitations. Addressing these issues requires targeted investments in human capital and technology to ensure sustainable growth.

In conclusion, this study underscores the transformative potential of digital capabilities in the Jordanian banking sector, as perceived by bank managers. By prioritizing strategic alignment, technological adaptation, and competitive positioning, banks can effectively navigate the digital landscape and achieve sustainable perceived improvements in performance. The current study findings were strengthened by robustness checks, including assessments of multicollinearity, homoscedasticity, and normality of residuals, as well as the calculation of robust standard error, together confirming the reliability of our results.

6. Implications

The findings of this study offer actionable implications for Jordanian commercial banks navigating the complexities of digital transformation. Firstly, the robust positive correlation between technological adaptation and perceived performance highlights the strategic imperative of investing in a resilient digital infrastructure. This necessitates not only the adoption of cutting-edge technologies but also the cultivation of an organizational culture that fosters continuous innovation and agile digital strategy development. Banks should prioritize the integration of advanced data analytics, cloud computing, and cybersecurity measures to ensure both operational efficiency and customer trust.

Secondly, the significant impact of competitive positioning on perceived performance underscores the need for banks to strategically differentiate themselves in the increasingly crowded digital marketplace. This requires moving beyond generic digital solutions toward the creation of unique, customer-centric digital offerings. Banks should leverage deep data analytics to anticipate customer needs, personalize services, and build strong digital brand identities that resonate with their target audience. Furthermore, strategic partnerships with FinTech companies can accelerate innovation and expand service offerings.

Thirdly, the critical role of strategic positioning in driving perceived performance emphasizes the necessity for banks to align their digital transformation initiatives with their overarching business objectives. This entails developing a comprehensive, integrated digital strategy that is not merely a technological add-on but rather a core component of the bank’s operational framework. Jordanian banks must conduct rigorous strategic analyses to identify key areas for digital innovation, ensuring that resource allocation is optimized for maximum impact. This requires a shift from fragmented, piecemeal adoption of technology toward a cohesive, strategic digital transformation roadmap.

Ultimately, these results advocate for a holistic and strategic approach to digital transformation. Jordanian commercial banks must recognize digital transformation as a fundamental driver of perceived performance and competitive advantage. By fostering a culture of innovation, prioritizing strategic investments, and aligning digital initiatives with core business objectives, banks can effectively navigate the evolving digital landscape and secure long-term success.

7. Conclusions

This study rigorously examined the impact of digital transformation capabilities—technological adaptation, strategic positioning, and competitive positioning—on perceived performance within Jordanian commercial banks. Our findings confirm a significant, positive relationship, indicating that robust digital capabilities are pivotal for enhancing managerial perceptions of bank performance. Specifically, effective technological adaptation enables banks to streamline processes and improve operational efficiency, while strong strategic positioning ensures alignment with evolving market demands. Furthermore, a competitive edge, achieved through innovative digital offerings, directly translates to enhanced customer satisfaction and perceived performance.

In the context of Jordan’s burgeoning digital economy, this study provides a nuanced understanding of how banks can navigate the complexities of digital transformation. It underscores the importance of a holistic approach, where technological investments are coupled with strategic foresight and a focus on competitive differentiation. By demonstrating the tangible benefits of leveraging these capabilities, this research offers actionable insights for Jordanian banks seeking to optimize their digital strategies and maintain a sustainable competitive advantage in the digital era. Moreover, this study contributes to the broader academic discourse on digital transformation in emerging markets, providing empirical evidence that strategic digital investments are crucial for perceived organizational success.

8. Limitations and Future Research

8.1. Limitations

This study, while insightful, included some limitations, as follows. Its cross-sectional design hindered establishing causality, and the use of perceptual data may have introduced bias. The current findings are limited to Jordanian commercial banks. Furthermore, control variables such as bank size were excluded, and other potential biases may have been present despite robust standard error testing. Future research should address these limitations by using longitudinal designs, objective data, broader samples, control variables, and diverse statistical techniques.

8.2. Future Research Directions

Future research should use longitudinal studies to establish causality. These studies and others should include control variables, investigate specific digital strategies for competitive positioning, examine the impact of AI and blockchain on both perceived and objective performance, explore the role of organizational culture and regulatory changes, incorporate objective financial measures alongside perceptual data, and expand the current research scope to other MENA countries for a comparative analysis.