The Effect of Digital Transformation on Financial Performance with Business Risk as a Momed in Banking Companies Listed on the Indonesia Stock Exchange

The Indonesian banking sector is undergoing significant digital transformation driven by technological advancements and changing consumer expectations. This shift requires the adoption of new technologies while managing business risks to sustain financial performance. This study investigates how digital transformation influences the financial performance of banking companies on the Indonesia Stock Exchange (IDX), with business risk as a moderation and mediation variable. Using data from 229 banking companies over 2019–2023, financial performance is measured through Return on Assets (ROA), Return on Equity (ROE), and Earnings Per Share (EPS). Business risk is assessed using Total Earnings Per Share (T.EPS), EBIT, and EBITDA. Findings indicate that digital transformation does not significantly affect financial performance directly in the short term but significantly impacts business risk. Business risk partially mediates the relationship between digital transformation and financial performance, though the effect is weak, and shows no significant moderation role. This research enhances understanding of how digital transformation shapes banking institutions’ financial health and highlights the importance of managing business risk to optimize financial outcomes in the digital era.