Exploring the Mediating Role of FinTech Adoption and Digital Transformation in Enhancing Bank Performance: A TOE Framework Study Using a Hybrid SEM-ANN Approach

This study investigates the influence of dynamic capabilities like technological, organizational, and environmental on bank performance through the mediating roles of digital transformation (DT) and fintech adoption (FA), employing the Technology-Organization-Environment (TOE) framework. Drawing on data from 325 respondents in the Chennai region of India, a two-stage hybrid methodology combining Structural Equation Modeling (SEM) and Artificial Neural Networks (ANN) was used to validate the proposed model. The findings reveal that technological and organizational capabilities significantly drive digital transformation and fintech adoption but do not directly improve bank performance. In contrast, government support, representing environmental capability, exerts a direct and positive influence on performance outcomes. Importantly, the mediating effect of DT and FA strengthens the relationship between dynamic capabilities and bank performance, underscoring their strategic importance. This research contributes to the literature by integrating dynamic capability theory within the TOE framework, offering a holistic understanding of how banks can leverage internal strengths and external support for successful digital transformation. The results hold practical implications for bank management and policymakers. Strategic recommendations include incentivizing digital adoption through regulatory support, tax benefits, and funding programs to foster innovation while maintaining financial stability.