The Effect of Employee Digital Competencies, Technology Infrastructure, and Local Government Support on the Effectiveness of Islamic Banking Digitalization in Bandung City

Authors

  • Hildawati Hildawati Universitas Utara Malaysia
  • M Gifari Sono Universitas Muhammadiyah Luwuk
  • Rival Pahrijal Nusa Putra University

DOI:

https://doi.org/10.58812/wsis.v3i05.1951

Keywords:

Islamic Banking, Digitalization, Employee Digital Competencies, Technology Infrastructure, Local Government Support

Abstract

This study investigates the factors influencing the effectiveness of Islamic banking digitalization in Bandung City. Specifically, it examines the roles of Employee Digital Competencies (EDC), Technology Infrastructure (TEI), and Local Government Support (LGS) in shaping the success of digital transformation in Islamic banking institutions. A total of 220 respondents from various Islamic banks in Bandung participated in this research. Data were collected through a structured questionnaire with a 5-point Likert scale, and analyzed using Structural Equation Modeling - Partial Least Squares (SEM-PLS 3). The results reveal that Employee Digital Competencies, Local Government Support, and Technology Infrastructure significantly and positively influence the effectiveness of digitalization. The findings suggest that employee skills, government support, and robust technology infrastructure are essential for successful digital transformation in Islamic banking. This study contributes to the understanding of the digitalization process in Islamic financial services and provides practical recommendations for banking practitioners and policymakers in fostering an environment conducive to digital innovation.

References

[1] H. Irawan, “The role of Islamic banks in developing a Sharia-based economy in the digital era in Indonesia,” J. Islam. Econ. Lariba, vol. 9, no. 2, 2023.

[2] M. Ash-shiddiqy, “Analisis Peluang Dan Tantangan Perbankan Syariah Di Era Digital,” JASIE-Journal Aswaja Islam. Econ., vol. 2, no. 01, pp. 9–16, 2023.

[3] M. S. Bashir, “Globalization, Digitalization, and Financial Inclusion in Islamic Banking,” in Developing Digital Inclusion Through Globalization and Digitalization, IGI Global, 2024, pp. 250–286.

[4] M. Hasanah and I. Istikomah, “Digitalization Of Sharia Banking In Improving Financial Inclusion In Indonesia,” in Proceeding International Conference on Economics, Business and Information Technology, 2023, pp. 892–895.

[5] R. Ardista, A. P. Kusuma, and A. N. I. Munandar, “Manajemen sumber daya manusia di bank syariah: Tantangan dan peluang dalam era digital,” J. Ekon. Dan Bisnis, vol. 4, no. 4, pp. 634–639, 2024.

[6] P. Cintya and F. L. Nisa, “Pengaruh Teknologi Digital Dalam Perkembangan Layanan Perbankan Syariah,” J. Ekon. Bisnis Dan Manaj., vol. 2, no. 3, pp. 134–145, 2024.

[7] E. Sudarmanto, I. Yuliana, N. Wahyuni, S. R. Yusuf, and A. Zaki, “Transformasi Digital dalam Keuangan Islam: Peluang dan Tantangan,” J. Ilm. Ekon. Islam, vol. 10, no. 1, pp. 645–655, 2024.

[8] H. Shabri, “Transformasi digital industri perbankan syariah Indonesia,” El-Kahfi| J. Islam. Econ., vol. 3, no. 02, pp. 228–234, 2022.

[9] E. Siska, “Exploring the essential factors on digital Islamic banking adoption in Indonesia: a literature review,” J. Ilm. Ekon. Islam, vol. 8, no. 1, pp. 124–130, 2022.

[10] A. A. Adewale and R. Ismal, “Empirical assessment on digital transformation in Islamic banking 1,” in Digital Transformation in Islamic Finance, Routledge, 2022, pp. 118–141.

[11] H. Desky and I. Maulina, “Digital transformation in Islamic banking,” Int. J. Multidiscip. Res. Anal., vol. 5, no. 12, pp. 3616–3622, 2022.

[12] P. Kashemsanta and B. Plangsorn, “Reskilling and Upskilling Digital Competencies: A Systematic Review for Financial Sector Employee’s’ Development,” in Conference Proceedings of International Conference on Teaching, Education and Learning (TEL), 2024, pp. 25–35.

[13] G. V Petruk and N. A. Klescheva, “Competencies Of A Contemporary Employee In The Age Of Digitalization,” Eur. Proc. Soc. Behav. Sci., 2021.

[14] T. Manana and T. Mawela, “Digital skills of public sector employees for digital transformation,” in 2022 International Conference on Innovation and Intelligence for Informatics, Computing, and Technologies (3ICT), IEEE, 2022, pp. 144–150.

[15] Т. Ю. КАЛОШИНА, “DIGITAL COMPETENCIES: LET’S TALK ABOUT RELEVANCE IN THE CONTEXT OF THE «NEW» ECONOMY,” Экономика и предпринимательство, pp. 332–335, May 2023, doi: 10.34925/EIP.2022.148.11.063.

[16] D. D. Nguyen, H. C. Dinh, and D. Van Nguyen, “Promotion of fintech application for the modernization of banking-finance system in Vietnam,” J. Asian Financ. Econ. Bus., vol. 7, no. 6, pp. 127–131, 2020.

[17] A. N. Link and S. Metcalfe, “Technology infrastructure: Introduction to the special issue,” 2008.

[18] P. Senarathna and R. Wickramarachchi, “Critical success factors of digital transformation: A systematic literature review,” in 2024 4th International Conference on Advanced Research in Computing (ICARC), IEEE, 2024, pp. 346–351.

[19] I. Shkodina, I. Derid, and O. Zelenko, “Цифрова трансформація глобального банківництва: проблеми i перспективи,” Financ. Credit Act. Probl. theory Pract., vol. 3, no. 30, pp. 45–51, 2019.

[20] N. Tubaltseva, N. Hryshyna, and D. Bondarenko, “THE INFLUENCE OF DIGITALIZATION ON TRANSFORMATION PROCESSES IN THE FIELD OF SERVICES,” Publ. House “Baltija Publ., 2024.

[21] J. Weise, “Public key infrastructure overview,” Sun BluePrints OnLine, August, pp. 1–27, 2001.

[22] A. Q. W. Sulistya et al., “A case study of Indonesian government digital transformation: Improving public service quality through E-government implementation,” in 2019 5th International Conference on Science and Technology (ICST), IEEE, 2019, pp. 1–6.

[23] S. Willia Gusman, “Development of the Indonesian Government’s Digital Transformation.,” Dinasti Int. J. Educ. Manag. Soc. Sci., vol. 5, no. 5, 2024.

[24] T. Anas and E. Cahyawati, “Strategic Investment Policies for Digital Transformation,” J. Southeast Asian Econ., vol. 40, no. 1, pp. 96–126, 2023.

[25] I. D. Wijaya, “An Analysis of the Challenges and Opportunities for Governance in Indonesia during the Digital Transformation of Public Organisations,” Proceeding Res. Civ. Soc. Desemination, vol. 2, no. 1, pp. 236–243, 2024.

[26] H. Hapiyah, A. Marbawani, Y. N. Ramadhanty, and Z. Qamariah, “Exploring the Digital Frontier: Challenges and Opportunities in Sharia Banking Development,” CEMERLANG J. Manaj. dan Ekon. Bisnis, vol. 4, no. 3, pp. 22–30, 2024.

[27] S. J. Andriole, “Skills and competencies for digital transformation,” It Prof., vol. 20, no. 6, pp. 78–81, 2019.

[28] H. Haerunnisa and A. Sugitanata, “EKSPLORASI TEORI DISRUPSI DIGITAL CLAYTON CHRISTENSEN DAN MAQASHID SYARIAH TERHADAP INOVASI PERBANKAN SYARIAH DI ERA DIGITAL,” J-EBI J. Ekon. Bisnis Islam, vol. 3, no. 01, 2024.

[29] Z. Štaka, M. Vuković, and V. Vujović, “The Role of digital competencies in the process of digital transformation,” in 2022 21st International Symposium INFOTEH-JAHORINA (INFOTEH), IEEE, 2022, pp. 1–6.

[30] В. В. Коваленко, “Цифрова трансформація банківського сектору економіки України,” Фінанси України, no. 3, pp. 84–98, 2021.

[31] M. S. K. Munira, “Digital transformation in banking: A systematic review of trends, technologies, and challenges,” Technol. CHALLENGES (January 27, 2025), 2025.

[32] J. Nwoke, “Digital Transformation in Financial Services and FinTech: Trends, Innovations and Emerging Technologies,” Int. J. Financ., vol. 9, pp. 1–24, Sep. 2024, doi: 10.47941/ijf.2224.

[33] M. C, “Assessing The Impact On Digital Transformation With Special Reference To Banking Sector,” Educ. Adm. Theory Pract., vol. 30, no. 4, pp. 9659–9664, 2024, doi: 10.53555/kuey.v30i4.4706.

[34] Z. Efendi, L. N. Wati, and A. D. Kuraesin, “The Role of Financial Literacy in Strengthening the Effect of Digital Platforms and Financial Technology Peer-to-Peer Lending on Capital Access and MSME Growth: An Empirical Study of MSMEs in DKI Jakarta,” 2023.

[35] R. R. Kurniati, S. Nuringwahyu, and M. R. Daidan, “Optimising Operational Excellence in the Digital Age : A Study of Digital Banking Service Transformation in Indonesian Islamic Banks,” vol. 13, no. 11, pp. 91–97, 2024, doi: 10.35629/8028-13119197.

[36] D. Sari, R. Jahara, T. R. Dalila, and N. Nurbaiti, “Optimalisasi Manajemen Sumber Daya Data Untuk Mengatasi Tantangan Digitalisasi Dalam Operasional Bank Syariah,” J. Ris. Ekon. dan Akunt., vol. 2, no. 1, pp. 71–77, 2024.

[37] J. Bousrih, “The impact of digitalization on the banking sector: Evidence from fintech countries,” Asian Econ. Financ. Rev., vol. 13, no. 4, pp. 269–278, 2023.

Downloads

Published

2025-05-28

Issue

Vol. 3 No. 05 (2025): West Science Interdisciplinary Studies

Section

Articles

License

Copyright (c) 2025 Hildawati Hildawati, M Gifari Sono, Rival Pahrijal

Creative Commons License

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

How to Cite

The Effect of Employee Digital Competencies, Technology Infrastructure, and Local Government Support on the Effectiveness of Islamic Banking Digitalization in Bandung City (H. Hildawati, M. G. . Sono, & R. . Pahrijal , Trans.). (2025). West Science Interdisciplinary Studies, 3(05), 876-886. https://doi.org/10.58812/wsis.v3i05.1951