Abstract:
The swift progression of the digital economy and the Fourth Industrial Revolution highlights the essential function of Information and Communication Technology (ICT) in the transformation of the banking sector. In emerging markets such as Vietnam, the rapid growth of digital financial services necessitates an understanding of the relationship between ICT and bank performance. This research examines the influence of ICT on the operational efficiency and profitability of 24 commercial banks in Vietnam over the period from 2011 to 2022. This study assesses the impact of ICT and its components-Information Technology Infrastructure (ITI) and Information Technology Applications (ITA)-on essential financial metrics: Return on Assets (ROA), Return on Equity (ROE), and Net Interest Margin (NIM). The methodology employs panel data regression techniques such as Pooled OLS, Fixed and Random Effects Models, Feasible Generalized Least Squares (FGLS), and the Generalized Method of Moments (GMM) to ensure robustness and address endogeneity concerns. The findings indicate that ITI has a significantly positive impact on ROA and ROE; however, the overall ICT index does not demonstrate a consistent positive relationship across models, suggesting a profitability paradox. Online payment systems enhance return on assets (ROA) while adversely impacting ROE and NIM as a result of implementation expenses and operational risks. It concludes that ICT investment can improve efficiency, but its advantages are contingent upon strategic alignment, employee readiness, and regulatory support. Policymakers and bank managers must emphasize IT infrastructure, staff training, and risk management to optimize returns from digital transformation.
