Digital Transformaition of Russian Banks: The Role of IT Integration for Performance

This work aims to investigate the relationship between the level of involvement of Russian banks in the process of digital transformation and banks’ performance. For this purpose, the regression analysis is performed for a sample of banks that have more than one year of available data for the period from 2015 to 2019. As a quantitative proxy for IT integration, the author suggests using the level of expenditures on information technology according to the reports provided to the Central Bank of the Russian Federation. Return on Equity (ROE) is used as the main measure of banks’ performance. Control variables include various elements of financial reporting, macroeconomic and institutional parameters. Quantitative analysis shows that there exists a stable positive correlation between IT expenditures and bank’s performance. In addition, it allows us to note that this correlation is more significant for a sample of banks with only positive returns on equity, from which we can infer that active participation in digital transformation is beneficial for a bank in case it successfully conducts its core business.