Efficiency Analysis of Commercial Banks in the Era Digitalization Financial Sector: A Data Envelopment Analysis (DEA) Approach

• Published in: 2024 12th International Conference on Cyber and IT Service Management, CITSM 2024
• Main Author: Perdini Fisabilillah L.W.; Aji T.S.; Sari A.N.; Zahida Azhar N.A.; Zainuddin A.Z.; Eka Putra M.R.
• Format: Conference paper
• Language: English
• Published: Institute of Electrical and Electronics Engineers Inc. 2024
• Online Access: https://www.scopus.com/inward/record.uri?eid=2-s2.0-85214911389&doi=10.1109%2fCITSM64103.2024.10775772&partnerID=40&md5=c4085fe47537ca342b95b2d667ef2013

The rapid development of technology in Indonesia has an impact on various sectors, one of which is the financial sector. Digitalisation of the financial sector is unavoidable and a necessity. The covid-19 pandemic has also forced conventional people to switch to using technology. One of the financial sector digitalisation products is digital payment systems such as link aja, Gopay, Ovo and so on. The challenge of banking digitalization is getting stronger with the existence of various factors that encourage the development of digital banks in Indonesia, considering that Indonesia has great economic potential to absorb digitalization development. The contributing factors are represented in three main aspects: digital opportunities, digital behavior and digital transactions. There are at least two most significant potential positive impacts that may arise from digital transformation by banks. First, expanding the accessibility of banking, second, increasing the competitiveness of Indonesian banking. Digital banking will be able to increase the ease of access to banking for the public, as well as increase banking efficiency so that it will encourage increased economic activity. The purpose of this study was to determine the level of efficiency of Indonesian and Malaysian banks. In this study the data used is secondary data sourced from the publication reports of Indonesian and Malaysian banks in 2019-2022 Meanwhile, the research method used is DEA (Data Envelopment Analysis) The results of the study explain that there are 3 Indonesian banks that are consistently efficient and there is 1 bank that is only efficient in 2022. While Malaysian banks there are only 2 that are consistently efficient and 2 more are not efficient. When viewed from the average efficiency, Indonesian banks are more efficient faster but if there is a shock that comes from external (covid-19) then Indonesian banks will immediately decrease their efficiency. In contrast to Malaysian banks that tend not to experience shocks during the covid-19 pandemic, they actually crawl up even though they are not 100% efficient. © 2024 IEEE.