The impact of digital transformation on employee performance: the mediating role of organizational agility in Islamic banks in Saudi Arabia: a partial least squares structural equation modeling approach

Why This Matters for Everyday Work

Behind every mobile banking app and online transfer, bank employees are learning to work in new ways. This study looks at Islamic banks in Saudi Arabia and asks a simple but important question: when banks invest in new digital tools, do employees actually perform better—and what has to change inside the bank for that to happen? The authors show that technology helps staff not only by giving them better tools, but also by making their organizations quicker and more flexible.

Banking in a Time of Fast Change

Saudi Arabia’s financial sector is under pressure to modernize as part of Vision 2030, which aims to diversify the economy and promote a knowledge-based society. Islamic banks face a double challenge: they must keep up with global digital trends while also following Sharia principles that shape how financial products are designed and delivered. In this environment, employee performance—how well staff serve customers, solve problems, and adapt to new demands—becomes a key factor in whether digital projects succeed or fail. The study focuses on four major Islamic banks and asks how digital change is linked to how well their people do their jobs.

How the Study Was Carried Out

To explore these questions, the researchers surveyed 490 employees from different levels and departments in four large Islamic banks in Saudi Arabia. Staff answered detailed questions about how far digital tools and systems had spread in their bank, how agile or flexible their organization felt, and how they viewed their own performance at work. The team then used a statistical technique that looks at hidden patterns behind survey answers to see how these three elements—digital transformation, organizational agility, and employee performance—fit together. This approach let them measure not only direct links, but also how one factor might work through another.

What Digital Change Looks Like Inside a Bank

The study treats digital transformation as more than just installing new software. It includes four areas: strategy (how well digital goals are built into the bank’s plans and investments), culture (whether the workplace encourages innovation and new ideas), people (how ready and skilled employees are to use new tools), and processes and technology (the actual systems, security, and digital workflows in place). Organizational agility is also broken into three abilities: sensing changes in markets and technology, making timely decisions, and executing those decisions quickly through flexible operations. Employee performance covers how efficiently people work, how well they solve problems, and how easily they adapt to digital ways of working.

What the Results Reveal

The findings show that digital transformation has a strong, positive impact on how employees perform. Staff in banks that are more advanced digitally report better efficiency, more effective decision-making, and smoother day-to-day work. Just as important, the study finds that digital change is tightly linked to organizational agility: banks that invest in digital tools and systems become much better at sensing shifts, deciding on a response, and acting quickly. In turn, this agility boosts employee performance, suggesting that staff do their best work when they are supported by an organization that can move and adapt rapidly rather than being slowed by rigid rules and slow approvals.

Two Paths from Technology to Better Work

Perhaps the most striking insight is that digital transformation helps employees through two almost equally strong paths. On one path, technology directly makes individual jobs easier—by automating routine tasks, improving access to information, and enabling faster, more accurate service. On the other path, digital change reshapes the bank itself, making it more agile; this, in turn, creates a more supportive environment where employees can respond quickly to customers and regulations without being blocked by slow processes. About half of the overall benefit of digital transformation on employee performance comes through this agility channel. For leaders in Islamic banking and beyond, the message is clear: buying new technology is not enough. To get the full value, banks must also redesign how they sense change, make decisions, and act—so that people and systems move together.

Citation: Hamid, O., Eledum, H. The impact of digital transformation on employee performance: the mediating role of organizational agility in Islamic banks in Saudi Arabia: a partial least squares structural equation modeling approach. Humanit Soc Sci Commun 13, 534 (2026). https://doi.org/10.1057/s41599-026-07080-8

Keywords: digital transformation, organizational agility, Islamic banking, employee performance, Saudi Arabia Vision 2030