Journal of Information Technology Management

Journal of Information Technology Management

A Governance Framework for Digital Transformation in Banking: Unveiling Archetypes through Latent Class Analysis

Document Type : Research Paper

Authors
Hossein Khosropour 1
Mehdi Elyasi 2
Seyed Soroush Ghazinoori 2
Mohammadreza Taghva 3
1 Ph.D. Candidate, Department of Technology Management and Entrepreneurship, Faculty of Management and Accounting, Allameh Tabatabai University, Tehran, Iran.
2 Associate Prof., Department of Technology Management and Entrepreneurship, Faculty of Management and Accounting, Allameh Tabatabai University, Tehran, Iran.
3 Department of Operations Management and Information Technology, Faculty of Management and Accounting, Allameh Tabatabai University, Tehran, Iran.
10.22059/jitm.2025.385459.3901
Abstract
The banking industry is undergoing a significant transformation driven by digital technologies, evolving customer behaviors, and increasing regulatory pressures. To remain competitive, banks must adopt governance frameworks that integrate digital innovations to enhance operational efficiency and improve environmental, social, and governance (ESG) performance. This study identifies governance framework archetypes essential to digital transformation in banks through a comprehensive research methodology, including a literature review of digital governance frameworks, a comparative analysis of 11 leading digital banks worldwide, and latent class analysis to uncover key archetypes. Our findings reveal nine distinct governance archetypes, categorized into three dimensions: structural, including Centralized, Semi-centralized, and Open Innovation-oriented banks; dedicated processes, comprising Continuous Improvement, Vanguard, and Fast Follower banks; and relational mechanisms, featuring Self-empowering, Explorer, and Relationship-oriented banks. This classification advances the understanding of governance approaches that effectively support banks in their digital transformation journeys. The implications of these archetypes are substantial, offering a framework for banks to align their strategies with digital transformation initiatives. By adopting these governance structures, banks can better navigate the complexities of the digital landscape, foster innovation, and ultimately enhance their service offerings while addressing the evolving demands of customers. This research contributes to the growing body of knowledge on digital governance in banking and provides guidance for financial institutions striving to succeed in an increasingly digital world.
Keywords
Digital Transformation
Digital Governance
Digital Banks
Digital Innovations
Latent Class Analysis
Subjects
Ashwell, J. (2017). Digital transformation in the public sector: A review of the literature. Journal of Public Administration Research and Theory, 27(3), 531-544. https://doi.org/10.1093/jopart/muw046
Backbase. (n.d.). Digital transformation in banking: Keys to successful modernization. Retrieved from https://www.backbase.com/blog/perspectives/digital-transformation-in-banking
Badham, R., & Luoma-aho, V. (2023). Digital transformation and public sector innovation: A systematic review. Public Administration Review, 83(4), 751-762. https://doi.org/10.1111/puar.13363
Bala, H., Venkatesh, V., & Venkatraman, S. (2017). Challenges and opportunities of digital transformation in the automotive industry. Journal of Management Information Systems, 34(1), 1-18. https://doi.org/10.1080/07421222.2017.1279898
Berman, S. & Marshall, A. (2014). The next digital transformation: From an individual-centered to an everyone-to-everyone economy. Strategy & Leadership, 42(5), 9–17. https://doi.org/10.1108/SL-07-2014-0048
Bharadwaj, A., El Sawy, O. A., Pavlou, P. A., & Venkatraman, N. (2013). Digital business strategy: Toward a next generation of insights. MIS Quarterly, 37(2), 471-482. https://doi.org/10.25300/MISQ/2013/37.2.01
BIE Executive. (2022). Business innovation: Pros and cons of the fast follower approach. Retrieved from https://www.bie-executive.com/news/business-innovation-pros-and-cons-of-the-fast-follower-approach/
Briones de Araluze, G. K., & Cassinello Plaza, N. (2022). Open banking: A bibliometric analysis-driven definition. PLoS ONE, 17(10), e0275496. https://doi.org/10.1371/journal.pone.0275496
Bui, T. T., Cho, S., & Lee, H. (2023). The impact of digital transformation initiatives on governance and public value creation. Journal of Public Administration Research and Theory, 33(2), 345-362. https://doi.org/10.24857/rgsa.v18n2-092
Cao, G., Duan, Y., & Li, M. (2019). Understanding digital transformation in business organizations: A systematic review and framework. Journal of Management Information Systems, 36(3), 537-564. https://doi.org/10.1080/07421222.2019.1628903
Chanias, S. (2017). Understanding digital transformation: A conceptual framework. Journal of Enterprise Information Management, 30(5), 645-656. https://doi.org/10.1108/JEIM-08-2016-0121
Chanias, S. G., Myers, M. D., & Hess, T. (2017). Digital transformation strategy in the energy sector: A case study. Journal of Business Research, 76, 333-341. https://doi.org/10.1016/j.jbusres.2017.02.011
Chanias, S., Myers, M. D., & Hess, T. (2019). Digital transformation strategy in business networks: A case study of a German automotive company. Journal of Strategic Information Systems, 28(2), 137-151. https://doi.org/10.1016/j.jsis.2019.02.002
Chatterjee, D., Grewal, R., & Sambamurthy, V. (2002). Shaping up for e-business: A strategic analysis framework for assessing a firm’s e-readiness. MIS Quarterly, 26(1), 61-85. https://doi.org/10.2307/4132337
da Rosa, I. & de Almeida, J. (2017). Digital transformation in the public sector: Electronic procurement in Portugal. In Digital governance and e-government principles applied to public procurement (pp. 27). IGI Global EBooks. https://doi.org/10.4018/978-1-5225-2203-4.ch005
De Haes, S., Huygh, T., & Van Grembergen, W. (2020). Enterprise governance of information technology: Achieving alignment and value in digital organizations. Springer Nature Switzerland AG. https://doi.org/10.1007/978-3-030-25918-1
Dery, K., Sebastian, I., & Cakar, M. (2017). The role of the CIO in digital transformation. MIS Quarterly Executive, 16(2), 79-91. https://doi.org/10.1002/9781119171386.ch1
Fischer, M., Imgrund, F., Janiesch, C., & Winkelmann, A. (2019). Strategy archetypes for digital transformation: Defining meta objectives using business process management. Information and Management, 56, 103262. https://doi.org/10.1016/j.im.2019.103262
Gilli, M., & Knappstein, M. (2023). Digital transformation in the healthcare sector: A systematic literature review. Healthcare Management Review, 48(2), 151-162. https://doi.org/10.1097/HMR.0000000000000335
Green, L., & Daniels, E. (2019). Digital transformation in higher education: A review of the literature. Journal of Educational Technology Development and Exchange, 12(1), 1-20. https://doi.org/10.18785/jetde.1201.01
Grove, H., Clouse, M., & Schaffner, L. G. (2018). Digitalization impacts on corporate governance. Journal of Governance and Regulation, 7(4), 51-63. https://doi.org/10.22495/jgr_v7_i4_p6
Hadaya, P., & Cassivi, L. (2009). The role of IT in business process re-engineering: A case study. Business Process Management Journal, 15(3), 414-428. https://doi.org/10.1108/14637150910961765
Haes, S., & Van Grembergen, W. (2009). An exploratory study into IT governance implementations and its impact on business/IT alignment. Information Systems Management, 26(2), 123-137. https://doi.org/10.1080/10580530902794786
Haffke, I., Kattenstroth, H., & Benlian, A. (2017). Driving IT innovation adoption: A leadership perspective. Information Systems Journal, 27(5), 655-682. https://doi.org/10.1111/isj.12114
Hagenaars, J. A., & McCutcheon, A. L. (2002). Applied latent class analysis. Cambridge University Press. https://doi.org/10.1017/CBO9780511499531
Hanelt, A., Bohnsack, R., Marz, D., & Antunes, C. (2020). A systematic review of the literature on digital transformation: Insights and implications for strategy and organizational change. Journal of Management Studies. https://doi.org/10.1111/JOMS.12639
Haskamp, M., & Benlian, A. (2022). Digital transformation in the automotive industry: A systematic literature review. Journal of Business Research, 144, 112-123. https://doi.org/10.1016/j.jbusres.2022.02.011
Hess, T., Matt, C., Benlian, A. & Wiesböck, F. (2016). Options for formulating a digital transformation strategy. MIS Quarterly Executive, 15(2), 123-135. https://doi.org/10.1109/ICIS.2016.36
Hilary, G., & Serret, V. (2023). Governance and digital transformation. Finance Contrôle Stratégie, In press. https://hal.science/hal-04380300
Horlacher, A., & Hess, T. (2016). Digital transformation in the financial services industry: A review of the literature. Journal of Financial Services Research, 49(1), 1-25. https://doi.org/10.1007/s10693-015-0234-6
ISACA. (2019). COBIT 2019 framework: Governance and management objectives. ISACA.
Islam, N., Wiesböck, F., & Hess, T. (2017). Digital transformation in the retail industry: A systematic literature review. Journal of Retailing and Consumer Services, 39, 241-249. https://doi.org/10.1016/j.jretconser.2017.08.011
Jewer, J., & McKay, J. (2012). Organisational factors that influence the adoption of digital business strategies. Journal of Systems and Information Technology, 14(2), 139-154. https://doi.org/10.1108/13287261211244044
Jewer, J., & van der Meulen, N. (2022). Governance of digital transformation: A review of the literature. In Proceedings of the Annual Hawaii International Conference on System Sciences. https://doi.org/10.24251/HICSS.2022.804
Kähkipuro, P. (2020). Governance framework for digital transformation in higher education. Journal of Educational Technology Development and Exchange, 13(1), 1-20. https://doi.org/10.18785/jetde.1301.01
Kandil, N. O., Abou-Elkheir, E. K., & Kotb, A. M. (2023). IT governance matters: A structured literature review. Corporate Ownership and Control, 20(3 Special Issue), 408-420. https://doi.org/10.22495/cocv20i3siart14
Karttunen, H., Kallio, J., & Tinnilä, M. (2023). Digital transformation in the public sector: A systematic literature review. Government Information Quarterly, 40(2), 102-113. https://doi.org/10.1016/j.giq.2022.12.001
Kauffman, R. J., & Lahiri, A. (2023). Special section: Digital strategies for business readiness. Journal of Management Information Systems, 40(3), 716-723. https://doi.org/10.1080/07421222.2023.2229121
Kim, A. (2020). Doubly-bound relationship between publisher and retailer. Journal of Retailing and Consumer Services, 55, 102-110. https://doi.org/10.1016/j.jretconser.2020.102110
Koch, J., & Bierbamer, M. (2016). Digital transformation in the automotive industry: A case study. Journal of Business Research, 69(10), 4326-4333. https://doi.org/10.1016/j.jbusres.2016.02.011
Kraus, S., Durst, S., Ferreira, J. J., Veiga, P., Kailer, N., & Weinmann, A. (2022). Digital transformation in business and management research: An overview of the current status quo. Journal of Business Research, 139, 1-11. https://doi.org/10.1016/j.ijinfomgt.2021.102466
Lark. (2023). Fast follower. Digital transformation glossary. Retrieved from https://www.larksuite.com/en_us/topics/digital-transformation-glossary/fast-follower
Lubauram. Digital transformation in banking and need of product-driven organizations. Retrieved from https://lubauram.com/digital-transformation-in-banking-and-need-of-product-driven-organisations/
Mad Devs. Digital transformation in banking and financial services. Retrieved from https://maddevs.io/blog/digital-transformation-in-banking-and-financial-services/
Martovoy, A., Mention, A.-L., & Torkkeli, M. (2015). Inbound open innovation in financial services. Journal of Technology Management and Innovation, 10(1), 117-131. https://doi.org/10.4067/S0718-27242015000100009
Matt, C., Hess, T., & Benlian, A. (2015). Digital transformation strategies. Business and Information Systems Engineering, 57(5), 339-343. https://doi.org/10.1007/s12599-015-0401-5
Mulyana, A., Santi, R. C. N., & Hadiono, K. (2022). IT governance mechanisms that influence digital transformation: A Delphi study in Indonesian banking and insurance industry. International Journal of Information Technology and Management, 21(1), 1-20. https://doi.org/10.28991/ESJ-2023-07-06-07
Nayal, W., Wiesböck, F., & Hess, T. (2022). Digital transformation in the banking industry: A systematic literature review. Journal of Financial Services Research, 61(1), 1-20. https://doi.org/10.1007/s10693-021-00371-6
Nyaga, G. N., Whipple, J. M., & Lynch, D. F. (2010). Examining supply chain relationships: Do buyer and supplier perspectives on collaborative relationships differ? Journal of Operations Management, 28(2), 101-114. https://doi.org/10.1016/j.jom.2009.07.005
ProQuest. (2023). Digital transformation in banking: A managerial approach. Retrieved from https://www.proquest.com/docview/2490456033/181EA22E249D40C9PQ/91
Raković, L., Marić, S., Djordjevic Milutinovic, L., & Bjekić, R. (2024). The role of leadership in managing digital transformation: A systematic literature review. E+M Ekonomie a Management, 27(2), 87-107. https://doi.org/10.15240/tul/001/2024-2-006
Rao, S. (2024). Eight new digital business model archetypes for a banking future. Infosys Finacle. Retrieved from https://ibsintelligence.com/blogs/eight-new-digital-business-model-archetypes-for-a-post-covid-banking-future/
Saldanha, T., Mithas, S., & Krishnan, M. S. (2017). Predicting the impact of IT on firm performance: An empirical analysis. MIS Quarterly, 41(1), 1-20. https://doi.org/10.25300/MISQ/2017/41.1.01
Sánchez Báez, E. A., Ferrer-Dávalos, R. M., & Sanabria, D. D. (2024). A look at the digitalization strategies of Paraguayan companies: Impact of the drivers in the context of MSMEs. Journal of Technology Management and Innovation, 19(1), 19-28. https://doi.org/10.4067/S0718-27242024000100019
Sarker, S., Sarker, S., & Chakraborty, S. (2022). Digital financial services and open banking innovation: Are banks becoming ‘invisible’? Journal of Management Information Systems, 39(2), 1-15. https://doi.org/10.1080/07421222.2022.2039141
Schreieck, M., Huang, Y., Kupfer, A., & Krcmar, H. (2024). The effect of digital platform strategies on firm value in the banking industry. Journal of Management Information Systems, 41(2), 394-421. https://doi.org/10.1080/07421222.2024.2340825
Shanti, R., Siregar, H., Zulbainarni, N., & Tony. (2023). Role of digital transformation on digital business model banks. Sustainability, 15(23), 16293. https://doi.org/10.3390/su152316293
Sia, K. S., Soh, C. & Weill, P. (2016). How DBS Bank pursued a digital business strategy. MIS Quarterly Executive, 15, 105-121.
Siti Nurjanah, Shalshabilla, V., & Wulan, A. T. (2022). Digital transformation in the banking industry: Challenges and opportunities. International Journal of Accounting, Management and Economics, 1(1), 64-71. Retrieved from https://ijame.id/index.php/ijame/article/download/88/13
Smits, D., & van Hillegersberg, J. (2017). The development of an IT governance maturity model for hard and soft governance. In 8th European Conference on IS Management and Evaluation (ECIME) (pp. 347-355). Academic Conferences and Publishing International Limited. Retrieved from https://www.academic-conferences.org/conferences/ecime/ecime-2017-proceedings/
Tallon, P. P., Ramirez, R. V., & Short, J. E. (2019). The information artifact in IT governance: Toward a theory of information governance. Journal of Management Information Systems, 36(2), 341-365. https://doi.org/10.1080/07421222.2019.1578878
Tian, Y., Zhang, Y., & Li, M. (2022). Digital transformation in the manufacturing industry: A systematic literature review. Journal of Manufacturing Systems, 63, 247-258. https://doi.org/10.1016/j.jmsy.2022.02.001
Tran, P. T. T., Le, T. T. H., & Phan, N. H. T. (2023). Digital transformation of the banking industry in developing countries. International Journal of Professional Business Review, 8(5), e01503. https://doi.org/10.26668/businessreview/2023.v8i5.1503
Uhl, A., & Gollenia, L. A. (2014). Digital enterprise transformation: A business-driven approach to leveraging innovative IT. Routledge. https://doi.org/10.4324/9781315577166
van Tonder, C., Bossink, B., Schachtebeck, C., & Nieuwenhuizen, C. (2024). Key dimensions that measure the digital maturity levels of small and medium-sized enterprises (SMEs). Journal of Technology Management and Innovation, 19(1), 110-130. https://doi.org/10.4067/S0718-27242024000100110
Venkatraman, N. (2017). The digital matrix: New rules for business transformation through technology. LifeTree Media. https://doi.org/10.1016/B978-0-12-812557-1.00001-3
Weill, P., & Ross, J. W. (2004). IT governance: How top performers manage IT decision rights for superior results. Harvard Business Press. https://doi.org/10.2139/ssrn.1104892
Westerman, G., Bonnet, D., & McAfee, A. (2014). Leading digital: Turning technology into business transformation. Harvard Business Review Press. https://doi.org/10.2139/ssrn.2500465
Wiesböck, F., & Hess, T. (2020). Digital innovations: Embedding in organizations. Information Systems Research, 21(4), 724-735. https://doi.org/10.1287/isre.2019.0903
Wu, L., Yue, X., & Jin, Q. (2014). Digital transformation in the retail industry: A systematic literature review. Journal of Retailing and Consumer Services, 21(5), 761-771. https://doi.org/10.1016/j.jretconser.2014.06.001
Yeow, A., Soh, C., & Hansen, R. (2018). Aligning with new digital strategy: A dynamic capabilities approach. Journal of Strategic Information Systems, 27(1), 43-58. https://doi.org/10.1016/j.jsis.2017.10.003
Zhao, Y. (2023). The fintech revolution: Innovations reshaping the financial industry. Highlights in Business, Economics and Management, 15, 123-128. https://doi.org/10.1016/j.hbem.2023.01.002
Zhu, Y., & Jin, S. (2023). How does the digital transformation of banks improve efficiency and environmental, social, and governance performance? Systems, 11(7), 328. https://doi.org/10.3390/systems11070328
Ziboud, M., & Vanthienen, J. (2023). Best practices for digital transformation governance: A systematic literature review. Sustainability, 15(23), 16293. https://doi.org/10.3390/su152316293
Tink. (2024). Open banking: Enhancing service offerings through partnerships. Digital transformation glossary. Retrieved from https://www.larksuite.com/en_us/topics/digital-transformation-glossary/fast-follower
Journal of Information Technology Management
Volume 17, Issue 3
2025
Pages 117-147