Digital Banking Transformation and Its Implications for Risk Management

Abstract

This article examines how digital banking transformation reshapes risk management in the banking sector, in a context where technology, competition and customer expectations are rapidly evolving. The study’s role is to synthesize dispersed empirical evidence by conducting a systematic literature review of peer-reviewed journal articles published between 2019 and 2023 that analyze digital banking, risk exposure and bank stability. The review shows that digitalization alters risk profiles by increasing operational and cyber vulnerabilities through higher transaction volumes and complex system architectures, while simultaneously enabling richer data, automation and real-time monitoring that can strengthen controls. The article discusses these patterns through thematic mapping of how digitalization is measured, which risk categories are affected and how governance and control frameworks respond. The main findings indicate that the impact of digital banking on overall risk is context dependent, enhancing resilience where governance and regulation are strong but potentially amplifying losses and risk-taking where digital expansion outpaces risk-management capabilities.