Digital Transformation of Indonesian Banking: Economic and Security Impacts

Abstract

Digital transformation in the Indonesian banking sector has emerged as a crucial pillar for enhancing operational efficiency, financial inclusivity, and overall economic growth. The rapid development of digital technologies, fintech innovations, and e-commerce platforms presents opportunities to improve productivity through process automation, real-time data analytics, and innovative digital financial services. The Fourth Industrial Revolution (Industry 4.0) has accelerated the adoption of advanced technologies such as artificial intelligence (AI), blockchain, and big data analytics, enabling banking services to become more personalized, accessible, and responsive to customer needs. However, these profound changes also introduce significant challenges, including impacts on traditional labor structures, persistent digital literacy gaps, and heightened cybersecurity risks. Indonesia’s demographic potential, characterized by a dominant young population, provides a strategic advantage for accelerating digitalization, though disparities in technological access remain a concern. This study employs a library research methodology to explore recent literature on digital banking, fintech, and cybersecurity in Indonesia, aiming to understand the implications of digital transformation for financial stability, economic development, and data protection.