In today’s context, digital transformation is essential for the survival of an economy. The digital transformation mechanism involves the understanding of the potential of technology and creating a new road map that details the solutions and resources needed to deliver change. Digitalisation happens when organisations embed digital technologies across all their operations. The purpose of this study involves the verification of whether the digital transformation mechanism could improve organisational performance. Under current research analysis, the effect of digitalisation strategies such as various structural changes, use of digital technologies and value creation upon the short- and long-run financial performance of Indian banks has been examined. For the same, employees of 20 public and private sector banks have been selected through a stratified random sampling technique. First, the effect of digital transformation on the banking industry’s financial performance has been analysed, and then, the role of cognitive conflict, that is, employees’ mental health or cognitive dissonance as a moderator, has been investigated. The findings revealed that the adoption of digital technologies can significantly affect the financial performance of a business enterprise. In the banking industry, the adoption of digitalisation has a positive relationship with the short-run and long-run financial performance, which is moderated by the psychological state of human personnel, that is, cognitive conflicting state.

Cognitive dissonance, digital transformation mechanism, financial performance indicators, structural changes, value creation

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