The digital transformation paradox: how organizational and institutional barriers neutralize leadership investment in systemic banking
TL;DR
The paper extends the TOE framework through TOE–V by showing how value realization conditions digital maturity in regulated environments, repositioning digital transformation as a challenge of institutional design rather than execution.
Abstract
This study examines the “digital transformation paradox” in which systemic banks invest heavily in technology yet remain digitally immature. It identifies and prioritizes the key technological, organizational, and institutional barriers that constrain transformation despite strong leadership commitment. Ultimately, the paper reframes digital transformation from a problem of execution to a problem of institutional design. The study applies a hybrid Delphi–scaling methodology with senior experts from Greece’s four systemic banks. It integrates Institutional Theory with an extended Technology–Organization–Environment–Value (TOE–V) framework. A Delphi process established consensus on 14 major inhibitors, followed by a scaling survey that ranked their relative impact. The results reveal a persistent transformation trap driven by legacy information technology (IT) systems, rigid organizational routines, and compliance-focused governance. These factors redirect modernization toward regulatory conformity rather than operational improvement. Clear and enforceable regulatory mandates, however, can act as catalysts for modernization. Digital maturity should be assessed not only in terms of adoption but also in terms of outcomes, including usability, personalisation, and relevance to stakeholders. Executives should move beyond viewing transformation as primarily a technology initiative and address structural constraints such as technical debt and cultural resistance, and tie digital investments to measurable stakeholder outcomes. The study conceptualizes the digital transformation paradox as a systemic outcome of organizational and institutional constraints. It extends the TOE framework through TOE–V by showing how value realization conditions digital maturity in regulated environments, repositioning digital transformation as a challenge of institutional design rather than execution.