<![CDATA[Background: Digital banking has expanded rapidly in Indonesia, yet growth in assets and transaction activity has not consistently translated into stronger profitability. This tension raises the question of whether the transition to a digital operating model and the accompanying cost structure are associated with short-term financial performance. Objective: This study examines the relationship between post-digital-transformation status and bank profitability and separately evaluates the association between the Cost-to-Income Ratio (CIR) and Return on Assets (ROA). Method: The analysis uses an unbalanced panel comprising 79 valid bank-period observations drawn from quarterly reports of 10 Indonesian digital banks over 2019–2024. Panel-model selection relied on the Chow, Hausman, and Lagrange Multiplier tests, followed by diagnostic assessment and hypothesis testing. Results: Post-transformation status is negatively associated with ROA (B = -13.9108; p < 0.001). CIR also shows a negative association with ROA (B = -0.0525; p < 0.001). The estimates indicate that profitability remained under pressure during the observed transition period and that a heavier operating-cost burden corresponded with weaker asset returns. Conclusion: For the banks and periods observed, both digital-transformation status and higher CIR are associated with lower ROA. The findings highlight the importance of operating efficiency during digital transition, while the transformation coefficient should be interpreted as a short-term empirical association rather than evidence of a permanent causal effect.]]>
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