THE COMPARATIVE ANALYSIS OF DIGITAL BANKS AND CONVENTIONAL BANKS IN TERMS OF FINANCIAL PERFORMANCE

Abstract

This study aims to compare the financial performance of digital and conventional banks using the CAMEL method, which consists of several criteria, including Capital Adequacy, Asset Quality, Management Efficiency, Earnings, and Liquidity. This study uses financial ratios to analyze the bank’s financial performance, which consists of CAR, CKPN, NPL, BOPO, ROA, ROE, NIM, and LDR ratios. The samples of this research are two digital banks and two conventional banks, which are taken based on purposive sampling. The data in this study were obtained from the annual financial statements of each bank from 2017 to 2021. In conducting data analysis, this study used statistical analysis of the Independent Sample T-test and the Mann-Whitney Test. The results of this study are digital banks have better financial performance than conventional banks in terms of CAR and NIM ratios. Meanwhile, based on the ratio of CKPN, NPL, BOPO, ROA, ROE, and LDR, the financial performance of conventional banks is better than digital banks. The hypothesis testing results indicate a significant difference between the financial performance of digital banks and conventional banks on the variables of CAR, CKPN, BOPO, ROA, and ROE. While on NPL, NIM, and LDR variables, the researcher did not find a significant difference between the financial performance of digital banks and conventional banks.