The Impact of Digital Transformation on the Quality of Accounting Information in Jordanian Islamic Banks

Introduction

Due to the intersection of advanced technology and the use of digital transformation technologies, namely, AI, blockchain, and cloud computing, supplemented with big data analytics and electronic banking, today’s banking system is markedly different from the past (Jarah, 2025). Traditional banking systems and the accounting and financial reporting practice are no longer what they used to be. The banking industry’s competitiveness has spawned a digital transformation race. Banks are motivated to digitally transform to achieve operational efficiency, transparency, competitiveness, and sustainability within an evolving environment (Hidayat-ur-Rehman & Hossain, 2025). Within banking business systems, Accounting Information Systems (AIS) are paramount as they support the delivery of essential financial and non-financial information for a given business decision. Digital transformation technologies will improve accounting information through task automation with a reduction in errors, improvements in internal controls, and timely enhancement of financial reporting (Odonkor et al., 2024). Furthermore, game-changing digital technologies will alter the accounting, auditing, and reporting functions of contemporary businesses. Digital innovations render accounting systems more robust, integrated, and easier to use, while allowing them to do more with precision and openness. Al Shanti and Elessa (2023) recognize that digital accounting alters the performance, financial sustainability, and governance of banking institutions. Because Islamic banks work on a dual level of innovation and technology coupled with Islamic law and the Islamic accounting framework, the digital transformation of banking systems is more significant in this context.

Islamic banks are working to improve the efficiency of their operations and their customers' experience by investing in digital systems and mobile banking in conjunction with cloud accounting, artificial intelligence, and cybersecurity systems. (Gharaibeh et al., 2024). There has been significant investment in the digital transformation of Islamic banking systems in the Jordanian banking sector to promote competitiveness and improve the efficiency of banking and accounting operations, including the introduction of comprehensive electronic banking systems, online financial services, automated accounting, and digital payment systems (Almatarneh et al., 2024). These systems will suffer from a variety of problems, including threats to cybersecurity, the quality and flexibility of infrastructure and technology, the ability of banking and accounting laws to keep pace with the digital transformation, and the lack of banking and accounting professionals, especially in Islamic banks. These systems will adversely affect the quality, accuracy, and reliability of the accounting information of Islamic banks (Jarah et al., 2025).

Digital transformation has the potential to support the integrity, transparency, and reliability of Islamic financial institutions’ accounting information systems regarding the use of blockchain, cloud accounting, and IT systems frameworks with digital security (Mohammed Sarea & Mohd Hanefah, 2013). Numerous studies have examined the impact of digital transformation on the quality of accounting information, with conflicting findings. The benefits of digital transformation on the calibre and efficacy of accounting information systems were attributed to automated systems and sophisticated internal controls (Baharipour et al., 2025). Nonetheless, the impact of digital transformation on accounting information systems has been negative due to system complexity, employee skill gaps, poor infrastructure, and an overall lack of readiness from organizations (Almatarneh et al., 2023).

Additionally, the quality of accounting information in Islamic banks must be good due to the high standards of transparency, accountability, and Islamic governance that these banks are expected to maintain. While the number of studies on digital transformation and accounting information systems is increasing, very few studies are empirical and focus on Islamic banking in Jordan. Moreover, most studies cover conventional banks, public sector institutions, and non-Islamic financial institutions. Many of these studies overlook the different operational, regulatory, and Shari'ah requirements of Islamic banking (Bukhary, 2024; Chakraborty & Rajasekar, 2024; Ding et al., 2024; Narayana et al., 2024; Liedekerke et al., 2025). Therefore, this study will try to analyze the digital transformation elements (i.e., digital infrastructure, AI, cloud computing, digital security, and digital banking) and their effects on accounting information systems of Islamic banks in Jordan. As a result of this work, we will be able to identify the effects of digital transformation on the improvement of accounting and financial reporting systems and practices within Islamic banking. The results will guide different stakeholders: regulators and policymakers, managers of commercial banks, and scholars (Belfiore et al., 2024; Figueroa-Valverde et al., 2024; Karatas, 2024; Negreiros & Ory, 2024; Wolderslund et al., 2024; Alexandrovna et al., 2025; Johar et al., 2025).

Literature Review

Digital transformation is arguably the most significant ongoing phenomenon for the global banking and accounting information systems industry. To accommodate new systems, organizations have modified their infrastructure and processes to maximize efficiency. This has changed the way organizations operate and manage their accounting information systems. New systems have changed the way organizations manage quality and construct their accounting information (Shakhatreh et al., 2023). For instance, Hinings et al. (2018) argued that rapidly changing information technologies have allowed organizations to balance the trade-off between control over their information and operational flexibility. Digitally transformed organizations are, therefore, very efficient, and their decision-making ability is heightened given the availability of real-time information. Issa et al. (2016) analyzed the implications of AI systems on accounting, emphasizing that AI systems will help with the generation of accounting estimates, the automation of accounting systems, and the detection of fraudulent activities in accounting (Ghiga et al., 2024; Kęska & Suchy, 2024; Kounatidis et al., 2024; Lee & Ferreira, 2024; Negreiros & Ory, 2024; Noor et al., 2024; Abdullah et al., 2025; Jagsi et al., 2025; Schneider & Krüger, 2025; Wong et al., 2025). The research also indicated that AI will help automate manual defects in the financial reporting process and improve the timeliness and reliability of financial reports (Csep et al., 2024; Jin et al., 2024; Osluf et al., 2024; Rypel et al., 2024; Fischer et al., 2025; Mansour & Saeed, 2025; Musa et al., 2025; Raza et al., 2025).

According to Krahel and Titera (2015), machine learning has the potential to enhance financial reporting by enabling real-time and ex-post controls of accounting activities and by strengthening the control systems of an organization. The study suggested that the application of sophisticated accounting technologies diminishes the financial reporting risks and enhances the precision and consistency of accounting systems within organizations. Furthermore, the use of robotic process automation (RPA) to bring about the automation of accounting systems has drastically changed the face of accounting. Cooper et al. (2019) argued that the automation of commonplace accounting processes, such as reconciliations and invoice processing, has a positive effect on the accounting operational processes of an organization. The study further argued that the deployment of RPA in an organization significantly diminishes the operational costs of the organization and enhances the accuracy and promptness of financial reporting to the organization while improving the organization’s compliance with accounting norms. The study further argued that automation technologies promote clarity and uniformity of processes within the accounting divisions of an organization. The integration of accounting with the blockchain has the potential to bring about a radically new way of achieving clarity and dependable financial reporting. According to Coyne and McMickle (2017), the application of blockchain technology results in safe and permanent financial records, improves the substantiation of financial transactions, and lowers the occurrence of financial malfeasance.

The caliber of accounting information is impacted by the use of integrated digital systems and enterprise resource planning (ERP) systems. The seamless integration of the functions of the business units of organizations is achieved by the integration of finance and the integration of the ERP systems, as stated by Nicolaou (2004). The integration of the business systems of organizations through a single enterprise system enhances the efficiency of financial reporting. The gaps, inconsistencies, and inefficiencies of accounting information are eliminated, and the quality of financial information increases instantaneously, resulting in better managerial decisions. Likewise, Appelbaum et al. (2017) examined the impacts of big data analytics in accounting systems and concluded that advanced analytics facilitated the organization’s assessment of financial and business risks and the performance of predictive analytics. Their research further concluded that advanced analytics of large financial data enhanced the organization’s capability for fraud detection and the optimization of organizational effectiveness in strategic planning. Cloud computing improves accounting systems by providing flexibility and accessibility. For instance, Low et al. (2011) discussed how systems based in the cloud allow organizations the ability to make adjustments in scale and optimize costs. The research of Low et al. (2011) demonstrated that cloud-based systems increased the speed with which organizations could access accounting data. The development of financial reports became instantaneous. The findings of the research of Low et al. (2011) demonstrated the positive impacts of cloud technology in accounting by making reports available in real-time, leading to increased communication and coordination across multiple organizational units. The result of this was an increase in the efficiency of accounting tasks.

Another literature gap is in the intersection of cloud computing infrastructure and cybersecurity governance systems. Kshetri (2017) showed how cyber threats have the potential to undermine trust and the ability to conduct business in the digital economy. The research suggested that organizations with strong cybersecurity systems can expect a significantly lower risk of financial fraud and the compromise of organizational data. The research also indicated that a strong cybersecurity framework helps to improve the trust, integrity, and assurance of the accounting information system, which is important to stakeholders of the banking institution. Digital transformation has also affected how auditing and governance of banking institutions are performed. Earley (2015) observed that contemporary banking systems and practices have advanced auditing by helping auditors identify errors and assess risks in the auditing process more effectively and efficiently. Debreceny et al. (2002) studied the evolution of Internet financial reporting and observed that digital reporting frameworks improve the transparency and comparability of financial reports. Their research also provided the means for stakeholders to recognize the enhanced efficiency of communication provided by organizations and the improved qualitative provision of accounting information.

Additionally, studying trust in digital systems identified the security and reliability of the offered technologies as the main components in the acceptance of electronic services by customers. Gefen et al. (2003) stated that secure and user-friendly digital systems enhance trust and improve the effectiveness of the operations. This research found that the establishment of a reliable digital system by the organization enhanced the customers’ trust and the usage of electronic financial services. Enhanced banking operations, along with the developments in e-commerce and mobile banking, furthered the efficiency of banking and financial operations. Oliveira et al. (2014) analyzed mobile banking adoption and the development of electronic banking systems, which provided customers with improved access to electronic financial services. The research found that the application of digital banking technologies reduced the operational costs and increased the efficiency of electronic financial transactions. The research also found that developed electronic banking systems improved the planning and control of banking operations and the services of banks. The digital evolution of banking also provided the opportunity for a positive advancement in financial inclusion and engagement of banking customers. Ozili (2023) stated that in emerging economies, digital banking services support the accessibility of banking services and improve the efficiency of banking transactions. The research found that digital banking services support the improvement of customer satisfaction through expedited, low-cost, and reliable banking services. According to the results of the study, digital financial services improve banking operations and make the operations of banking institutions sustainable by providing financial inclusion and greater access to banking services. Banna et al. (2021) argued that banks that accepted digital transformation had sophisticated skills regarding the evaluation and tracking of operational risks. This study noted that the digital transformation of risk management systems increased the capacity of banks to identify and react to risks in the uncertain financial market. The results of the study also stated that digital transformation strengthened the internal control systems of banks and the banks' operational resilience. In the context of Islamic banks, digital transformation is essential to improve the competitiveness, operational efficiency, and financial inclusion of these banks. As George et al. (2021) noted, digital transformation contributes to sustainability through more effective resource management and higher operational efficiency. During economically unstable times, the incorporation of digital technologies into organizations facilitates greater flexibility and enhances transparency.

Although the relationship between digital transformation and accounting systems is becoming more established, studies regarding Jordanian Islamic banks are scarce. Most of the previous studies concentrated on conventional or multinational banks and overlooked the operational and governance structures of Islamic banks. Previous research examined only the singular employment of digital technologies. They did not assess the integrated effect on the quality of accounting information. This research will address the absence in the literature on the integrated effect of digital infrastructure, artificial intelligence, cybersecurity, cloud computing, and electronic banking on the quality of accounting information in Jordanian Islamic banks.

Conceptual Framework

H1: Digital transformation has a significant impact on the quality of accounting information in Jordanian Islamic banks.

H2: Digital infrastructure has a significant impact on the quality of accounting information in Jordanian Islamic banks.

H3: Artificial intelligence applications have a significant impact on the quality of accounting information in Jordanian Islamic banks.

H4: Electronic banking services have a significant impact on the quality of accounting information in Jordanian Islamic banks.

H5: Cybersecurity practices have a significant impact on the quality of accounting information in Jordanian Islamic banks.

H6: Cloud computing has a significant impact on the quality of accounting information in Jordanian Islamic banks.

Materials and Methods

To understand the effect of digital transformation on the quality of accounting information in Jordanian Islamic banks, theories were proposed and hypotheses tested. This was done by applying sophisticated methods of analysis based on quantitative techniques, which examined the population of the case study: employees (Islamic bank digital and accounting employees; managers, accountants, auditors, financial staff, and employees; Jordanian Islamic bankers; and employees of digital banking and accounting information systems, banking operations, and digital banking). This was done to simplify and make the information readily available.

Purposive sampling was done to gather knowledgeable participants in digital transformation, banking, and accounting systems and operations. 360 questionnaires were distributed. 327 were returned, and 315 were fully answered. The remaining 12 questionnaires were discarded. Valid questionnaires were analyzed using AMOS. The questionnaires were designed based on existing literature regarding the relationship between digital transformation and accounting information quality. The questionnaires had 2 sections. The first section provided demographic information, and the second section had measurement items. Furthermore, the research included the components of AI, cloud computing, and cybersecurity, as well as online banking and digital infrastructure. The components of accounting information were its relevance, reliability, timeliness, comparability, and understandability. The level of agreement for the items was measured on a 5-point Likert scale with 1 = strongly disagree and 5 = strongly agree. The validity of the questionnaires was assessed and confirmed by professionals in accounting and information systems. CFA (Confirmatory Factor Analysis) was conducted in AMOS to assess the construct validity of the research. Reliability of the items was assessed using Cronbach’s alpha, and all items scored above 0.70, indicating a satisfactory level of internal consistency.

Data analysis was performed using AMOS and SPSS. Descriptive statistics and reliability analysis were conducted using SPSS. Measurement and structural analysis, including hypothesis testing, were conducted using the SEM framework in AMOS. The research was evaluated using several fit indices (CFI, TLI, GFI, RMSEA, CMIN/DF), and model fit was assessed based on the standard SEM thresholds. The study conformed to research ethics since participation in the study was voluntary, and respondents were granted assurance of responding to the research instruments would be kept confidential and that the responses would be used for academic purposes only.

Results and Discussion

In this part, the statistics of the research on the influence of digital transformation on the accounting information quality of Jordanian Islamic banks are presented.

Table 1. Descriptive Statistics of Study Variables

Descriptive statistics for the dimensions of digital transformation and accounting information quality for Jordanian Islamic banks are shown in Table 1. The results show that there is a strong positive sentiment toward the adoption of digital transformation technologies and the quality of accounting information, as shown by the high mean scores recorded by all of the variables. The highest mean score was recorded for Cybersecurity (M = 4.26, SD = 0.61). This shows that respondents consider the protection of accounting systems and financial data from cyber threats, the protection of privacy, and the integrity of accounting information as important. This was followed by Accounting Information Quality (M = 4.18, SD = 0.65). This means that the respondents perceive accounting information as being relevant, reliable, timely, and easy to understand. This shows that digital technologies have a positive effect on the quality of financial reporting. Also noted were the high mean scores recorded for Cloud Computing (M = 4.11, SD = 0.69) and Electronic Banking Services (M = 4.07, SD = 0.73). These results show that there is a growing use of cloud technologies and electronic banking services to provide operational flexibility and facilitate effective communication and transaction automation. Mean scores for artificial intelligence (M = 3.98, SD = 0.77) and digital infrastructure (M = 3.94, SD = 0.75) show that the use of digital technologies to automate the accounting function, provide a higher level of accuracy to the accounting function, and enhance the ability to undertake varied analyses is at a relatively lower level.

Table 2. Reliability Analysis

In Table 2, we see that all of Cronbach’s alpha values exceed the minimum requirement of 0.70. Thus, all study variables reflect high reliability and internal consistency. The Cybersecurity (α = 0.91) components of the study and the Accounting and Information Quality mean (α = 0.90) also reflected high internal consistency and reliability. The mean (α = 0.93) of the overall tool also indicates that the tool is highly reliable for statistical analysis and testing the hypothesis.

Table 3. Factor Loadings and Validity Indicators

Table 3 and Figure 1 present results from AMOS from a CFA (CFA results) as part of a reliability and validity assessment of the study’s constructs and factors. The results indicated that all factor loadings were above 0.50 (all latent variables of the study model were above the threshold of convergent validity). This shows that each item on the research questionnaire was relevant to each research construct and dimension. Cybersecurity recorded the highest Composite Reliability (CR) of 0.92, and the remaining variables recorded CRs between 0.85 and 0.92. The CRs of the measurement variables for the quality of accounting information were adequate. The results also showed that the Average Variance Extracted (AVE) for all study variables was above the threshold of 0.50, meaning the study constructs were explaining the majority of the measurements of the indicators. Cybersecurity, with an AVE of 0.69, was the highest, and thus, among the study variables, the construct of Cybersecurity expressed the highest level of convergent validity. The results for the CFA for latent variables and measurement indicators are shown in Figure 1. The figure shows that the measurement model is adequate and supports the researcher’s choice of structural equation modelling. The overall results support both the validity and reliability of the measurement model.

Table 4. Model Fit Indices

Table 4 describes the indices measuring the fit of an AMOS structured model. Results show that the model built satisfies the key criteria for fit in structural equation modeling (SEM). The model confirms the proposed interrelations among the variables of the study. The ratio of chi-square/degrees of freedom (χ²/df) was 2.74 and was below the 5.0 threshold, suggesting a good fit of the theoretical model and the observed data. Moreover, the Goodness-of-Fit Index (GFI) with a value of 0.92 and the Adjusted Goodness-of-Fit Index (AGFI) with a value of 0.90 were both above 0.90; the Comparative Fit Index (CFI) with a value of 0.94 and the Tucker-Lewis Index (TLI) with a value of 0.93 were both above the threshold of a good model fit; and the Root Mean Square Error of Approximation (RMSEA) with a value of 0.061, was below the acceptable threshold of 0.08 and showed a good fit of the model with the data.

Table 5. Structural Model Results

Table 5 shows that the outcome of the SEM analysis demonstrated a positive relationship between the digital transformation dimensions and the accounting information quality of the Islamic banks in Jordan. The findings also demonstrate that digital transformation technologies have a significant impact on Islamic banks' operational efficacy, accounting efficacy, and the caliber of their financial reports. The quality of accounting information was most positively impacted by digital transformation (β = 0.34, T = 6.45). This emphasizes the advanced digital technology adoption and its positive impact on the accounting information relevance, reliability, comparability, timeliness, and understandability. Cybersecurity was the second largest positive impact (β = 0.31, T = 6.12). This reiterates the importance of securing accounting systems and financial databases to safeguard the integrity and reliability of accounting information. Positive impacts were also noted for artificial intelligence (β = 0.29, T = 5.78) because of its positive impact on accounting process automation, the reduction of accounting process errors, and improved accounting process analysis. Positive impacts were also noted for electronic banking (β = 0.24, T = 4.67) and cloud computing (β = 0.22, T = 4.23) because of their positive impacts on the improved efficiency of business transactions and the ability to instantaneously update and report the business's financial position, as well as improved flexibility and communication within the business. Although digital infrastructure had the least impact (β = 0.21, T = 4.12), it was still significant. This confirmed the importance of digital infrastructure in sustaining integrated accounting and digital banking systems.

The study assessed the effects of digital transformation segments on accounting information quality in Jordan's Islamic banks. The results indicated that each of the digital transformation segments positively and significantly impacted the quality of accounting information. The results validated the far-reaching influence of digital technologies in improving the efficiency of accounting, the quality of financial reporting, and the overall performance of Islamic banking. Digital transformation had the most significant impact, and the results indicated that adopting modern digital technologies positively impacted the accounting information in terms of relevance, reliability, comparability, timeliness, and understandability. The results support Hinings et al. (2018), who argued that digital transformation provides flexible business processes and enhances the management of information, and George et al. (2021), who attributed the implementation of digital transformation to improvement in business transparency, accountability, and sustainability. The second strongest impact was cybersecurity, which indicates that secure accounting and financial infrastructures and defense against cyber intrusion are critical. The results supported Kshetri's (2017) assertion that cybersecurity is critical to confidence in accounting information systems (AIS) and the integrity and reliability of AIS, and Gefen et al. (2003), who argued that trustworthy and secure digital systems create confidence and enhance business operations. AI had a positive impact on the quality of accounting information, and the results corroborated the findings of Issa et al. (2016), Krahel and Titera (2015), and Cooper et al. (2019) that intelligent technologies enhance the quality of accounting, increase the effectiveness of control, improve the detection of fraud, and increase overall efficiency. Additionally, the quality of accounting information was positively impacted by electronic banking services and cloud computing, which agreed with the findings of Oliveira et al. (2019). Ozili (2023), Low et al. (2011), and Low et al. (2014) all agree that the convergence of digital banking solutions and cloud computing yields higher transaction efficiency, greater flexibility in operations, enhanced communication, and quicker processing of real-time accounting data. While digital infrastructure showed the least impact, it was still significant, corroborating the findings of Banna et al. (2022), who stressed the crucial role of technology infrastructure in building resilience and enabling the operations of the organization. These findings show that the positive effects of technology on accounting procedures in Jordanian Islamic banks highlight how technology can enhance the calibre of accounting data and financial reporting. Additionally, it implies that continuous technological advancement makes it possible to increase accounting procedures and the organization's general efficacy

Conclusion

The study found evidence that digital transformation bolsters the quality of accounting information in Jordanian Islamic banks. Results showed that its building blocks, cybersecurity, AI, cloud computing, e-banking, and digital networks positively influence the relevance, reliability, and timeliness of accounting information, along with its comparability and understandability. Furthermore, digital transformation helps mitigate operational mistakes, enhance internal control systems, elevate the quality of financial reporting, and positively influence the speed of accounting processes and the overall quality of accounting practices, given the flexible digital technologies. The results showed that the proposed SEM model had a good fit and a strong influence on the quality of accounting information. The results showed that the strategic importance of digital transformation focus areas for the enhancement of banking competition was considerable. The study, therefore, suggests that Jordanian Islamic banks keep on investing in advanced digital technologies, especially in cybersecurity, artificial intelligence, and cloud computing, along with digital infrastructure and comprehensive employee training on digital accounting, with subsequent supportive legal frameworks for secure digital transformations in Islamic banking and accounting practices.

Acknowledgments: The authors gratefully acknowledge all participants for their valuable contributions to this study.

Conflict of Interest: None

Financial Support: None

Ethics Statement: None