Digital readiness of Islamic rural banks in Indonesia: Lesson from the COVID-19 pandemic

Nurfadilah, Dety; Samidi, Sudarmawan; Daryanto, Wiwiek M Article Digital readiness of Islamic rural banks in Indonesia: Lesson from the COVID-19 pandemic Cogent Business & Management Provided in Cooperation with: Taylor & Francis Group Suggested Citation: Nurfadilah, Dety; Samidi, Sudarmawan; Daryanto, Wiwiek M (2023) : Digital readiness of Islamic rural banks in Indonesia: Lesson from the COVID-19 pandemic, Cogent Business & Management, ISSN 2331-1975, Taylor & Francis, Abingdon, Vol. 10, Iss. 3, pp. 1-18, https://doi.org/10.1080/23311975.2023.2259587 This Version is available at: https://hdl.handle.net/10419/294645 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ Full Terms & Conditions of access and use can be found at https://www.tandfonline.com/action/journalInformation?journalCode=oabm20 Cogent Business & Management ISSN: (Print) (Online) Journal homepage: www.tandfonline.com/journals/oabm20 Digital readiness of Islamic rural banks in Indonesia: Lesson from the COVID-19 pandemic Dety Nurfadilah, Sudarmawan Samidi & Wiwiek M Daryanto To cite this article: Dety Nurfadilah, Sudarmawan Samidi & Wiwiek M Daryanto (2023) Digital readiness of Islamic rural banks in Indonesia: Lesson from the COVID-19 pandemic, Cogent Business & Management, 10:3, 2259587, DOI: 10.1080/23311975.2023.2259587 To link to this article: https://doi.org/10.1080/23311975.2023.2259587 © 2023 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group. Published online: 28 Sep 2023. Submit your article to this journal Article views: 892 View related articles View Crossmark data MANAGEMENT | RESEARCH ARTICLE Digital readiness of Islamic rural banks in Indonesia: Lesson from the COVID-19 pandemic Dety Nurfadilah 1 *, Sudarmawan Samidi 1 and Wiwiek M Daryanto 1 Abstract: The goal of this research is to investigate how various variables, including ease of use, usefulness, and social influence, competencies affect a specific phenomenon, and COVID-19 on digital readiness and examine the role of attitude as mediating variables. This study used a quantitative research method that gathers the data through questionnaires to employees at Islamic rural banks in Java Islands, Indonesia. Three hundred and seventy-eight respondents from Java and outside Java islands across Indonesia were collected and the data were analyzed by SEMPLS. The result shows that perceived ease of use and perceived usefulness drive the attitude of employee at Islamic rural banks which also affect their readiness for digital transformation. Further, COVID-19 and competency also found to have positive effect on digital readiness. The originality of this study is to provide new perspective that COVID-19 drive the emergence of digital transformation in Islamic rural banks. Moreover, by analyzing the attitudes and competencies of employee and management, this study fills the gap to uncover the critical factors that shape the outcome of digital transformation in Islamic rural banks in Indonesia. Subjects: Human Resource Management; Strategic Management Keywords: digital readiness; covid-19 pandemic; Islamic rural banks; employee’s competency; perception 1. Introduction The velocity of digital transformation in Islamic banks unquestionably accelerated since the COVID- 19 pandemic. The substantial alterations are apparent from how people shift from traditional to online services, such as opening new accounts and managing financial transactions through mobile banking. However, compared to Islamic rural banks, digital transformation creates major challenges. There are few numbers of Islamic rural banks that have implemented mobile banking, such as Fajar Mobile initiated by BPR Syariah Fajar Sejahtera Bali and Dinar Mobile initiated by BPR Syariah Dinas Ashri, while the shift in people’s behavior which increasingly relies on technology requires Islamic rural banks to be able to provide digital-based banking products and services that are innovative and varied, cheap, safe, and easily accessible anywhere and at any time. The emergence of fintech and bank digital also create fierce competition for providing financing to the micro or retail segment. It can be seen from the percentage of financing given to SMEs and informal sector where 38.39% of them used online loan and peer to peer lending platform to fulfill their basic needs and business expansion (Irawati, 2023). It is supported by the increased trend of internet users in rural areas from 19.87% in 2019 to 49.30% in 2022, as well as the increased trend of financial inclusion from 68.49% to 82.7% (Financial Service Authority, 2022). Nurfadilah et al., Cogent Business & Management (2023), 10: 2259587 https://doi.org/10.1080/23311975.2023.2259587 Page 1 of 18 Received: 26 October 2022 Accepted: 12 September 2023 *Corresponding author: Dety Nurfadilah, Sekolah Tinggi Manajemen IPMI, DKI Jakarta 12750, Indonesia E-mail: [email protected] Reviewing editor: Virginia Barba-Sánchez, Universidad de Castilla-La Mancha - Campus de Albacete, Spain Additional information is available at the end of the article © 2023 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group. This is an Open Access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. The terms on which this article has been published allow the posting of the Accepted Manuscript in a repository by the author(s) or with their consent. As Islamic Rural Banks provide financing and saving services to Micro, Small and Medium Enterprises (MSMEs), farmers, fisherman, workers, retirees, and other societal groups with medium to low income, Islamic rural banks are recognizing the importance of digitalization in improving their efficiency, customer experience, and overall competitiveness (Nurfadilah et al., 2022). Arjun et al. (2021) added that operational banking activities may be impacted by the existence of machine learning, artificial intelligence, big data, and the internet of things. The high number of tellers and back office would be replaced by applications and many branches would be switched to digital bank. It is necessary for the companies to acquire digital that has capability to manage the business process in an agile and responsive way. Otherwise, the investment in digital technology will not provide a better return in the long run. However, recent technology advancement triggers much discussion into its impact on the employee’s digital readiness. The remaining question is what factors drive the employee’s digital readiness? From a theoretical perspective, digital readiness refers to the intention and ability to adopt digital technology, in addition to a readiness to utilize this technology, there is also a desire to generate novel innovative opportunities that can aid individuals, organizations, industries, or countries in achieving their objectives more quickly and with better outcomes. According to Westerman et al. (2019), organizations that possess strong digital readiness experience significantly higher levels of revenue and profitability compared to those with a lower level of digital readiness. Digital readiness encompasses two perspectives. The first pertains to the attitude towards digital technology, which is perceived as a distinct object that can be universally recognized (as an independent object). Particularly in light of current problems, banks need to reconsider their client contacts and recast their operations as a fully digital organization (Gomber et al., 2017). However, not all banks have adequate digitalization readiness (Berghaus & Back, 2017). More specifically, they struggle to transition from a traditional bank to a digital bank, where processes are automated, customer interactions are supported by robo-advisors, and banking primarily takes place online, on mobile devices, and in other social media channels. Banks must plan for and be ready for such a transition in order to master it. When a bank is said to be “digitally ready,” it refers to both its employees’ readiness to manage the required transformation in regard to their optimistic attitudes, proficiency, and expertise, and taking into account the organization’s preparedness, including factors such as financial limitations, organizational capabilities, endorsement from leaders, and culture of innovation (Arsawan et al., 2022). Evidence suggests that being digitally prepared affects business success positively, and that businesses, as well as their management and people, must be prepared. For the necessary organizational change to be successfully guided and carried out, a deeper knowledge of the perceptional disparities between managers and employees as well as among management levels is essential. Second, attitude toward interaction with digital technology. Individuals who perceive digital technology as an integrated object should be prepared to engage with it. The emotional responses that arise due to the presence of digital technology and the possibility of alterations in work processes or activities resulting from engagement with digital technology are significant implications to consider, are important to be included in these two components of digital readiness. Consequently, when digital technology is perceived as an independent object with its outcomes, it is known as attitudinal readiness. On the other hand, when digital technology is perceived as an integrated object with its effects, it is referred to as action readiness (Nasution et al., 2021). From the empirical perspective, there has been much discussion about digital readiness. Kunaifi and Ubaidillah (2021) stated that BPR Syariah Bakti Sumekar used e-banking, namely BBS Mobile, by developing this service to boost the number of customers. Currently, the number of customers is 278,426. Moreover, this service has already been used in 31 BPRS Bakti Sumekar branches throughout Indonesia, including the ATM owned by BPRS Bakti Sumekar which reached 31 (Husna, 2023). Adhiatma et al. (2023) examined the digital transformation in SMEs in Indonesia by looking into readiness, agile leadership, dynamic capability, and digital ecosystem. The study found that SMEs in Semarang, Indonesia, those three criteria influence the development of digital readiness. Abdi Nurfadilah et al., Cogent Business & Management (2023), 10: 2259587 https://doi.org/10.1080/23311975.2023.2259587 Page 2 of 18 et al. (2022) conducted similar studies for MSMEs in Indonesia and found that intrinsic motivation and information technology knowledge. However, there is a scarcity of research that examines digital readiness within Islamic financial institutions or even rural Islamic banks. Majority of previous studies in this field focused on the relation about digital transformation and banking process which spurred the growth of blockchain, artificial intelligence, and cryptocurrency. This study aims to bridge the gap between theory and practice by expanding the technology acceptance model with two objectives: (1) to examine the relationship between perceived ease of use, perceived usefulness, perceived social influence, and competency towards attitude, and (2) to explore the impact of attitude and COVID-19 on digital readiness. This study provides three significant contributions. Firstly, it builds upon previous research and used industry 4.0 as the phenomenon of their study (Pirola et al., 2020), while this study used COVID-19 as a new variable to examine its impact on digital readiness. COVID-19 pandemic is somehow unique compared to other crises where it is an unprecedented crisis from health care and socio-economic development (Fung & Liu, 2021). Thus, it may provide different findings that contribute to the field of business and management. Second, many previous studies conducted a study about digital readiness in regards to MSMEs (Abdi et al., 2022; Pirola et al., 2020), while this study aims to address the gap in the existing literature of digital readiness in Islamic rural banks which has not been explored by previous scholars. Islamic rural banks hold a crucial significance for the economic development in Indonesia because they provide financial inclusion among MSMEs and other societal groups that have no access to commercial banks. Third, it provides managerial implications for practitioners in Islamic rural banks that need to have an insight about their employee’s perceptions and competencies toward digital readiness, while previous studies discussed about the digital readiness from user’s perspective (Khanboubi & Boulmakoul, 2019; Ly & Ly, 2022). The need to conduct this study also comes from an issue faced by Islamic rural banks where they need to adapt quickly with digitalization, but they face a barrier from regulators which limit their innovation due to security risks and traditional business models. This paper is organized into five sections. First, it discusses the background of study together with the objectives. Second, it reviews the literature. Third, it presents the methodology. Next, it discusses the research findings. Finally, it outlines the research results and offers recommendations for managers and theories. 2. Literature review 2.1. Development of Islamic rural banks To facilitate the advancement of the national economy, banking institutions that are able to provide broad services to the public are needed. The community’s need for Islamic banking institutions is considered quite high. To meet the needs of the community, Nurfadilah et al. (2018) suggests that the national banking system allows for the creation of a sharia bank, such as Islamic rural banks, which can provide simple, easy, and efficient banking services to communities, particularly to small and medium-sized enterprises in both urban and rural areas. As can be seen from Table 1, there is an increased in the number of Islamic rural banks from 167 in 2018 to 171 in April 2023 (Financial Service Authority, 2023). The assets and number of banks increased for 64.9% and 51.5% respectively, while the number of employees increased for 69.4% within the same period. The western area continues to dominate this distribution. 2.2. The readiness for digital technology Companies must shift digitally in order to respond to change in the age of Industry 4.0 and stay competitive. The success of a company’s transformation directly depends on how prepared they are for such a change. Method for determining whether a transport firm is ready for digital transformation. The following tasks were completed as part of the readiness assessment: evaluation of the maturity of management processes, analysis of processes according to the readiness level for automation, and evaluation of the competencies and skills of the company’s staff to use Nurfadilah et al., Cogent Business & Management (2023), 10: 2259587 https://doi.org/10.1080/23311975.2023.2259587 Page 3 of 18 contemporary digital technologies and solutions. Neither industry nor organization is thought to be secured to the effects of new digital technology, making its exploration, integration, and exploitation one of the major challenges for corporations and society today. The phrase “condition of being both psychologically and behaviorally prepared to take action” (i.e., capable and willing) is used to describe the readiness concept (Jafari-Sadeghi et al., 2021). More practically, measuring or assessing readiness is described as the methodical investigation of an organization’s capacity to manage and implement a transformative process or change. When changes are introduced within a practical setting of an organization, including new processes, procedures, and organizational structures, risks, opportunities, and potential obstacles may materialize. Furthermore, conducting a readiness evaluation provides a chance to identify and address any deficiencies in the current organizational setup before or during the execution of planned modifications (Pirola et al., 2020). In order for the organization to address any potential success hurdles prior to starting the change project, a readiness assessment also aims to detect any current ones. 2.3. Technology Acceptance Model (TAM) Technology acceptance is the voluntary decision made by an individual adopting new technology. The willingness of users to integrate and use technology successfully is a key component (Granić & Marangunić, 2019). According to Selvi (2023), the successful implementation of electronic banking initiated by BPR Syariah Fajar Sejahtera for Fajar Mobile, BPR Syariah Dinas Ashri for Bali Dinar Mobile, and BPR Syariah Bakti Sumekar for BBS Mobile. The service has already been used in 31 BPRS Bakti Sumekar branches throughout Indonesia, including the ATM owned by BPRS Bakti Sumekar which reached 31 (Husna, 2023). Researchers have created a number of models over the last few decades to comprehend the characteristics of user adoption of technology. These models’ efficacy for numerous information technology-based applications has been repeatedly proven (Salloum et al., 2019). However, the most solid and proven basis for technology adoption to date is represented by Davis’ Technology Acceptance Model (TAM) (Kamal et al., 2020). TAM, which has roots in sociology and psychology, is the model that is most frequently utilized in a variety of research investigations. The main objective of TAM is to anticipate user adoption of new technology and to draw attention to information system design flaws before widespread use (Rafique et al., 2020). TAM is made up of two major components that are applied in a variety of technology contexts: perceived utility and perceived usability (Estriegana et al., 2019). In this study, perceived ease of use, perceived usefulness, and perceived social influence are important factors that can impact an individual’s attitude and competencies towards digital readiness in Islamic rural banks. In addition, their attitude and competencies can influence their readiness to adapt with digital, although COVID-19 might be one of the triggers. Thus, the theoretical framework for this study can be seen in Figure 1. Table 1. Islamic rural banks growth in Indonesia from 2018 to April 2023 Years Asset Islamic rural banks in Indonesia Number of Banks Number of Offices Number of Employees 2018 IDR 12.3 T 167 446 4,565 2019 IDR 13.7 T 164 617 6,620 2020 IDR 14.9 T 163 627 6,750 2021 IDR 17.05 T 164 659 6,964 2022 IDR 20.1 T 167 668 7,491 April 2023 IDR 20.29 T 171 676 7,735 **Data per April 2023 (source: Financial Service Authority, 2023) Nurfadilah et al., Cogent Business & Management (2023), 10: 2259587 https://doi.org/10.1080/23311975.2023.2259587 Page 4 of 18 Table 2. Respondent Profile Demographic Variables Frequency Percentage Gender Male 201 53.3% Female 177 46.7% Years of working 0–2 years 42 11.1% 3–5 years 56 14.8% 6–8 years 98 25. 9% 9–11 years 70 18.5% >11 years 112 29.6% Educational Background High School 10 2.65% Undergraduate Degree 305 8.6% Master Degree 63 16.7% Doctoral 0 0 Income level per month Below Rp 5.000.000 227 60% Rp 5..000 - Rp 1.000.000 63 16.7% Rp 1.000.001 - Rp 15..000 25 6.7% Rp 15..001 - Rp 2.000.000 25 6.7% > Rp 2.000.001 38 10% Digital technology that you have known very well (can choose more than one) Web development 25 6.7% Social media 290 76.7% Cloud computing 63 16.7% Microsoft office 315 83.3% Banking system/ application 214 56.7% Blockchain 12 3.3% Dashboard 75 20% Digital technology that you want to learn in the future (can choose more than one) Web development 25 60% Social media 290 40% Cloud computing 63 36.7% Microsoft office 315 30% Banking system/ application 214 50% Blockchain 12 43.3% Dashboard 75 26.7% Figure 1. Theoretical framework. Modified from Pham & Vu (2022). Nurfadilah et al., Cogent Business & Management (2023), 10: 2259587 https://doi.org/10.1080/23311975.2023.2259587 Page 5 of 18 2.4. Perceived ease of use Perceived ease of use, employed in the UTAUT model (Dwivedi et al., 2019), effort expectancy is an important component of TAM and refers to the perceived level of ease associated with using a new system. The perception of usability has a big impact on adoption (Wu et al., 2020). To put it differently, users are more likely to want to use a system when they perceive it as easy to use. Employee desire to adopt digital systems will also increase if they believe that using these is simple. When a system is made to be easy to use, it may be considered to be of high quality (Malik & Annuar, 2021). This includes making it simple for users to acquire the knowledge and skills required to operate and benefit from the system. It also makes it simple for users to complete a task or job (Bui et al., 2022; Latifah et al., 2021; Nguyen et al., 2020). The ease in this context refers to whether using a digital system or platform makes an employee’s daily tasks and activities in a company easier compared to traditional With the advancement of the internet, several gadgets such as laptops, tablets, and smartphones have emerged and are extensively utilized by organizations (Dasgupta & Gupta, 2019). To remain competitive, businesses need to adapt to this trend (Gobble, 2018). As habits and work procedures are altered to suit the potential efficiency increases, digitalization is thought to deliver considerable efficiency (Kuusisto, 2017). The typical work patterns and methods, on the other hand, will undoubtedly change as a result of digitization strategies. Workers must adjust to the technology as part of this process, and this will have a variety of effects on them. Some workers may perceive these changes as positives, while others may need more time to grasp and cope with them (Nurfadilah & Samidi, 2021). The objective of this study is to examine the significance of ease of use in the adoption of digital technology by employees of Islamic Rural Bank in Indonesia. Thus, the hypothesis can be formulated as follows: H1: Attitude is significantly and positively influenced by the perceived ease of use. 2.5. Perceived usefulness The most important element in user acceptance of a system is perceived usefulness. The productivity, effectiveness, and overall advantages of the system in terms of enhancing user performance are all factors that influence how useful people consider it to be. The acceptance of technology by individuals is influenced by two cognitive factors, namely perceived usefulness (PU) and perceived ease-of-use (PEOU)—mediates how people adopt new technologies (Brandon-Jones & Kauppi, 2018). As per Malik and Annuar (2021), perceived usefulness refers to the personal probability of the user that the technology would enhance the performance of the individual or team from an organizational perspective. A person’s assessment of how technology is positioned to enhance their jobs or duties in regards to efficacy and productivity is known as perceived usefulness. A concept known as “perceived usefulness” demonstrates how changing people’s behavior might be a particular aspect of repeated usage (Kong et al., 2021). Al-Hattami and Gomez Corona (2021) suggests that five separate indicators of magnitude of increased efficiency, advantageous, productivity, speedier trade, and efficacy of an activity should be used to measure or analyze the perceived usefulness variable. The major goal of this research is to ascertain how employee attitudes and performance in the Islamic Rural Bank in Indonesia are impacted by the perceived usefulness of digitalization in order to bridge the digital gap. Thus, the hypothesis can be formulated as follows: H2: Attitude is significantly and positively influenced by the Perceived Usefulness. Nurfadilah et al., Cogent Business & Management (2023), 10: 2259587 https://doi.org/10.1080/23311975.2023.2259587 Page 6 of 18 2.6. Perceived social influence Most individuals who participate in online social activities are primarily consumers of forum content blog post searchers, or viewers of images or other media (Holt et al., 2022). The impact of social influence can be associated with various aspects of the social network, such as families and organizations, certain behaviors such as obtaining emotional or informational assistance, or our perception of the availability of resources for support (Singh et al., 2020). An exchange of resources between two people that is understood by either the supplier or the intended recipient to improve the wellbeing of the recipient is another way to define social influence. It comes in the forms of inspiration, drive, knowledge, and experience. Other research has examined the impact of cultural and social factors on technology adoption, highlighting the importance of social influences. For example, Hao et al. (2017) found that users’ decisions to adopt technology are shaped by a combination of social factors, including social image and subjective norms. According to perceived social influence, employees at an Islamic rural bank feel that their attitudes and behaviors regarding digital technology may be altered, either consciously or unconsciously, to accommodate social pressures. Understanding what factors affect people’s decisions to adopt and use information and communication technologies (ICTs) is important as these technologies permeate more and more facets of our life. Social influence may become more crucial in determining whether technologies thrive as more and more technologies, particularly social technologies, are developed (Popkova & Zmiyak, 2019; Upadhyay et al., 2021). Social influence can be seen from the intensity of employees towards digital changes in Islamic rural banks. Intention to use is considered a behavioral construct that is indicative of attitude, behavior, and actual usage being acceptable. This might happen as a result of the fact that the behavior of a person is a reflection of their intention to use a certain technology. The purpose of use in this context is mainly focused on measuring employee interest in viewing and monitoring their performance review results, work-progress reports, and updates on the evolution of daily information made digitally accessible (Purwanto & Loisa, 2020). Examining this as a measure of acceptance of digitalization will reveal the level of eagerness among employees and its importance to them. It is possible that each employee has unique intentions when using applications and websites that demonstrate variations in performance value and rewards earned. As a result, the hypothesis can be formulated as follows: H3: Attitude is significantly and positively influenced by the Perceived Social Influence. 2.7. Attitude Attitude is considered one of the fundamental elements of human psychology, which is a feature of the mind since it reflects a response to interactions with the outside world and the body. The extensive body of study on this topic demonstrates the practical use of this trait in the fields of psychology, sociology, political science, and other related fields Hien and Nhu (2022) have an impact on their actions. Positive attitudes among employees, which have been thoroughly documented in the literature to have an impact on both individual and organizational performance (Mwesigwa et al., 2020), may significantly affect both. Positively, though, if management demonstrates a desire to engage with employees and make changes as needed, that attitude in and of itself can significantly raise morale. Thus, the hypothesis can be formulated as follows: H4: Attitude is significantly and positively influenced by the Digital Readiness. 2.8. Competencies Although research on digitalization and related fields has explored its effects at the employee level, including smart manufacturing (also known as Industry 4.0) and servitization, there is a research gap regarding competency (Kohtamäki et al., 2020; Szalavetz, 2019; Van Melle et al., Nurfadilah et al., Cogent Business & Management (2023), 10: 2259587 https://doi.org/10.1080/23311975.2023.2259587 Page 7 of 18 5. Discussion The purpose of this study is to examine the effect of perceived ease of use, perceived usefulness, perceived social influence, competencies, and COVID-19 on digital readiness in Islamic rural banks and examine the role of attitude as mediating variables. This study collected the data through online survey and distributed questionnaire to employees from Junior to senior executive level in Islamic rural banks located in Java and outside Java Islands. Based on the finding, perceived ease of use and perceived usefulness proved to have a significant effect on attitude. Perceived ease of use can significantly impact employee productivity and efficiency. If employees can navigate systems and technology without significant challenges, they can complete their tasks more quickly and accurately. This efficiency can lead to a sense of Table 6. VIF VIF PEU1 1,438 PEU2 1,956 PEU3 2,161 PU1 2,326 PU2 1,576 PU3 2,387 PSI1 1,612 PSI2 1,883 PSI3 1,872 COM1 2,415 COM2 1,666 COM3 2,433 ATD1 1,931 ATD2 2,174 ATD3 1,714 ATD4 2,049 COV1 1,753 COV2 1,662 COV3 1,671 DR1 1,829 DR2 2,080 DR3 1,618 Table 7. Hypothesis testing Original Sample (O) Sample Mean (M) Standard Deviation (STDEV) T Statistics (|O/STDE V|) P-Values Result PEU -> ATD 0,253 0,254 0,087 2,924 0,004 Accepted PU -> ATD 0,281 0,272 0,121 2,318 0,021 Accepted PSI -> ATD 0,161 0,161 0,096 1,674 0,095 Rejected ATD -> DR 0,598 0,574 0,141 4,237 0,000 Accepted COMP -> ATD 0,289 0,298 0,082 3,527 0,000 Accepted COV -> DR 0,324 0,348 0,144 2,253 0,025 Accepted Nurfadilah et al., Cogent Business & Management (2023), 10: 2259587 https://doi.org/10.1080/23311975.2023.2259587 Page 14 of 18 accomplishment and pride in their work, which, in turn, contributes to a positive attitude. It is in-line with the previous finding from Chen and Aklikokou (2020) when technology is perceived as easy to use, it reduced the time and resources required for training. Employees can quickly adapt to new systems or updates, making the transition smoother. This can lead to a more positive attitude towards change and adaptability within the organization. It shows that the employees at Islamic rural banks perceive digital technology as beneficial tools/system that improve their work and assist them to be more effective and efficient at workplace (Barba-Sanchez et al., 2022). The study also shows that the employee believes that digital technology is easy to use. It is also supported by Asbisindo that there are 97 out of 165 Islamic rural banks that have adopted digital technology in 2022. However, their perception toward social influence is found to have no significant on attitude. The investment in digital technology has to measure its impact on the company’s return, not only from the financial aspects, but also non-financial aspects, such as customer’s loyalty, trust, and company’s image. Moreover, the employee’s competencies and COVID-19 are found to have positive effect on digital transformation. It shows that their skills are needed to help them absorb digital technology faster than others and the COVID-19 is also found to improve digital transformation in many sectors. Alam et al. (2023b) supported this study that competency to adopt digitalization remains a challenge. When the COVID-19 pandemic hit the world, the conventional methods of delivering education became obsolete and numerous countries adopted technology for education purposes. Since then, technology became a primary tool at different educational levels in diverse ways. The result is also in-line with the study conducted by Nurfadilah et al. (2022) that the implementation of advanced digital technologies must be accompanied by the readiness of the employees. Firms that have employees with higher degree of digital readiness are more likely to achieve greater productivity, leading to improved overall firm performance. 6. Conclusion and recommendation 6.1. Conclusion The goal of this research is to examine the driver of digital readiness for Islamic rural bank’s employee in Indonesia. From the statistical significance tests, perceived ease of use, perceived usefulness, and competency has been shown to have a positive effect on attitude, while perceived social influence has no effect on attitude. Moreover, attitude plays a mediating role toward digital readiness together with COVID-19 as a significant variable. This research offers essential details that contribute to a more comprehensive comprehension of the connection. 6.2. Recommendation The finding of this research provides contribution to the literature of Islamic financial institutions, particularly Islamic rural banks. It expands the theory of acceptance model by including COVID-19 as external variables and perceived social influence and competency as internal variables. This research can also serve as a valuable resource for professionals in the field to improve their talent management strategy in order to create a better talent that could adopt easily to the digital transformation. It contributes to the better understanding of the employee’s ability at Islamic rural banks to develop their skills and knowledge in adopting technology. This research has some limitations, including the small number of sample size that could not provide generalize result for Islamic rural banks in Indonesia. Future researchers are expected to expand the number of sample size across other provinces in Indonesia. Then, the study only focusses on COVID-19 as the phenomenon. This study may have different results for different situations; therefore, it is essential to expand the research for new normal or another crisis as another phenomenon. Nurfadilah et al., Cogent Business & Management (2023), 10: 2259587 https://doi.org/10.1080/23311975.2023.2259587 Page 15 of 18 Acknowledgments This research has been funded by a Research Grant awarded by the Keputusan Kuasa Pengguna Anggaran Direktorat Riset, Teknologi, dan Pengabdian Kepada Masyarakat under the reference number No: 1178/LL3/ AL.04/2023. This grant is part of the 'Pendanaan Penelitian Program Kompetitif Nasional dan Penugasan,' sponsored by the Ministry of Education, Culture, Research, and Technology in Indonesia. Additionally, I would like to acknowledge the support I received from Sekolah Tinggi Manajemen IPMI. Funding The work was supported by the Kementerian Riset Teknologi Dan Pendidikan Tinggi Republik Indonesia . Author details Dety Nurfadilah 1 E-mail: [email protected] Sudarmawan Samidi 1 Wiwiek M Daryanto 1 1 Sekolah Tinggi Manajemen IPMI, DKI Jakarta, Indonesia. Disclosure statement No potential conflict of interest was reported by the author(s). 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