From insights to impact: leveraging data analytics for data-driven decision-making and productivity in banking sector

This research stems from the disturbing phenomenon known as digital transformation and the colossal data creation. A vast amount of data has been produced as a result of increased usage of digital technologies to generate commercial value. However, data does not hold any value, so organizations are motivated to invest in data analytics and make informed decisions to enhance their performance. Against this backdrop, this study investigates the impact of data-driven decision-making (DDDM) on productivity in the presence of data analytics capability of Pakistan’s banking sector. We explore this link based on innovation diffusion theory using Instrumental Variable Two-Stage Least Square. A composite index of DDDM was developed based on primary data collected through online survey. This index is then regressed on actual productivity measures for 2016–2020. The findings suggest that banks exploiting analytics and adopting DDDM methods results in an increase in productivity of about 9–10%. It further indicates that DDDM adoption with an investment in data analytics leads to enhanced productivity.