Impact of Digital HR Transformation on Employee Engagement in a Global Bank’s Retail Sector

Thesis Abstract

This study investigates how digital human resource (HR) transformation influences employee engagement within the retail sector of a global banking institution, addressing the gap between technological deployment in HR processes and observed employee-reported engagement levels. The problem arises from accelerated adoption of cloud-based HR information systems, AI-enabled talent analytics, and mobile-enabled self-service tools in large banks, which, despite improving process efficiency, yield mixed effects on workforce motivation, sense of belonging, and discretionary effort. The aim is to assess the extent to which digital HR transformation drives both affective and instrumental components of employee engagement, and to identify moderating and mediating factors that shape this relationship. The study pursues four specific objectives (1) to quantify the relationship between digital HR capabilities (self-service adoption, analytics-driven decision-making, and automated talent development) and overall employee engagement; (2) to examine how perceived changes in HR service quality and speed mediate this relationship; (3) to explore the moderating roles of organizational trust, change readiness, and perceived organizational support; and (4) to develop a parsimonious model linking digital HR transformation to engagement outcomes and to generate practical recommendations for retail banking HR leaders. Guided by the Job Demands-Resources (JD-R) model and the Technology Acceptance Model (TAM), the study hypothesizes positive associations between mature digital HR practices and engagement, with mediation by perceived HR service quality and moderation by change readiness. Methodologically, the study adopts a cross-sectional explanatory sequential mixed-methods design. The population comprises frontline employees and branch managers working in the retail divisions of a global bank operating in North America and Europe. A stratified random sample of 600 frontline employees across 60 branches and 60 branch managers will be selected to ensure representation by region, branch size, and tenure. Quantitative data will be collected via a structured questionnaire measuring digital HR transformation (digital HR capabilities scale), employee engagement (the Utrecht Work Engagement Scale), perceived HR service quality (HR Service Delivery Scale), change readiness (Change Readiness Index), organizational trust (Trust in Organization scale), and perceived organizational support. Reliability will be evaluated with Cronbach’s alpha, and construct validity tested through confirmatory factor analysis. Data will be analyzed using multiple regression to test direct effects, PROCESS macro to assess mediation and moderation effects, and hierarchical linear modeling to account for nested data (employees within branches). A subset of 40 participants (20 frontline employees and 20 managers) will be purposively selected for semi-structured interviews to explore the mechanisms behind quantitative findings, with thematic analysis used to triangulate results. Expected findings include a positive and significant relationship between mature digital HR transformation and employee engagement, partially mediated by perceived HR service quality and faster HR responsiveness. It is anticipated that change readiness and perceived organizational support will strengthen this relationship, while organizational trust will moderate the impact of automated development programs on affective engagement. The analysis will likely reveal differential effects across regions, with larger effects in branches demonstrating higher digital literacy and stronger HR-employee interfaces. The study aims to contribute to theory by integrating JD-R and TAM into a cohesive model of digital HR-driven engagement in retail banking, and to practice by outlining actionable configurations of digital HR capabilities, service quality improvements, and change management approaches that maximize engagement. The study’s contribution to knowledge includes (1) empirical evidence on the link between digital HR transformation and employee engagement in a global bank’s retail sector; (2) validated measurement models for digital HR capabilities and engagement in financial services; (3) insights into mediating and moderating factors shaping this link, informing AI and analytics governance in HR; and (4) practical guidance for HR executives on resource allocation, change management, and employee communication strategies to sustain engagement during digital transitions. The main conclusion is that well-implemented digital HR transformations, complemented by high perceived service quality and supportive organizational climates, substantially enhance employee engagement, whereas neglect of change readiness and trust-building undermines potential gains. Recommendations include investing in user-centric HR IT interfaces, transparent change communications, training programs to improve digital literacy, and leadership practices that demonstrate consistent support for employees during digital transitions.