Digital Banking Risks and Information Systems Audit Readiness: Lessons from Financial Institutions

Posted: Sep 08, 2020

• Hamza Shahbaz Ahmad
  University of Missouri Kansas City
• Ali Abbas
  University of the Punjab
• Samina Yousaf
  National University of Sciences and Technology (NUST)

Abstract

This research examines how financial institutions prepare for Information Systems audits in the context of rapid digital transformation, with particular focus on data protection challenges and system control gaps. Through comprehensive analysis of 156 financial institutions across North America, Europe, and Asia from 2018 to 2020, this study identifies critical success factors and common vulnerabilities in IS audit readiness frameworks. The research develops a novel Digital Audit Readiness Assessment (DARA) model that quantifies institutional preparedness across technological, organizational, and regulatory dimensions. Empirical results indicate that institutions with mature digital audit readiness frameworks experience 52% fewer regulatory findings and 47% shorter audit remediation periods compared to peers with underdeveloped approaches. The study reveals that data protection gaps account for 68% of critical audit findings in digital banking environments, while system control deficiencies represent the most significant operational risk. Findings demonstrate that successful audit readiness requires integrated approaches combining technological controls, organizational capabilities, and continuous monitoring mechanisms. This research contributes actionable insights for financial institutions navigating digital transformation while maintaining robust audit preparedness and regulatory compliance.