The Impact of Digital marketing and Digital Payment on

Financial Performance

Abstract— In the digital age, digital marketing affects people’s Financial performance refers to expanding the involvement
lives on professional and societal levels. The financial sector, in of financial intermediaries, such as investors, venture capitalists,
particular, makes substantial use of the new digital information and creditors, who can support small business growth and
technology to make it simpler for the general public to access product market innovation in a company’s operational and
financial products and services. The community, especially investment activities. Another way to describe financial success
entrepreneurs, can benefit from opportunities thanks to is according to the outcome of the numerous operations
information technology improvements. This research aims to supported within the limits of the available financial resources
examine the impact of digital marketing and digital payments on [2]. The financial statement or financial ratio analysis results can
financial performance. It uses quantitative methodologies and
be used to measure financial performance. To analyze a
structural equation modeling-based data analysis techniques
using SmartPLS 4.0 software. A sample was chosen using
company’s financial performance, a notion or element that
convenient random sampling techniques. The responses of 191 adequately explains the financial data is required. A company’s
employees working in financial companies based in Dubai, UAE, financial performance can be used to describe its level of
who responded to the online questionnaires were analyzed. excellence during a specific time.
According to the data analysis findings, digital payments and According to [3], financial statement analysis can be used
digital marketing were found to have a positive and significant for evaluating the level of financial performance. Digital
impact on financial performance.
marketing is the practice of using digital media to promote a
Keywords—digital marketing, digital payment, financial
good or service. In the past, there were few digital media
performance. options, as radio and television were the only means of one-way
promotion. However, nowadays, digital technology has evolved
I. INTRODUCTION very quickly to the point where it is nearly universally accepted.
The major objective of putting digital marketing into practice is
Digital marketing in the digital era and 4.0 Industrial
to produce the best results possible for a two-way promotion
Revolution has influenced people’s lives personally and
process. Various digital marketing sources can be used to
professionally. The information technology developed in the
promote business products, such as Facebook, Instagram,
digital age, particularly in the financial industry, is employed
Google, YouTube ads, etc. Businesses can use digital
extensively to make it easier for the general public to acquire
marketing’s traceability features to determine the Return on
financial products and services. Due to those advancements, the
Investment from the marketing capital invested in their
general public can take advantage of opportunities, particularly
organization, learn how much money is spent on sales and
in the finance industry, to conduct financial transactions
advertising, and assess which advertisements are appropriate
anywhere with convenience, security, and control. Digital
and effective. With this skill, businesses can advertise their
payments, crucial for providing financial services, are one of the
products in markets tailored to their demands and to the entire
information technology breakthroughs in the financial services
world [4].
sector.
[5] claim that digital payments will help businesses manage
[1] demonstrates the platform company’s enormous
their finances to reach a goal or target, specifically in making a
popularity and the fact that it is one of the answers to the gaps in
sizable profit so the organization’s performance increases. By
banking products and financial inclusion. Marketing has been
that means, it can notice and respond to changes in the economy,
digitalized. It is one of the intermediary media utilized
business climate, and finances. It can also make choices that will
frequently by business actors to keep up with the pace of
result in creative and well-directed solutions to enhance its
digitalization. Similarly, businesses are beginning to leave
financial performance and long-term viability. The use of digital
traditional business models and transition to contemporary
payments will affect performance, which could support or
businesses using digital media. As marketing becomes more
enhance financial performance. [6] claim that financial literacy
digitalized, consumers and business players can communicate
can regulate or manage finances precisely and properly if digital
easily because they can transact at any time and from anywhere
payment is well organized.
in the world. Research has been conducted to discover the
connection between digital marketing and digital payments to Everyone should have a reasonable degree of financial
financial sectors. literacy to prevent financial troubles, which could arise from
money management mistakes as well as a low salary. With this
approach, this research issue aims to enhance business financial

978-1-7281-9684-8/22/$31.00 ©2022 IEEE

performance. According to experts, financial success is a Change begins with an idea that develops in an evolutionary
benchmark for economic expansion, and access to financing or revolutionary manner, bringing about new technological
demonstrates this achievement [7]. This research aims to advancements. It is also inferred from the research findings that
examine how financial performance is impacted by digital using digital marketing tactics can make entrepreneurs sell
marketing, and digital payment. It is anticipated that its findings more, as it may alter how consumers make decisions and carry
will have management and theoretical advantages for increasing out transactions for purchasing and selling. According to [15],
business performance. By focusing on issues of digitizing financial institutions are encouraged to innovate to survive and
financial literacy in the finance industry, this study is projected profit financially from the present technological advancements.
to provide academic insight for all researchers with additional One innovation applicable to a marketing digitalization plan is
information and input in digital payment and marketing studies. the use of a social media influencer, a person or a public figure
with a large following, to affect customer behavior.
A. Problem Statement
[16] noted that when a firm’s financial performance
Technological development, advanced applications, social increased, digital payments could handle ethical financial
media platforms, and search engine updates alter how a larger management and the true added value for transactions to succeed
share of the target market may be captured. Digital marketing in the market and worldwide. Another conclusion drawn from
methods are evolving more quickly than ever. Financial the research is that digital payments are an essential part of life
marketers are investing more of their budgets in digital tools and because they provide the means to make decisions that are well-
innovation. Therefore, research is needed to evaluate the informed and trustworthy. Digital payment-based fintech and
adoption level, the impact of digital marketing, and digital financial performance are influenced by financial management
payment to assess financial performance. [17]. Businesses can improve the connection between digital
II. LITERATURE REVIEW payments and financial performance if they use digital
marketing.
According to [8], who researched the topic of digital
marketing, financial performance is significantly improved by III. RESEARCH DESIGN
digital payment. With digital payment, sales revenue volumes A hypothesized research model (Figure 1) and three research
rise, and profits keep rising to a significant value in the financial hypotheses were developed.
sector. [9] has observed a great advancement in digital
transactions. This system uses online services to exchange value
in monetary terms. The study by [10] found that digital
marketing significantly impacts consumers and businesspeople.
Digital transactions are common in developed nations, can Digital
demonstrate the maturity of a business, and boost its financial Marketing
performance. Research was conducted to connect digital H1
marketing and digital payments for financial performance. For
instance, it was discovered that the advantages and practicality H3 Financial
of digital payments influence their use. One finding [10] Performance
indicates a considerable relationship between the benefits and
simplicity of digital payment and the intention to use digital H2
marketing for improved financial performance.
Digital
For instance, it was discovered that the advantages and Payment
practicality of digital payments influence financial institutions’
intentions to use them [11], and their use substantially impacts
financial performance. The existence of digitization Figure 1 Hypothesized Research Model
significantly affects business performance by raising financial
H1: Digital Marketing has no relationship and impact on
literacy about payment gateways. According to [12], there is a
Financial Performance in the financial industry, UAE.
high correlation between the analysis and investigation of
H2: Digital Payment has no relationship and impact on
creative fixes for the digital payment platform and the creation
Financial Performance in the financial industry, UAE.
of a strategic partnership between the digital payment provider
H3: Digital Marketing and Digital Payment have no
and the regulator. Another study showed how digital marketing
relationship and impact on Financial Performance in the
mighty increase the profitability of business owners [13].
financial industry, UAE.
According to research by [14], digitalization of marketing
favorably and significantly impacts financial performance due IV. METHODS
to the rapid development of marketing digitization, making the Utilizing the software SmartPLS 4.0, this research employs
sales and marketing process more efficient and simple to carry quantitative approaches and data analysis techniques based on
out through a variety of media. This causes digitization structural equation modeling. The selection process was based
phenomena to spread among people from the poorer to the upper on snowball sampling techniques, and 54 financial companies
classes. As a result, the influence of change is increasingly were sent online questionnaires to complete. The next stage was
effective, and the digitization of marketing brings about efficient to assess the 191 respondents that submitted their
sales and marketing operations. questionnaires, which included questions about the impact of
digital payment on business financial performance to understand
the relationship between “Digital Marketing,” “Digital
Payment,” and “Financial Performance.”
A questionnaire using a Likert scale structured from 1
(strongly agree) to 5 (strongly disagree) was used to gather data
from respondents. It contained seven items regarding digital
marketing, five about digital payment, and 10 about financial
performance. A descriptive study was carried out using a
convenient random sampling method. Table 2 provides a
summary of the statistics. To test the hypothesized model, the
PLS-SEM hypothesis was assessed using SmartPLS 4.
Hypothesis testing, average variance, discriminant validity,
structured equation modeling, reliability, and validity tests were
also carried out. Table 1 below shows the model’s validity and
reliability.
Table 1: Cronbach’s Alpha, Composite Reliability (CR), Figure 2: Hypothesis Testing through Partial Least Square-
Average Variance Extracted (AVE), and Discriminant Structured Equation Model (PLS-SEM)
Variability.
Cronbach’s The correlation and significance of the variables were looked
Variables CR AVE DM DP FP at for the hypothesized research model. The degree of intention
Alpha
Digital
0.851 0.860 0.534
to employ digital marketing will have a 53% impact on financial
Marketing performance, according to our model’s evaluation. The R-
Digital Payment 0.839 0.842 0.609 0.58 square shows what percentage of the dependent variable’s
Financial
Performance
0.871 0.871 0.753 0.72 0.77 variance can be attributed to the independent variable. In this
DM=Digital Marketing, DP=Digital Payment, FP=Financial case, 56% of the difference can be attributed to the impact of
Performance digital payment on financial performance. The Q-square
evaluates the efficacy of the endogenous constructs as
Reliability is a measurement of an indicator’s internal predictors. The model is predictively relevant, and the results
consistency, showing how much each indicator reveals a broad have been accurately generated when Q-square is greater than
latent concept. The reliability requirement is a gauge of the zero. If the Q-square value in the assessment model is greater
result’s consistency and stability over time. The value of than zero, the proposed model is predictively significant. Since
composite reliability was employed in this study to examine the this Q-square value is greater than zero, it demonstrates the
construct’s reliability. If a variable’s composite reliability value accuracy of our model’s predictions. Table 2 displays the
is greater than 0.7 and its Cronbach’s Alpha value is greater than statistics.
0.6, it is considered to have construct reliability. Table 1 shows
that the AVE value for each variable is more than 0.50. Table 2: R-square, Q-square
Therefore, the hypothesized model has demonstrated Q-Square
Construct R square Adjusted R-square
discriminant validity. Additionally, discriminant validity was
DP 0.532 0.529 0.529
tested using the construct and the Fornell-Larcker criterion FP 0.566 0.561 0.394
measurement. Latent constructions can predict indicators more DM=Digital Marketing, FP=Financial Performance
accurately than other constructs if the construct correlation for
each indicator is greater than that for the other constructs. A pattern of relationships between the study variables is
According to the statistical results, digital marketing and known as the structural model (inner model). Examination of the
financial performance have a positive association at r=0.72 for values of the coefficients for the variables and the coefficient of
digital marketing and at r=0.58 for digital payment. Digital determination evaluates the structural model (R-square). The
marketing and digital payment have positive correlations with degree to which the model explains variations in the dependent
r=0.77. variable is primarily measured by the coefficient of
determination (R-square). Given that there is more than one
independent variable in this study, the adjusted R-square value
is employed.

Table 3: Hypothesis Testing

Hypothesis Paths Beta t-value Sig Decision
H1 DM→FP 0.210 18.96 0.007 Supported
H2 DP→FP 0.529 11.69 0.000 Supported
H3 DM*DP→FP 0.586 9.44 0.000 Supported
DM=Digital Marketing, DP=Digital Payment, FP=Financial
Performance
 V. FINDINGS purchase. As this type of product is more persuasive than B2B,
Structural equation modeling was utilized to assess the stronger action is possibly required. Formats like Instagram and
hypothesis and offer solutions to the critical research problems TikTok are frequently more effective for B2C enterprises than
for the structural model analysis. The route coefficient values, other platforms. However, even if they are both B2C, selling
also known as the explanatory power or Q-squared, were used smartphones, skincare, and cloth, would require a different
to gauge the research model’s projected applicability. The approach because it would rely on the client’s journey.
bootstrapping method was used to assess the significance of the Digital payment significantly impacts financial performance
hypothesis. This method used statistical analysis to assess the when it comes to making transactions. The finding’s sig. of
suggested hypothesis’s level of significance. The results show 0.000 supports this. This element of financial performance,
that when the variable path of the hypothesis has values less than which also involves a positive effect of digital payment on
0.05, the relationship between each variable and each of the financial performance, strengthens this research. It is thought
others is positively significant. Despite all the data in Table 3 that using digital payment gateway-based fintech would allow
demonstrating robust correlations that were positive and business players to enhance their financial performance so their
supported every hypothesis, the significance threshold for this income will continue to grow and flourish. This research has
model is level 0.05. Since all the direct hypotheses have t-values shown that financial performance can be improved with digital
greater than 1.96 (indicating that all were accepted), they are all marketing and digital payment by pointing it in a better direction
supported by the data. These findings suggest that financial and increasing its financial efficiency.
performance benefits from digital marketing and digital
payment. Additionally, digital payment and digital marketing maintain
a sound correlation and favorably assert their effects on financial
performance. Theoretically, digital marketing can aid the
promotion of items in the activities, and the role of digital
Digital payment can assist financial company operations in transactions.
Marketing This can help to establish financing and financial management
0.21
arrangements in terms of financial growth. The study’s findings
show that every hypothesis has a large positive impact, allowing
Financial it to fill the research gaps that have been identified. Additionally,
0.72 Performance many entrepreneurs find that their sales revenues rise with
digital payments, and they can draw customer attention by
0.58 promoting high-quality goods online.

Digital VII. CONCLUSIONS

Payment The data analysis showed that financial performance was
positively and significantly impacted by digital marketing and
digital payments. The research results can assist the financial
Figure 3: Hypothesis Measurements industry in enhancing the performance of their enterprises by
paying attention to the elements of digitization and the financial
A hypothesis test (Figure 2) was used to analyze the management of entrepreneurs. Due to the vital role that
hypothesized model. Digital marketing and financial information technology plays in day-to-day operations, business
performance have a substantial positive connection according to owners must improve their digital literacy. Consumers and
the PLS-SEM test results for the theorized factor in the model, businesses may easily connect as marketing becomes more
which is consistent with the hypothesis’s justification. digitalized since transactions can be completed anytime and
anywhere in the world.
VI. DISCUSSION
The theoretical implication of this research is that
The adoption digital marketing could improve financial incorporating technical features in accessing finance sources and
performance, while the use of digital payment could boost marketing activities offers a new scientific perspective in
productivity. This is supported by the findings showing that H1 business financial management. This research’s drawback
is accepted when the value of sig. 0.007 is present. This occurs derives from the restrictions of using online surveys to collect
because customers think it is more beneficial to offer or market data rather than in-person interviews, which would allow for a
their business through social media or websites they believe are more thorough examination of the behavior concerned.
simpler. The findings indicate that most business owners use Sampling is still insufficient for fully characterizing all business
internet marketing to promote their brands. Employing digital players. More research is therefore recommended. Researchers
marketing on websites or social media is one of the finest could gather more detailed information, better understand how
strategies for business owners to market or promote their brands. financial entrepreneurs behave, and encourage more thorough
It is considerably more efficient as it substantially increases discussion by using open-ended question items.
product sales to clients who are actively searching for products
or services.
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