Digital Transformation Strategy, Dynamic Capabilities, and Competitive Positioning: Evidence from Nigerian Commercial Banks

This study empirically investigates how dynamic capabilities mediate the relationship between digital transformation strategy and competitive positioning in Nigerian commercial banks, with data collected from banks operating in Lagos, Abuja, and Kano across South West, North Central, and North West geopolitical zones. The rapid digitalisation of Nigeria's banking sector, accelerated by fintech competition and regulatory push for financial inclusion, has intensified strategic imperatives for banks to build technology-driven competitive positions. A quantitative cross-sectional survey was conducted with 215 bank executives, digital strategy officers, and technology managers. Structural equation modelling was applied. Digital transformation strategy dimensions assessed include digital vision clarity, IT investment intensity, data analytics capability, and digital leadership. Dynamic capabilities were operationalised through sensing, seizing, and reconfiguring dimensions. Findings indicate that sensing and seizing capabilities mediate the strategy-positioning relationship most powerfully, while reconfiguring capability showed stronger effects on long-term positioning sustainability. Digital vision clarity and data analytics capability were the transformation strategy dimensions most directly associated with dynamic capability development. These findings extend dynamic capabilities theory into the digital banking context and provide evidence for the mechanism through which transformation investments yield competitive positioning benefits. Recommendations include developing digital leadership pipelines, institutionalising data governance frameworks, and aligning IT investment planning with capability development objectives. Keywords: digital transformation, dynamic capabilities, competitive positioning, commercial banks, Nigeria.