The Role of the First-Line Leader in the Digital Transformation of a Traditional Bank

Carla Grasiela Comarella Schatzmann; Ingrid De Matos Martins

DOI: 10.22167/2675-6528-202602757

Article derived from a Final Course Work (TCC), with content based on the student’s original work and adapted to the editorial format of the E&S Magazine with the support of the ResumeAI tool, an artificial intelligence solution developed by Instituto Pecege for textual synthesis and organization.

Abstract

The literature on digital transformation in organizations has highlighted the fundamental influence of senior management in this process. The present study sought to understand the role and impact of first-line leaders in driving change, especially in a traditional financial company. The research inputs were obtained quantitatively, through the application of a questionnaire to 44 managers, and, deductively, an attempt was made to capture their perceptions regarding responsibilities, skill development, and acting as change agents. The results revealed a high conceptual understanding of the relevance of leadership in digital transformation; however, they also showed deficiencies in practical accountability, particularly among managers with more years of experience. It was concluded that it is essential for organizations to promote initiatives that involve frontline leaders in the transformation, reinforcing their influence in the context of change and recognizing them as active agents in strengthening an organizational culture focused on continuous learning, facilitating the necessary developments.

Keywords: Skills; Digital culture; Influence; Leadership; Accountability.

1. Introduction

The popularization of technologies from the 1990s onwards accelerated the pace of change in various organizations, driving the pursuit of innovation and competitiveness through more efficient strategies. This scenario became particularly evident in the national financial system with the emergence of fintechs, companies native to the digital environment focused on the financial segment, which since 2010 have played a central role in reconfiguring the sector.

Traditional banks, characterized by bureaucratic processes in the provision of their services, faced increasing competition from fintechs, which stood out for simplifying operations through accessible applications centered on the user experience (Rodrigues et al., 2020). This dynamic imposed digital transformation a central role in the sector’s competitiveness.

To remain relevant in the market, traditional banks were compelled to reinvent themselves. This involved significant investments in process optimization, modernization of their business models, and expansion of their product and service portfolio (Aguiar et al., 2020). However, a transformation process of this magnitude entails complex challenges.

Digital transformation is not limited to structural and technological adjustments; it crucially encompasses cultural challenges. The impact of increasing automation has transcended regulatory adaptations and the difficulties of modernizing legacy systems. The profile of professionals has been intensely affected, generating a demand for collaborators with specific and qualified skills at all levels, from leadership to direct service (Cruz et al., 2020).

In the face of changes, people’s reactions vary. While some individuals welcome them positively and demonstrate resilience, others proactively seek to lead the implementation of transformations (Chiavenato, 2017). The formation of a robust digital culture is essential, depending on the use of digital technologies and the qualification of collaborators. In this context, leadership plays a significant role in driving technical competencies and organizational efficiency (Saputra and Saputra, 2020).

Modern literature associates digital transformation with the existence of a culture that fosters a safe and collaborative environment. Leaders are responsible for developing dynamic capabilities that sustain changes in business models, going beyond technical training (Warner and Wäger, 2019). The transition and consolidation of an exploration-oriented culture depend on employee engagement, encouragement by example, and precise communication from leadership, which acts as the main sponsor of change.

It is fundamental that leaders understand the importance of empathy and building connections with their teams. These elements are crucial for people’s motivation, engagement, and alignment during the change process, increasing the chances of success for organizational transformation initiatives (Kotter, 2017). However, existing literature on change processes often focuses on the role of top leadership, assigning to them the responsibility for defining the strategic vision, driving cultural changes, and sponsoring transformation initiatives (Kotter, 1996; Schein, 2010; Hambrick and Mason, 1984).

This focus on senior leadership reveals a gap in understanding the role of frontline leaders, who are entry-level managers. The relevance of their beliefs and behavioral models in engaging subordinates and in the speed of establishing a digital culture is an aspect that deserves more attention. Thus, this study is justified by the need to deepen the understanding of the contribution of these leaders in the specific environment of a Brazilian mixed-economy financial company and the context involved. The central objective of this study is to shed light on the key role of frontline leadership, the entry-level manager, and the extent to which the awareness that their beliefs and behavioral models impact the speed and engagement of subordinates for the establishment of a digital culture, in the specific environment of a Brazilian mixed-economy financial company and the context involved.

2. Material and Methods

This study was characterized as an exploratory research, based on a bibliographic reference. A quantitative methodological approach was adopted, with the purpose of investigating the role of first-line leadership in digital transformation. The central objective was to understand how the beliefs and behavioral models of these managers impact the speed and engagement of their subordinates in establishing a digital culture in a specific context.

The empirical unit of analysis focused on the role of frontline leadership, specifically entry-level managers, within a Brazilian mixed-economy financial firm. This institution, of national economic relevance and scope, served as the setting for the investigation. The study sought to contextualize the actions of these leaders within the digital transformation process that permeates the financial sector.

The target population of the research comprised 76 professionals who held entry-level leadership roles, distributed across various regions of Brazil, within the studied financial company. For data collection, a sample of 44 managers was obtained, representing approximately 58% of the target audience. The participant selection criteria focused exclusively on individuals occupying first-line management positions in the aforementioned organization.

The data collection instrument consisted of a structured questionnaire, made available through the digital platform Microsoft Forms. This questionnaire was developed based on theoretical references from Sacavém et al. (2025) and Schiuma et al. (2024), who address the role of leaders in innovation and the development of digital competencies. Before the final application, a pre-test was conducted with a group of three individuals belonging to the target audience, and the feedback obtained resulted in adjustments to improve the clarity and understanding of the questions.

Data collection occurred quantitatively, through the application of the questionnaire to selected managers. Responses were obtained anonymously and voluntarily, with an estimated completion time of 15 minutes, and participation could be interrupted at any time. The questionnaire questions were organized into thematic blocks and the responses were recorded using a Likert scale of agreement, allowing the participants’ perceptions of their responsibilities and performance as change agents to be captured.

The collected data were organized and analyzed deductively, seeking to verify the study’s propositions. The analysis included the measurement of the respondents’ sociodemographic profile, which made it possible to correlate this data with the self-assessment of competencies and the perception of engagement in digital transformations. For the processing and generation of averages and correlation metrics, the Microsoft 365 Copilot tool was used. After using the software, the content was reviewed and edited by the author, who assumed final responsibility for the publication.

Ethical considerations were observed throughout the research process. Managers’ participation was voluntary and their responses were kept anonymous, being used exclusively for academic purposes. The application of the questionnaire was authorized by the institution’s People Directorate, ensuring that the study did not involve risks to participants and respected the principles of confidentiality and data integrity.

3. Results and Discussion

The analysis of the collected data revealed multifaceted perceptions of frontline leaders in a traditional financial company regarding their role in digital transformation. The results indicate a robust conceptual understanding of the importance of leadership in this process, but also point to significant challenges in practical accountability and the effectiveness of organizational communication. The research, quantitative in nature, involved 44 managers and used a Likert scale to assess their perceptions across four thematic blocks, allowing for an in-depth view of the organization’s internal dynamics.

The profile of the respondents showed that the majority of managers, 61%, were between 40 and 50 years old, with 25% over 50 years old and 14% between 30 and 40 years old. The gender distribution was balanced, with 52% female and 48% male. In terms of education, the vast majority, 86%, had postgraduate lato sensu degrees, indicating a high level of formal qualification. Regarding time in the role, 34% had between five and ten years, 30% between ten and fifteen years, and 23% more than fifteen years, with only 14% having less than five years of experience in the managerial role.

Leader’s Awareness and Role in Digital Transformation

In the first block of questions, which addressed awareness and the leader’s role, the results of questions Q1 and Q2 indicated a predominantly positive perception from respondents regarding their performance as agents and sponsors of digital transformation. A high percentage of agreement, with 54.5% total agreement and 31.8% partial agreement in Q1, and 34.1% total agreement and 47.7% partial agreement in Q2, demonstrated that most leaders recognize their direct responsibility in the change process. This is manifested both in the influence of their behaviors and beliefs and in their role as promoters of organizational transformations.

However, the presence of a smaller portion of disagreement suggests that not all managers consider themselves equally capable or influential in accelerating the adoption of new technologies and processes. This indicates that, despite a conceptual alignment on the importance of the leader as an agent of change, practical action may be limited by other factors. The correlation of sociodemographic variables revealed that gender has a moderate and positive association with Q1, indicating that women tend to report greater influence of their own behavior on the adoption of new digital technologies and processes.

For Q2, which assesses performance as a sponsor and enabler, age range and tenure in the role showed a weak and positive association, suggesting that older leaders tend to agree more with this statement. This trend, however, is accompanied by a subtle shift of responsibility to structural or systemic factors, causing digital transformation to be perceived as something that “happens” rather than something the leader “provokes.” This perception may limit practical leadership, as observed in more neutral or partial responses to other questions.

This positive relationship with age, which indicates a greater willingness to learn and act in disseminating the need for transformation, aligns with the framework of dynamic capabilities by Warner and Wäger (2019). The authors highlight the importance of perceiving opportunities and threats, leveraging them, and transforming the organization’s model and resource base. The finding that it is “easier” to recognize oneself as a sponsor than to believe in the direct impact of one’s own behavior on subordinates reveals the stage of digital maturity of the organizational culture. Warner and Wäger (2019) emphasize that sustaining a mindset of experimentation depends on the leader’s ability to balance existing capabilities and build new ones.

Digital Competence and Mindset

The second block, focused on digital competence and mindset (Q3, Q4, and Q5), presented the most consistent and convergent results of the entire instrument, with an average agreement percentage above 90%. In Q3, which questions the search for competence updating, 54.5% fully agreed and 43.2% partially. In Q4, regarding the incentive for exploration and innovation, 61.4% fully agreed and 31.8% partially. In Q5, which addresses leveraging the team’s digital competencies, 36.4% fully agreed and 52.3% partially.

These indicators reveal a strong consensus among managers regarding the need for continuous updating of skills and abilities, as well as the importance of encouraging innovation in the daily lives of teams. The almost non-existence of disagreement suggests a high perceived maturity regarding self-development and the leader’s role in promoting environments conducive to exploring new ideas. The set of results reinforces the idea that leaders see themselves as prepared and engaged in developing the necessary capabilities to face the challenges of the technology-based economy.

The analysis of sociodemographic correlations in this block indicated that age positively influences the recognition of the need to acquire new digital skills, and female leaders tend to report a greater search for updating. Although there is consensus on the responsibility for self-development, the company’s stability culture may suggest the absence of practical protagonism, manifested in more neutral or partial responses to behavioral questions. In Q4, age also proved to be a positive factor in encouraging innovation, with leaders in higher age groups standing out.

However, a slight variation in Q5, where the disagreement was greater, points to a negative perception of the effectiveness in converting intention into practical attitude with the team, evidencing a real development challenge. Personal engagement to update skills is a positive aspect of the developing culture, aligned with the vision of Saputra and Saputra (2020), who define digital leadership as the ability of supervisors to use technologies to direct the team, achieve collective goals, and improve employees’ digital skills. Thus, the heightened awareness of the need for continuous learning and the encouragement of digital attitudes tend to strengthen employees’ digital competence.

Organizational Communication

In contrast to the other blocks, Block 3, which addressed organizational communication (Q6 and Q7), presented the most critical indicators of the research, with the lowest average agreement percentage (72.73%) and the highest disagreement percentage (20.45%). In Q6, which deals with the clarity of digital strategy communication, 27.3% fully agreed and 38.6% partially agreed, but 22.7% partially disagreed and 4.5% fully disagreed. In Q7, regarding the effectiveness of the company’s actions to create a sense of urgency, 40.9% fully agreed and 38.6% partially agreed, but 6.8% fully disagreed and 6.8% partially disagreed.

These results suggest that organizational stimuli related to digital strategy communication and the creation of a sense of urgency are not perceived homogeneously by managers. The high variability indicates significant differences in individual experiences regarding the clarity of the strategy and the understanding of the leader’s expected role in this process. Although institutional actions appear to generate some awareness about the need for modernization, the data point to weaknesses in strategic communication, which may compromise the alignment and effectiveness of leadership in driving change.

This block emerges as a central point of reflection on the organization’s ability to sustain digital transformation through clear messages directed at the initial levels of the hierarchy. Q6, in particular, was the most “sensitive” item in the survey, with greater dispersion of responses and indices of neutrality or disagreement. This suggests that the lack of clarity between digital strategy and individual responsibilities is more tied to organizational and contextual factors than to the respondent’s profile, with a significant contingent of leaders who do not feel guided about their role.

The sense of urgency, addressed in Q7, demonstrated greater perceived effectiveness of institutional actions, especially among female leaders who presented a more positive evaluation. However, the variability in responses still highlights gaps and room for improvement in aspects such as access, quality, and communication saturation. The “example” of initial leadership is crucial for breaking down the barrier of traditional processes, according to Rodrigues et al. (2020), and although the majority agree that their behavior influences the speed of technological adoption, the organizational strategy is still ambiguous for the operational level.

This ambiguity ends up distancing the first-level manager from their role, whose importance and direct accountability in the daily behavior of experimentation and encouragement of errors would make them a leader in translating strategy, but not a mobilizer of change. Saputra and Saputra (2020) highlight that a digital organization is composed of teams and individuals familiar with technology, capable of collaborating for process improvements and the development of new solutions. To achieve this, it is essential to develop employees’ digital competence, extrapolating individual behavior to the establishment of a culture.

Change Management and Stability

The results of Block 4, which dealt with change management and stability (Q8, Q9, and Q10), showed a broadly favorable perception regarding change management practices at the team level, with an average agreement above 80%. In Q8, regarding the use of empathy and personal connections, 52.3% fully agreed and 36.4% partially agreed. In Q9, regarding team proactivity, 18.2% fully agreed and 56.8% partially agreed. In Q10, regarding the promotion of a safe learning environment, 79.5% fully agreed and 20.5% partially agreed.

The unanimity observed in the item related to the promotion of a safe and collaborative environment (Q10) stands out, indicating strong internalization of the concept of psychological safety as a facilitator of technological learning. The use of empathy and personal connections as an engagement strategy (Q8) also showed high adherence, reinforcing the centrality of the human factor in the change process. This is in line with Kotter’s (2017) recommendations, which emphasize the importance of empathy and creating connections for team motivation and engagement, especially in employment stability environments where hierarchical orders are less effective.

On the other hand, the positive perception of the teams’ proactive stance in the face of digital transformations (Q9) may vary depending on the context, indicating that, despite leaders perceiving themselves as promoters of environments conducive to change, team proactivity remains influenced by additional factors, possibly related to organizational culture, institutional stimuli, and working conditions. The results of Q9 indicate strong agreement regarding the influence of the manager’s behavior on the team’s adoption of digital technologies and recognize the need for skills updating.

However, there is no consensus on the leader’s posture, with older managers understanding that they have already done their part, which points to less practical accountability and a different team reaction. Q10, which addresses the promotion of a safe environment for learning and error, showed the strongest and most positive correlation with age in the entire questionnaire. This signals a clear perception of psychological safety and learning as a leader’s practice, at least in self-perception.

Despite the certainty in promoting this “safe environment”, a disconnect was observed between discourse and practice when it comes to sponsorship for change. This reveals that the sponsor, when encountering resistance or difficulties in updating skills, assumes a more discursive or institutional character, and less transformational in daily life. The importance of systematizing information for sustainable evolution, according to Cruz et al. (2020), is linked to the idea of constantly learning to learn, which, although present in responses related to schooling, permeates training and includes the role of dissemination.

Chiavenato (2017) emphasizes that resistance to change must be understood and managed, and that the success of change depends on leadership’s ability to involve people, communicate objectives, and offer support. Thus, the organization should take advantage of the fact that the results do not indicate a significant movement of resistance, even among older age groups or those with longer tenure. It is crucial to advance the use of approaches that bring clarity about the leader’s expected role, making the “how-to” tangible and bringing daily practice closer in an environment of psychological safety.

In summary, the research findings demonstrate that, although frontline leaders have a high awareness of the importance of digital transformation and perceive themselves as engaged in developing competencies, challenges persist in practical accountability and the effectiveness of strategic communication. Organizational culture and job stability influence the perception and actions of these leaders, especially the more experienced ones, who tend to delegate the responsibility for change to structural factors. The promotion of a safe learning environment is widely recognized, but the conversion of this intention into practical actions to sponsor change remains a critical point to be improved.

4. Conclusion

This study sought to understand the role and impact of the first-line leader in driving digital transformation in a traditional financial company. It was found that entry-level managers have a high conceptual understanding of the relevance of leadership in this process, recognizing the need for continuous skill updating and the encouragement of innovation in teams. However, deficiencies were identified in practical accountability, especially among managers with more years of experience, and significant challenges in the clarity of organizational communication of the digital strategy. It was observed that the perception of the leader’s role and team proactivity are influenced by contextual and cultural factors, with a notable internalization of the concept of psychological safety for learning, although a disconnect was found between discourse and practice in the effective sponsorship of change.

The main contribution of this work lies in demonstrating that digital transformation, from the perspective of frontline leadership, is intrinsically linked to personal characteristics and perceptions built throughout a professional career, rather than formal attributes. This highlights the need for organizations to promote initiatives that actively involve these leaders, reinforcing their influence and recognizing them as essential agents in strengthening an organizational culture focused on continuous learning and experimentation. The study, however, was limited to customer service and sales team management professionals, in an institution with job stability and low turnover, which may introduce biases. It is suggested that future studies explore other professional profiles and areas of the organization to validate and expand the recommendations presented, focusing on clarifying the strategy and translating “digital strategy” into tangible goals and responsibilities for the initial management level, catalyzing the sense of urgency through close and relevant narratives.

Bibliographic References

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Article originating from the Final Course Work of Specialization in Digital Business from the MBA USP/Esalq

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