Examining the effect of financial technology on internal audit practices: The mediating role of digital capability in Jordanian Islamic banks

The rapid advancement of digital technologies has transformed the banking industry, making Financial Technology (FinTech) a strategic driver of organizational innovation, operational efficiency, and governance. This study examines the effect of financial technology (FinTech) on internal audit practices and investigates the mediating role of digital capability in Jordanian Islamic banks. A quantitative, cross-sectional research design was adopted, and data were collected through a structured questionnaire distributed to employees working in internal auditing, information technology, risk management, compliance, and finance departments. A total of 350 questionnaires were distributed, of which 335 valid responses were obtained and analyzed using IBM SPSS Statistics 29 and IBM AMOS 29 based on Covariance-Based Structural Equation Modelling (CB-SEM). The findings reveal that financial technology has a significant positive effect on internal audit practices and digital capability. Furthermore, digital capability significantly enhances internal audit practices and partially mediates the relationship between financial technology and internal audit practices. These findings indicate that investments in financial technologies create greater organizational value when supported by strong digital capabilities, enabling banks to improve audit quality, strengthen internal controls, enhance risk assessment, and support effective corporate governance.