Digital transformation in the banking industry is changing the way banks do business, compete, and create value. This study examines how digital transformation influences the operational efficiency of commercial banks in Vietnam from 2018–2024. A combination of qualitative and panel data regression analysis (OLS, FEM, REM, and GLS) demonstrates how new technological advances, including the use of advanced AI, big data, and digital platforms, impact banking performance measures such as ROA and ROE. It is clear that digital transformation has a positive impact on banking efficiency in general but it depends on each bank’s size, governance and implementation capabilities. The study also identifies some challenges that banks will need to address, such as infrastructure and digital workforce readiness. The findings of this study will provide valuable evidence to the academic literature as well as to policy makers, as the examination of digital transformation from an emerging market experience offers practical suggestions for banks and regulators to leverage experience to enhance speed and quality of their digital implementation.