<p>This study adopts a multidimensional framework of digital transformation (DT), covering strategic, operational, and managerial aspects, to examine their effects on Chinese commercial banks' profitability. Using a panel dataset and fixed-effects regressions, we find that strategic digitalization (SD) is positively associated with bank performance, especially pronounced for large banks. In contrast, operational digitalization (OD) is negatively related to bank performance, with the effect being more salient for small banks. Managerial digitalization (MD), however, shows no statistically significant association with performance. We then conduct a channel analysis, which reveals that strengthening risk management capability is one of the key mechanisms linking DT to bank profitability. Moreover, OD shows nonlinear effects: banks face increased risk and reduced profitability in the short term, whereas achieve improved performance after a period of adjustment. By contrast, SD and MD do not exert any substantial nonlinearities. The study contributes by identifying the risk-management channel, using a multidimensional measure of banks’ DT, revealing scale-related heterogeneity and uncovering nonlinear dynamics in banks’ DT processes, offering practical guidance for executives and policymakers seeking to maximize long-term digital value.</p>