<p>The digital transformation of financial institutions can shape corporate investment behavior. However, existing research has largely focused on external financial markets, paying limited attention to the role of internal capital markets. This paper shifts the focus to internal capital markets and examines the impact of the digital transformation of group finance companies on the investment efficiency of enterprises within business groups. We utilize unique data from the <i>Yearbook of China Business Group Finance Companies</i> and estimate a fixed-effects model to establish correlational evidence. Our findings suggest that the digital transformation of finance companies mitigates underinvestment among group subsidiaries, while having no significant impact on overinvestment. Mechanism analysis further reveals that the digital transformation of finance companies primarily addresses underinvestment by easing financing constraints and strengthening financial control. Based on these insights, we offer recommendations aimed at advancing the digital transformation of financial institutions, enhancing the internal capital markets’ performance, and refining the regulatory framework for finance companies.</p>