Robo-advisors, green finance, and greenwashing: effects on financial performance in the banking sector

Purpose This study aims to investigate the relationship between robo-advisors, green finance, and banks' financial performance, with greenwashing as a mediating mechanism, in the Indonesian banking sector. Design/methodology/approach Using a non-experimental, survey-based design, data were collected from financial, environmental, and operations managers in Indonesian banks and analyzed using partial least squares structural equation modeling (PLS-SEM) to test the hypothesized relationships. Findings The results indicate that robo-advisors significantly enhance green finance investment, which subsequently improves banks' financial performance. Green finance also has a direct positive effect on financial performance, while greenwashing mediates this relationship, leading to short-term performance gains. Originality/value This study is among the first to empirically examine the interplay between robo-advisors, green finance, and financial performance through greenwashing in the banking sector. The findings advance theoretical understanding and offer actionable insights for managers and policymakers aiming to align technological innovation with sustainable finance.