Abstarct: Digital transformation and the expansion of financial technologies (FinTech) over the past two decades have fundamentally reshaped the banking industry worldwide. Developing countries, including Iraq, face unique challenges and opportunities in this trajectory. This study aimed to identify and analyze the key factors influencing digital transformation and FinTech adoption, and to examine their consequences for bank performance and financial inclusion in Iraq's banking sector. The research was applied in purpose and employed a sequential explanatory mixed-methods design. In the quantitative phase, data were collected through a researcher-developed questionnaire from 398 senior managers and experts in Iraqi banks and analyzed using descxriptive statistics, the Friedman test, one-sample t-test, Pearson correlation, and Partial Least Squares Structural Equation Modeling (PLS-SEM) in SPSS and SmartPLS. In the qualitative phase, 18 semi-structured interviews were conducted with key ecosystem actors (bank executives, FinTech founders, and Central Bank of Iraq experts), and data were analyzed using thematic analysis in MAXQDA. Quantitative findings revealed that the four categories of barriers-legal, institutional, infrastructural, and socio-cultural-exert significant inhibitory effects on digital transformation, with legal (β = -0.41) and institutional (β = -0.33) barriers having the strongest impact. The level of cooperation among the three main actors (banks, FinTechs, and the Central Bank) was found to be significantly low (t = -21.48, P < 0.001). Digital transformation had a significant positive effect on operational efficiency (β = 0.52), service quality (β = 0.59), financial inclusion (β = 0.61), and profitability (β = 0.38). Thematic analysis identified four main themes: Dominance of Legal and Institutional Barriers, Fragmented Ecosystem, Dual Pathways of Impact on Performance, and FinTech and Financial Inclusion. Integration of findings demonstrated that qualitative data explicated and complemented the quantitative results by revealing the underlying causal mechanisms. By presenting an integrated explanatory model, this study provides novel insights for policymakers, bank executives, and FinTech entrepreneurs in Iraq and can serve as an analytical frxamework for comparative studies in other developing countries with similar conditions.