The Application of Artificial Intelligence in Banking Risk Management and Operational Efficiency

Abstract

This research aims to analyze the role of Artificial Intelligence in improving risk management and operational efficiency in the banking sector, both conventional and sharia. Using a descriptive qualitative method based on a literature review of the last five years, this study examines how AI is used to identify risks, optimize business processes, and strengthen the ethical governance of financial institutions. The results of the study show that the application of AI plays a significant role in accelerating risk detection, reducing the potential for human error, reducing operational costs, and increasing productivity and decision-making accuracy in the banking sector. In the context of Islamic finance, AI also contributes to increasing transparency and compliance with Islamic principles through the application of ethics-based algorithms. However, the successful implementation of this technology is highly dependent on digital readiness, adaptive regulatory support, and the integration of moral and social values in the financial system. These findings underscore the importance of developing AI application models based on transparency, fairness, accountability, and sustainability to create a stable, ethical, and inclusive banking system in the digital era.