Leveraging Artificial Intelligence for Enhanced Risk Management in Saudi Banking Sector: A Quantitative Study

Abstract

In recent years, the banking sector in Saudi Arabia has undergone a significant digital transformation driven by the rapid adoption of artificial intelligence (AI). The Kingdom’s Vision 2030 emphasizes innovation and technology as strategic pillars for achieving economic diversification and financial sustainability. This study aimed to determine the impact of AI on risk management activities in the financial banking sector of Saudi Arabia, AI adoption, its effectiveness in reducing operational and economic risks, and the challenges associated with its implementation. The study used a quantitative method to collect primary data through a structured questionnaire. A sample of 350 employees from local commercial banks in Saudi Arabia was selected; however, only 300 valid responses were received and analyzed using SPSS. Saudi Arabian banks have gradually adopted AI technologies in their risk management processes, particularly in credit risk management, fraud detection, and operational surveillance. Results showed that AI can enhance predictive precision and reduce human errors, enabling quicker and evidence-based decision-making. The correlation analysis shows a strong positive relation of the adoption of AI technologies with the effectiveness of risk management practices, (r = 0.72, p < 0.01). This study highlights the need for increased investment in AI infrastructure, employee training, and a robust regulatory compliance system. This study has contributed to the digitalization of the Saudi banking industry, focusing on innovation as key to boosting economic stability and financial resilience.