AI Adoption in Middle Eastern Banking with Focus on Opportunities, Challenges and Policy Recommendations

The rapid advancement of artificial intelligence (AI) is revolutionizing the banking industry, notably in the Middle East. This study investigates the use of AI in banking, focus- ing on its role in improving customer experience, optimizing risk management, and increasing operational efficiency. AI- powered solutions such as chatbots, predictive analytics, and fraud detection systems have transformed financial services, allowing for hyper-personalized consumer interactions and real- time security monitoring. The study investigates AI’s impact on several banking phases, from traditional banking to Banking 4.0, in which financial institutions use AI, blockchain, and open banking frameworks to provide seamless services. A thorough literature analysis of 44 papers published between 2015 and 2025 were considered to examine worldwide and Middle Eastern AI deployments in banking, revealing both opportunities and obstacles. The article also covers essential case studies, such as AI applications in credit risk assessment, fraud prevention, mobile money services, and algorithmic trading. In addition to services, national policies and the regulatory framework are discussed. This study examines AI’s role in creating the future of banking in the Middle East, including best practices and strategic implementation methodologies.