Artificial intelligence in banking: who wins, who waits, and why it matters

This paper examines how disclosed artificial intelligence (AI) readiness is associated with bank performance, stability, and risk in the Middle East and North Africa (MENA) region. We develop a disclosure-based AI-readiness index that encompasses five dimensions: vision and strategy, data and technology infrastructure, people and expertise, implementation and impact, and governance and risk management, and then match it to panel data from 68 banks from 2016 to 2023. Dynamic panel estimations show that higher AI readiness is most consistently associated with higher earnings volatility, interpreted as more active risk-taking, while the stability, profitability, and margin effects are more sensitive across stricter specifications. The impact is heterogeneous: banks that connect strategic direction with execution benefit the most, whereas institutions that invest only in infrastructure or staff capacity gain less. Profitability, scale, and risk exposure also influence how far each bank advances in AI readiness, suggesting a feedback loop between financial strength and technological development. The results provide guidance for investors evaluating AI disclosures, for regulators designing targeted incentives, and for researchers examining how digital technologies are transforming financial intermediation. Future research can extend this framework to other regions and incorporate more direct indicators of AI implementation where such data become available.