Impact of AI on Bank Performance: A comparative study of conventional and Islamic banks in GCC

AI is improving banking efficiency, cost control, customer engagement, and risk management in the GCC, with conventional banks often adopting advanced analytics to strengthen risk assessment and performance measurement. Islamic banks face additional constraints because AI-enabled processes must comply with Shariah principles and ethical requirements, which can slow adoption and increase governance complexity. However, AI can still be valuable for Islamic banks, particularly in predicting and managing non-performing loan risks through better modeling. This study will empirically assess how AI adoption affects bank performance in the GCC by linking AI initiatives to profitability, efficiency, and risk outcomes, and comparing differences between conventional and Islamic banks. It will also examine how Shariah governance and the regulatory environment shape AI-driven outcomes in Islamic banking. Using robust comparative methods (including dynamic panel approaches) and considering AI-enabled reporting and risk disclosure analytics, the research aims to generate evidence-based guidance for banks, regulators, and Shariah boards. The work aligns with Qatar’s innovation agenda by informing responsible AI governance frameworks for Islamic finance.

Hamad Bin Khalifa University (HBKU)