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All Journal Journal of Central Banking Law and Institutions
Denisha Albania Prajoko
Indonesian International Islamic University
Humanities Decision Sciences, Operations Research & Management Economics, Econometrics & Finance Law, Crime, Criminology & Criminal Justice Social Sciences

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Transforming Financial Risk Management and Operational Efficiency: The Impact of AI Adoption in Indonesian Banks Novia Sari; Denisha Albania Prajoko; Nahdiyah Istiqomah; Muhamad Dupi; Fadil Maskur; Novia Sari; Denisha Albania Prajoko; Nahdiyah Istiqomah; Muhamad Dupi; Fadil Maskur
Journal of Central Banking Law and Institutions Vol. 5 No. 3 (2026)
Publisher : Bank Indonesia

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.21098/jcli.v5i3.442

Abstract

This study investigates the impact of Artificial Intelligence (AI) adoption on operational efficiency and financial risk management in six major Indonesian banks: BNI, BRI, BCA, Danamon, Mandiri, and CIMB Niaga. The research implements Difference-in-Difference (DiD) methodology coupled with Bayesian Vector Autoregression (BVAR) Scenario Testing to assess how AI affects financial indicators comprising NPLs, ROA, CAR, and LDR. The study shows that AI adoption yields minor, immediate results but does not produce substantial improvements in financial performance or risk management when moving beyond Level 3. AI improves operational performance by enabling automated processes and optimised decisionmaking, leading financial institutions to enhance their fraud detection, credit risk management, and liquidity risk management. The study demonstrates the value of implementing AI through an orderly strategic plan while mandating that organisations establish rules and ethical guidelines for AI use throughout its adaptation stages. The implementation of AI by Indonesian banks offers multiple prospects to enhance their operational performance, risk management capabilities, and financial stability over the years.
Co-Authors Denisha Albania Prajoko Fadil Maskur Fadil Maskur Muhamad Dupi Muhamad Dupi Nahdiyah Istiqomah Nahdiyah Istiqomah Novia Sari Novia Sari