The impact of artificial intelligence in the local financial services industry

Abstract

This thesis examines the impact of artificial intelligence (AI) within the local financial services industry, investigating how the adoption of intelligent automation, generative AI (GenAI), and predictive analytics influence operational performance, compliance monitoring, and strategic decision-making. It explores how these technologies are restructuring applications such as customer service automation, document analysis, fraud detection, and financial modelling, while identifying the organisational and technological conditions that influence their implementation within regulated financial environments. The study adopts a qualitative research approach based on semi-structured in-depth interviews with professionals working within the Maltese banking sector. Thematic analysis was used to examine practitioner perspectives on AI adoption, governance challenges, and strategic implications for financial institutions. The findings reveal that AI adoption remains uneven and strongly shaped by organisational context, with institutions tending to prioritise internal, low-risk applications rather than customer-facing services. In practice, GenAI is mainly used to enhance efficiency in knowledge-intensive tasks, while predictive AI supports decision-making in areas such as fraud detection and risk assessment. Rather than replacing human judgement, these technologies are reconfiguring work practices, shifting emphasis towards validation, interpretation, and oversight. At the same time, their effective use is constrained by data quality limitations, regulatory uncertainty, limited model transparency, and differences in organisational capability. The study concludes that the successful integration of AI depends less on technological availability and more on governance maturity, organisational readiness, and the ability to balance innovation with regulatory compliance. Within this context, AI is best understood as an augmentative tool that supports rather than substitutes human expertise, requiring structured oversight and continuous skill development to ensure responsible and effective implementation within the Maltese financial services sector.