Rauf Salayev

Type of the article: Research Article

Abstract
The digital transformation of banking is entering a new phase, shifting from mobile applications toward AI-driven, personalized services, yet the readiness of national environments for this shift remains largely unexamined. The study aims to assess the cross-country readiness of banking systems for this shift by integrating demand-side digital financial inclusion with supply-side government AI readiness in a single composite measure. To this end, an AI-Banking Readiness Index (ABRI) is constructed by two-stage principal-component analysis from the World Bank Global Findex (2011–2024) and the Oxford Insights Government AI Readiness Index 2025 for 97 economies; it is complemented by k-means clustering, a demand–supply positioning matrix, and cross-sectional and two-way fixed-effects panel regressions. Three findings follow. First, at the index level, the two sides of readiness are only moderately aligned (r = 0.655), and 28 of the 97 economies lead on one side only – a mismatch that supply-only rankings conceal. Second, across countries, government AI readiness is positively associated with deeper household digital-finance adoption once income is controlled (β = 0.451, p = 0.017). Third, within countries over time, e-government capacity is related to account ownership in a pattern consistent with an infrastructure-mediated channel; this constitutes suggestive channel evidence rather than a formal mediation test. Practically, the index locates each economy’s binding constraint: supply-led economies need demand-side activation through connectivity, interoperable payments, and digital literacy, whereas demand-led economies need AI governance and supervisory capacity before personalized, AI-driven services can scale safely.

Acknowledgment
This article was prepared based on the results of a study funded by the Ministry of Education and Science of Ukraine entitled “GovTech for Ukraine: A Digital, Secure, Transparent, and Equitable State in Times of War and Post-War Reconstruction” (registration number: 0126U000544)