Ai-Enabled Risk Management in Fintech: The Mediating Role of Managerial Leadership

Abstract

Artificial intelligence (AI) provides fintech companies with the capability to identify fraud, track transactions and evaluate financial risks. But having AI tools doesn’t mean that alerts are understood, escalated or acted upon properly. This paper aims to investigate if there is a mediating effect of managerial leadership between AI-enhanced risk management capability and RM effectiveness in Pakistani fintech firms. Managerial leadership is exhibited in practices that can be observed, such as: delegating responsibility for alerts; providing support for staff; reviewing exceptions; and leading risk responses. The professionals who work in risk management, compliance, fraud prevention, cyber security and other related fintech roles were the target of a quantitative, three-wave survey. The aim is to get around 350 full, matched responses from adults who have relevant experience of at least three months. At Time 1 the questionnaire will measure AI capability, managerial leadership and managerial effectiveness as baseline; at Time 2 the questionnaire will measure managerial leadership; at Time 3 the effectiveness of the management of risks. The proposed instrument has five items for each construct that are rated on a 5-point Likert scale. The responses will be analysed by descriptive statistics, scale-reliability and confirmatory factor analysis, as well as adjusted path analysis. This indirect association will be computed using 5,000 bootstrap resamples, except for the cases where the respondents are clustered in the same firm, where statistical inference will be adjusted. The intended analysis is illustrated with data in numerical tables; there are 350 artificial records. The values are hypothetical and not reflective of the actual values of Pakistani fintech organizations and need not be used to fail or pass the hypotheses. In this sense, the study did not have any empirical results at this stage. After collecting actual data, the analysis will identify whether there is a direct relationship between AI capability and subsequent effectiveness and whether managerial leadership is a lens that explains this relationship. The study aims to shed light on how the analytical tools are integrated with managerial control in fintech organizations and to acknowledge that an observational design does not necessarily allow the establishment of causation.