Artificial Intelligence as A Strategic Resource and Its Mediating Role of Dynamic Capabilities in Enhancing Organizational Performance in The Financial Services Sector.

Artificial Intelligence (AI) has emerged as a strategic resource with the potential to enhance organizational performance in the financial services sector; however, empirical evidence on its performance outcomes remains inconclusive, particularly in emerging economies. This study examined the influence of artificial intelligence as a strategic resource on organizational performance in Kenya’s financial services sector, with specific focus on the mediating role of dynamic capabilities. The study was guided by six objectives: to assess the effects of AI-driven customer engagement, AI-powered risk management and fraud detection, AI-enabled process automation, AI-supported strategic decision-making, the joint effect of AI dimensions, and the mediating role of dynamic capabilities on organizational performance. The study was anchored on the Resource-Based View (RBV) and Dynamic Capabilities Perspective (DCP), supported by the Technology–Organization–Environment (TOE) framework and the Knowledge-Based View (KBV). A positivist research philosophy was adopted, employing a descriptive and explanatory cross-sectional survey design. Primary data were collected using structured questionnaires from 263 managers and technical staff drawn from commercial banks and FinTech firms operating in Kenya, achieving a response rate of 94.3%. Data were analyzed using SPSS through descriptive statistics, reliability and validity tests, correlation analysis, multiple regression analysis, and mediation analysis. Reliability was confirmed with Cronbach’s alpha coefficients exceeding the 0.70 threshold, while diagnostic tests confirmed compliance with regression assumptions. The findings revealed that AI-driven customer engagement, AI-powered risk management and fraud detection, AI-enabled process automation, and AI-supported strategic decision-making each had a positive and statistically significant effect on organizational performance (p < 0.05). These effects manifested through improved customer satisfaction and retention, reduced fraud losses, enhanced regulatory compliance, lower operational costs, improved efficiency, and stronger data-driven decision-making. Further analysis showed that the joint effect of AI dimensions was statistically significant and stronger than individual effects, confirming the presence of synergistic performance gains from integrated AI deployment. Mediation analysis established that dynamic capabilities, sensing, seizing, reconfiguring, and learning, significantly mediated the relationship between joint AI parameters and organizational performance. The study concludes that while AI adoption enhances organizational performance in Kenya’s financial services sector, sustainable performance gains depend on the development of strong dynamic capabilities. The findings validate the applicability of RBV and Dynamic Capabilities Theory in explaining AI-driven performance in emerging economies. The study recommends integrated AI strategies, continuous workforce reskilling, strengthened organizational learning systems, and robust AI governance frameworks. At the policy level, supportive AI regulations, investment in digital infrastructure, and regulatory sandboxes are recommended to promote responsible AI adoption.

• Publication year

  2026

• Venue

  International journal of social science and humanity research

• Publication date

  2026-02-23

• Fields of study

  Not labeled

• Identifiers
  DOI 10.61108/ijsshr.v4i1.252
• External record

  Open on Semantic Scholar

• Source metadata

  Semantic Scholar

• No claims are published for this paper.

• No concepts are published for this paper.

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