LEADING THROUGH INNOVATION: THE IMPACT OF AI AND THE METAVERSE ON ORGANIZATIONAL DEVELOPMENT IN BANKING

Abstract

Purpose: The convergence of artificial intelligence (AI) and the metaverse in global finance is examined in this research. It dwells upon the impact of these technologies on the development of organizations and the leadership strategy. With the adoption of immersive, data-driven ecosystems by financial institutions in which digital banking is replacing their traditional digital banking, leadership is being redefined. Design/Methodology: This paper has a variety of cross-section of the banking business in Pakistan. The sample consisted of employees and managers of the Karachi, Lahore, Islamic, and digital banking units of both the public and the private. Purposive sampling was used to recruit 372 respondents as branch managers, IT officers and HR professionals who had direct experience with AI. The sample offers a strong and representative data to high-level PLS-SEM analysis. Findings: AI enhances managerial sense-making, risk evaluation, fraud detection, and speed of decision. It also transforms leadership to the command-based authority to people that facilitate human- algorithm cooperation. Metaverse and XR technologies will make compliance training and simulation of work in a virtual branch immersive, as well as remote collaboration possible. Nevertheless, digital fatigue, identity management, data privacy, and inclusivity are also among the challenges that they introduce. The most common themes that define trust and organizational culture are ethical issues, particularly algorithmic bias, surveillance and data governance. Originality: We suggest a three-layer leadership model to banks: (1) Technological Stewardship, (2) Human-AI Shared Leadership and (3) Strategic Digital Vision. This model adapts leadership to the financial environment that uses AI and the metaverse. Practical Implications: In order to accomplish responsible innovation, bank management must improve algorithmic literacy, ethical AI governance, and digital wellness policies. Organizational growth initiatives should be efficient, regulatory compliant, and psychologically safe, while also allowing everyone access to advanced digital technologies.

Keywords: Artificial Intelligence, Digital Banking, Metaverse, XR, Bank Leadership, Algorithmic Governance, Organizational Development, Ethical AI, Human-AI Collaboration.