This thesis explores the use cases of AI in business model innovation, with a fully integrated analysis of the internal key performance indicators (KPIs), applications of algorithms, and digital benchmarking strategy, through the case study of Kapital Bank.It is part of a global trend towards the more common use of artificial intelligence.At Kapital Bank, the modernization of internal processes has similar motivations, with a focus on customer services, automation, and long-term adaptability to a fast-changing environment for financial institutions.The study likewise highlights the ethical and regulatory issues associated with AI and the need for transparency and accountability in algorithmic decision-making.This study is expected to promote calculated perceptions around ethical, scalable, and sustainable transformations leveraging AI in the Azerbaijani banking context, and to make theoretical and practical contributions to finance, technology, and policy actors in a manner that integrates new models and perspectives into the discussion on responsible AI transformations in banking.