The rapid growth of digital banking has transformed the financial services sector by enhancing accessibility, efficiency, and customer experience. Simultaneously, the increasing dependence on digital platforms has exposed banks to various risks, including cyber threats, operational failures, fraud, data breaches, and regulatory compliance issues. Artificial Intelligence (AI) has emerged as a significant technological solution for identifying, assessing, and mitigating these risks. This paper examines the role of AI in risk management within digital banking services. The study explores AI-based applications such as fraud detection, predictive analytics, credit risk assessment, anti-money laundering systems, and cybersecurity monitoring. The paper also highlights challenges associated with AI adoption, including algorithmic bias, privacy concerns, regulatory issues, and technological dependence. Based on a review of contemporary literature and industry practices, the study concludes that AI significantly enhances the effectiveness of risk management while requiring appropriate governance frameworks to ensure ethical and secure implementation.