Artificial Intelligence (AI) is rapidly becoming the foundation of banking strategies, redesigning operational transformation and the reinvention of business models in the pursuit of healthier financial outcomes while addressing risk and compliance requirements, according to IBM.
According to the IBM Institute for Business Value 2025 Outlook for Banking and Financial Markets, Gen AI adoption is set to soar.
While only 8% of banks were developing generative AI systematically in 2024, 78% had a tactical approach, according to the findings.
As banks move from pilots to execution, more are redefining their strategic approach to service expansion, including agentic AI.
“We are seeing a significant shift in how generative AI is being deployed across the banking industry as institutions shift from broad experimentation to a strategic enterprise approach that prioritizes targeted applications of this powerful technology,” said Shanker Ramamurthy, IBM Consulting’s Global Managing Director Banking & Financial Markets.
“As banks and other financial institutions around the world gear up for a pivotal year of investing in transformation, technology, and talent, we anticipate their efforts coalescing around initiatives using generative AI to level up customer experience, boost operational efficiency, reduce risks and modernize IT infrastructure.”
According to the findings, steady banking convergence is giving way to contrasting financial performance. Re-imagining the business model/processes and, importantly, execution will separate the winners from the rest, the report said.
In addition, 60% of banking CEOs surveyed acknowledge they must accept some level of risk to harness automation advantages and enhance competitiveness.
While over 16% of clients worldwide are comfortable with a branchless, fully digital bank as their primary banking relationship, competition is shifting from mass market digital offers to higher-value services, including embedded finance and advisory services to affluent investors and small and medium-size enterprises (SMEs), the report said.
The outlook shares insights from analysis of industry C-suite leader sentiment, bank customer behavior and economic data from eight major markets—the United States, Canada, European Union, United Kingdom, Japan, China, India, and Japan – and what financial institutions and their ecosystem partners can glean from the trends.
