Gen AI will elevate banks' financial performance in 2025

IBM today released its annual expectations for technology and transformation in the global financial services industry in 2025 through the IBM Institute for Business Value 2025 Outlook for Banking and Financial Markets.

According to the report, generative AI (Gen AI) adoption is expected to skyrocket, profoundly impacting the financial performance of banks worldwide.

Key insights from the report include:

Surge in Gen AI adoption: In 2024, only 8% of banks were systematically developing Gen AI, while 78% had a tactical approach. As banks transition from pilots to execution, more institutions are redefining their strategic approach to service expansion, including agentic AI.
Contrasting financial performance: The steady convergence in banking is giving way to varying financial performance. Reimagining business models and processes, coupled with effective execution, will distinguish the winners from the rest.
Risk and automation: Sixty percent of banking CEOs surveyed acknowledge the necessity of accepting some level of risk to harness automation advantages and enhance competitiveness.
Digital banking: Over 16% of clients globally 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 for affluent investors and small and medium-sized enterprises (SMEs).

Shanker Ramamurthy, IBM Consulting’s Global Managing Director of Banking & Financial Markets, stated,

“We are seeing a significant shift in how generative AI is being deployed across the banking industry as institutions move from broad experimentation to a strategic enterprise approach that prioritises targeted applications of this powerful technology.”

“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 modernise IT infrastructure,” Ramamurthy added.

The report offers insights from the analysis of industry C-suite leader sentiment, bank customer behaviour, and economic data from eight major markets, including the United States, Canada, the European Union, the United Kingdom, China, India, and Japan.