More Banks Are Expected to Adopt Generative Artificial Intelligence, IBM Report Finds
The banking industry is on the brink of a major transformation, driven by the rapid adoption of generative artificial intelligence (Gen AI). According to a recent report by the IBM Institute for Business Value, 2025 is set to be a pivotal year for banks embracing this cutting-edge technology. The report highlights a significant shift in how financial institutions are approaching Gen AI, moving beyond experimentation and toward strategic, enterprise-wide adoption.
In 2024, only 8% of banks were systematically developing Gen AI capabilities, while 78% focused on tactical implementations. This year, however, the landscape is changing. Banks are transitioning from pilot projects to full-scale execution, integrating agentic AI into their core strategies. This evolution reflects a broader industry trend: moving from broad experimentation to targeted, strategic applications of Gen AI.
Shanker Ramamurthy, Global Managing Director of Banking & Financial Markets at IBM Consulting, emphasizes this shift. “We are seeing a significant change in how generative AI is being deployed across the banking industry,” he notes. “Institutions are moving from scattered experimentation to a strategic enterprise approach that prioritizes specific, high-impact applications of this powerful technology.”
The report underscores several key findings that highlight the growing importance of Gen AI in banking. For instance, 60% of banking CEOs now acknowledge that some level of risk must be accepted to fully harness the benefits of automation and stay competitive. This willingness to embrace risk signals a turning point in how banks view and implement AI technologies.
Another critical insight is the changing preferences of banking customers. Over 16% of clients worldwide are now comfortable with a fully digital, branchless banking experience as their primary financial relationship. This trend is pushing banks to rethink their service models and invest in digital transformation.
The industry is also moving away from mass-market digital offers and toward higher-value services. Embedded finance, personalized advisory services for affluent investors, and tailored solutions for small and medium-sized enterprises (SMEs) are becoming focal points for many institutions. These shifts reflect a broader reevaluation of business models and processes, as banks strive to stay competitive in an increasingly dynamic financial landscape.
From IBM’s perspective, this trend presents a significant opportunity. The company’s comprehensive suite of AI-related services, ranging from implementation to infrastructure modernization, aligns closely with the banking industry’s growing need for strategic, enterprise-wide AI adoption. This could pave the way for longer-term, higher-value contracts, providing IBM with more stable and predictable revenue streams in the consulting and technology sectors.
As the banking industry continues to evolve, one thing is clear: Gen AI is no longer a futuristic concept but a present-day reality that is reshaping the financial services landscape. With banks transitioning from tactical to strategic deployment, the stage is set for a transformative year ahead.
Business Model Reevaluation and Competitive Landscape
The IBM report also emphasizes the need for banks to reevaluate their business models and processes. As contrasting financial performance becomes more pronounced, institutions must carefully handle execution to stay ahead in a rapidly converging banking landscape. This reevaluation is crucial, as the industry moves toward a more dynamic and competitive environment where traditional banking models may no longer suffice.
The competitive landscape is undergoing a significant transformation, with banks shifting their focus from mass-market digital offers to higher-value services. Embedded finance, personalized advisory services for affluent investors, and tailored solutions for small and medium-sized enterprises (SMEs) are emerging as key areas of focus. These shifts underscore the industry’s broader move toward more specialized and targeted financial services, driven by the capabilities of Gen AI.
As banks embrace Gen AI, they are also being forced to rethink their IT infrastructure. Modernization is no longer optional but a necessity to support the advanced capabilities of generative AI. This includes investing in scalable, secure, and agile systems that can handle the complexities of AI-driven operations. For many institutions, this will require significant upgrades to their existing infrastructure, presenting both challenges and opportunities for innovation.
The report also highlights the importance of risk management in this new era. While 60% of banking CEOs acknowledge the need to accept some level of risk to harness the full potential of automation, institutions must strike a balance between innovation and stability. This delicate equilibrium will be critical as banks navigate the uncharted territory of Gen AI adoption.
In conclusion, the banking industry is at a crossroads, with Gen AI poised to redefine how financial services are delivered, managed, and experienced. As institutions transition from tactical to strategic deployment, the focus will be on creating sustainable, competitive, and customer-centric business models that leverage the full potential of this transformative technology.
Conclusion
The banking industry is undergoing a significant transformation as generative artificial intelligence (Gen AI) moves from experimentation to enterprise-wide adoption. According to the IBM report, 2025 marks a pivotal year for banks embracing this technology, with a shift from tactical implementations to strategic, high-impact applications.
As 60% of banking CEOs acknowledge the necessity of accepting some level of risk to harness automation’s benefits, institutions are reevaluating their business models and IT infrastructure to support advanced AI capabilities. The industry is also seeing a shift in customer preferences, with over 16% of clients worldwide favoring fully digital, branchless banking experiences.
IBM is well-positioned to support this transformation with its comprehensive suite of AI-related services, enabling banks to modernize their infrastructure and deliver personalized, higher-value services. As the banking landscape evolves, Gen AI is no longer a futuristic concept but a present-day reality driving innovation and reshaping financial services.
Frequently Asked Questions (FAQ)
What is Generative Artificial Intelligence (Gen AI)?
Generative Artificial Intelligence (Gen AI) refers to advanced AI systems capable of generating human-like text, images, and other content. In banking, it is being used to enhance customer experiences, improve operational efficiency, and deliver personalized financial services.
Why are banks adopting Gen AI now?
Banks are adopting Gen AI due to its ability to drive strategic, enterprise-wide transformation. With 60% of banking CEOs acknowledging the need to embrace some level of risk for automation, institutions are moving beyond experimentation to focus on high-impact applications of Gen AI.
How are customer preferences influencing Gen AI adoption in banking?
Over 16% of global banking clients now prefer fully digital, branchless banking experiences. This trend is pushing banks to invest in digital transformation and deliver personalized, higher-value services such as embedded finance and tailored solutions for SMEs and affluent investors.
What role is IBM playing in the adoption of Gen AI in banking?
IBM is providing a comprehensive suite of AI-related services, including implementation, infrastructure modernization, and strategic consulting. This positions IBM to support banks in their transition to enterprise-wide Gen AI adoption and secure long-term, higher-value contracts.
What does the future of banking look like with Gen AI?
The future of banking with Gen AI is expected to be highly competitive and customer-centric. Banks will focus on creating sustainable business models that leverage Gen AI to deliver personalized, efficient, and innovative financial services.
