GenAI to elevate financial performance for banks

The IBM study also foresees the convergence of technology in banks would be a differentiator to how banks perform.

The financial services industry continues to see strong adoption of GenAI. According to IBM’s annual expectations for technology and transformation in the global financial services industry in the IBM Institute for Business Value 2025 Outlook for Banking and Financial Markets, GenAI adoption is expected to soar this year.

Specifically, the study revealed that while only 8% of banks were developing GenAI systematically in 2024, 78% had a tactical approach. With global predictions also expecting more organizations to pivot from pilots to executions, banks around the world are also expected to do the same.

Insights from analysis of industry C-suite leader sentiment, bank customer behavior and economic data from eight major markets including India, China and Japan in the Asia Pacific region, reveal increasing GenAI capabilities at banks not only redefines their strategic approach to service expansion but also enables banks to implement agentic AI use cases.

IBM also foresees the convergence of technology in banks would be a differentiator to how banks perform. Be it in the Asia Pacific region or globally, banks that reimaging the business model as well as processes and have the right execution plan will have an edge over banks that are still deciding on their GenAI strategies.

It comes as 60% of banking CEOs surveyed acknowledge they must accept some level of risk to harness automation advantages and enhance competitiveness. Not only are banks competing with each other, but they would also need to be prepared to deal with the competition that is growing from fintech companies that are relying heavily on GenAI to provide digital banking services to customers.

In fact, most banking business models aren’t keeping up with client demand and AI-led innovation. Banks will need to revise their business strategies by transforming how they cater to clients.

The study revealed that over 16% of clients worldwide are comfortable with a branchless, fully digital bank as their primary banking relationship. As such, the 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).

"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,” added Ramamurthy.

As a trusted partner to banks, insurers, capital markets and payments providers, IBM guides financial institutions on all stages of their digital transformation journeys through IBM Consulting and delivers the proven infrastructure, software, and services they need through IBM Technology.