IBM Study: Gen AI Will Elevate Financial Performance of Banks in 2025

Rhea-AI Summary

IBM has released its annual banking outlook report for 2025, highlighting significant shifts in generative AI adoption within the financial services industry. The study reveals that while only 8% of banks were systematically developing generative AI in 2024, with 78% taking a tactical approach, this is expected to change dramatically in 2025.

Key findings show that 60% of banking CEOs acknowledge the need to accept some risk to leverage automation advantages. Over 16% of clients globally are comfortable with fully digital banking relationships, while competition is evolving toward higher-value services, including embedded finance and advisory services for affluent investors and SMEs.

The report analyzes data from eight major markets: the United States, Canada, European Union, United Kingdom, Japan, China, and India, focusing on C-suite leader sentiment, customer behavior, and economic trends.

Positive

• Expected significant increase in systematic generative AI adoption from current 8% level
• Shift towards higher-value services including embedded finance and advisory services
• 16% of global clients already comfortable with fully digital banking

Negative

• Only 8% of banks currently have systematic generative AI development
• 60% of CEOs must accept increased risk levels for automation advantages

Initiatives are maturing from pilots and proofs of concept to targeted, enterprise-wide strategies

ARMONK, N.Y., Feb. 5, 2025 /PRNewswire/ -- IBM (NYSE: IBM) today released its annual expectations for technology and transformation in the global financial services industry in the year ahead in the IBM Institute for Business Value 2025 Outlook for Banking and Financial Markets.

Key Insights

• Gen AI adoption is set to soar. Only 8% of banks were developing generative AI systematically in 2024, and 78% had a tactical approach. As banks move from pilots to execution, more are redefining their strategic approach to service expansion, including agentic AI. 
• 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.
• 60% of banking CEOs surveyed acknowledge they must accept some level of risk to harness automation advantages and enhance competitiveness.¹
• 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).

"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."

The report 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.

For additional perspective and to download the full report, visit https://ibm.co/2025-banking-financial-markets-outlook.

1.  6 Hard Truths CEOs Must Face: How to Leap Forward with Courage and Conviction in the Generative AI Era. IBM Institute for Business Value. May 2024. https://ibm.co/c-suite-study-ceo

IBM is a leading provider of enterprise AI, hybrid cloud architecture, security and ESG insights to the global financial services sector. Its deep industry expertise, extensive portfolio of services and solutions, and its robust ecosystem of fintech partners, empower collaboration, innovation, and creation with clients. 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. For more information, visit www.ibm.com/industries/banking-financial-markets.

The IBM Institute for Business Value, IBM's thought leadership think tank, combines global research and performance data with expertise from industry thinkers and leading academics to deliver insights that make business leaders smarter. For more world-class thought leadership, visit www.ibm.com/ibv.

About IBM
IBM is a leading provider of global hybrid cloud and AI, and consulting expertise. We help clients in more than 175 countries capitalize on insights from their data, streamline business processes, reduce costs and gain the competitive edge in their industries. Thousands of government and corporate entities in critical infrastructure areas such as financial services, telecommunications and healthcare rely on IBM's hybrid cloud platform and Red Hat OpenShift to affect their digital transformations quickly, efficiently and securely. IBM's breakthrough innovations in AI, quantum computing, industry-specific cloud solutions and consulting deliver open and flexible options to our clients. All of this is backed by IBM's long-standing commitment to trust, transparency, responsibility, inclusivity and service. Visit www.ibm.com for more information.

Media Contact

Mary Ellen Higgins
IBM Global Financial Services Industry External Communications
maryellen.higgins@ibm.com
781.789.1911

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/ibm-study-gen-ai-will-elevate-financial-performance-of-banks-in-2025-302368234.html

SOURCE IBM

FAQ

What percentage of banks were developing generative AI systematically in 2024 according to IBM's report?

According to IBM's report, only 8% of banks were developing generative AI systematically in 2024, while 78% had a tactical approach.

What percentage of banking CEOs acknowledge automation risks in IBM's 2025 outlook?

60% of banking CEOs acknowledge they must accept some level of risk to harness automation advantages and enhance competitiveness.

What percentage of clients are comfortable with fully digital banking according to IBM's study?

Over 16% of clients worldwide are comfortable with a branchless, fully digital bank as their primary banking relationship.

Which major markets did IBM analyze in its 2025 banking outlook report?

IBM analyzed eight major markets: the United States, Canada, European Union, United Kingdom, Japan, China, and India.

How is IBM expecting banking competition to shift in 2025?

Competition is expected to shift from mass market digital offers to higher-value services, including embedded finance and advisory services to affluent investors and SMEs.