Artificial intelligence (AI) is becoming a central pillar in the digital transformation strategies of banks as they strive to enhance customer experiences and streamline operations. A recent study by Publicis Sapient, a prominent American digital consulting firm, reveals that banks are dedicating 29% of their digital transformation investments in customer experience to machine learning (ML), AI, and generative AI (genAI). The study also indicates that AI will be the primary focus for digital transformation in banks over the next three years.
The findings come from the Global Banking Benchmark Study 2024, which surveyed over 1,000 senior retail and commercial banking leaders early in the year. The study highlights that banks are not only exploring AI’s potential but are also prioritizing data and AI as the key areas for their transformation. Executives are also keen on leveraging genAI for internal applications, reflecting a growing recognition of the technology’s broad capabilities.
The study reveals that developing existing talent is a significant area of focus for digital transformation, with executives emphasizing the importance of preparing employees to work alongside AI. This demonstrates a balanced approach, where human expertise is aligned with technological advancements.
Banks are particularly interested in deploying genAI in both internal and customer-facing use cases. About 61% of respondents plan to use genAI to optimize transaction-related functions, including credit analysis, underwriting, and contract management. Additionally, 55% are exploring its use for internal functions, such as developer tools, search capabilities, and virtual assistants. Meanwhile, 49% are focusing on customer-facing areas like marketing and customer service.
The study divides banks into four groups based on their digital transformation maturity. The “Transformation Leaders,” the top performers, are leading the charge in AI adoption. These banks allocate 34% of their digital transformation budgets to AI, ML, and genAI—6% more than the least mature banks, known as “Laggards.” Transformation Leaders also tend to prioritize AI tools for internal use, with 44% focusing on this area, compared to just 25% of Laggards.
These leaders are not only investing more in AI but also taking a different approach. A significant 84% of Transformation Leaders believe it’s better to develop custom-made AI tools rather than rely on third-party solutions, compared to 70% of Laggards. This approach is complemented by significant investments in cloud infrastructure, data analytics, and organizational culture changes to support AI integration.
Despite the strong commitment to AI, banks face several challenges in their digital transformation efforts. Regulatory hurdles, outdated legacy systems, and a lack of operational agility are among the top barriers cited by respondents. Budget constraints are another growing concern, with 32% of executives identifying limited budgets as a key obstacle, up from 19% in 2022.
Nevertheless, the outlook for AI adoption in banking remains positive. Gartner predicts that by 2026, more than 80% of banks will have adopted genAI, driven by its potential to improve operational efficiencies, customer service, and risk management. According to McKinsey & Company, genAI could add between $200 billion and $340 billion in value annually across the global banking sector, contributing up to 4.7% of total industry revenues through enhanced productivity.
