The future of banking in the age of Ai

The IBM 2025 Global Outlook for Banking and Financial Markets reveals a transformative era for the financial industry.

The key findings include:

🚀 AI is the game-changer. Only 8% of banks systematically developed generative AI in 2024, but this is expected to skyrocket in 2025 as banks move from pilots to enterprise-wide adoption.

🚀 Generative AI adoption is critical. 78% of banks in 2024 had a tactical approach to AI, but those that scale AI strategically will dominate the market.

🚀 Neobanks are reshaping competition. Over 16% of global clients are now comfortable with fully digital, branchless banks as their primary banking relationship.

🚀 Profitability is diverging. The top 10 largest US banks accounted for over 50% of the industry’s profits in 2024, the highest share since 2015.

🚀 Cost-to-Income Ratios (CIR) remain a challenge. CIRs for major hashtag#US banks averaged 61.6% in 2024, compared to 53.6% in the hashtag#EU and 30.9% in hashtag#China.

🚀 AI-driven risk management is essential. 60% of banking CEOs are willing to take substantial risks to harness automation advantages, but success requires a culture where every banker becomes an AI risk manager.

🚀 Digital payments are booming. hashtag#India’s UPI system now represents 46% of all global digital transactions, with over 400 million users.

🚀 Embedded finance is the future. Banks are leveraging AI to integrate financial services into everyday platforms, creating “everywhere, everyday banks.”

🚀 Cloud migration is underestimated. 65% of bankers cite incomplete cloud journeys as a barrier to competing in hashtag#SME markets, highlighting the need for modular and flexible architectures.

🚀 SMEs demand more. 86% of SMEs globally want banks to provide financial and business planning tools, not just financing.

🚀 AI is transforming customer insights. 86% of CMOs plan to use generative AI for customer insights by the end of 2025, up from 36% in 2023.

🚀 Fraud prevention is evolving. In 2024, 46% of data breaches in financial services involved customer data, yet only 28% of banks extensively use AI for security.

🚀 Digital wallets are taking over. In hashtag#Brazil, Pix surpassed credit and debit cards in 2024, becoming the most popular payment method for e-commerce and in-store purchases.

🚀 Regional disparities are growing. While European banks saw ROAE rebound due to rising interest rates, Chinese banks struggled with the lowest ROAE levels in over a decade.

🚀 AI-first strategies are non-negotiable. Banks that fail to adopt AI as the foundation of their business models risk being left behind in a rapidly evolving market.

🔴 The message is clear: Lead with AI or be left behind. What's your take on the future of banking? Share your thoughts below!

Author

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