Why, what, and how financial services firms can be AI-First

Thank you GenAI for kicking the door open to help banking and financial services (BFS) enterprises bring AI out of back-office oblivion. GenAI served as the catalyst to get AI back in the boardroom, and not a moment too soon, as the advance of AI technologies such as agentic AI is far exceeding the ability of established BFS firms to meaningfully assess, adopt, and apply AI in strategically meaningful ways. And by “strategically meaningful,” we mean doing more than hitting the low-hanging fruit lever of productivity with a side of potential cost savings. There is a massive opportunity for BFS enterprises to become AI-First leading with AI and automation to gain efficiencies, create new value, and drive competitive advantage rather than continuing to lead with people and manual processes.

HFS Research, in partnership with Infosys, set out to better understand how financial institutions around the globe are addressing the burgeoning AI opportunity. We surveyed 505 BFS leaders across major geographies to better understand why, what, and how BFS firms can be AI-First:

The WHY–why are BFS firms investing in AI?
The WHAT–what’s being invested in and executed to make AI strategies real?
The HOW–how can BFS firms overcome roadblocks to unlock value?

The sample included an intentional mix of IT and business leaders across banks and capital markets firms. We complemented the survey with detailed drill-down interviews with BFS leaders to road-test our analysis and develop pointed recommendations for AI success across the C-Suite–the “so what.” The report includes a case study on Citizens Bank’s AI journey to showcase a tangible example of BFS progress towards being AI-First.

The study reveals that BFS enterprises are all in on a formalized and funded embrace of AI. However, they risk failure if they don’t drive global, enterprise-wide AI strategies that contemplate more than people-centric bottom-line gains. To unlock the AI-First opportunity, BFS firms must recognize that their AI strategy IS their business strategy, with C-suite leadership driving clarity of purpose.

Key findings

- The Why – AI is the new transformation lever for BFS enterprises, but be careful of over-rotating on productivity.
  AI is garnering dedicated budgets and leadership to usher in critical foundational modernization to enable this powerful category of change agent. However, BFS enterprises risk lackluster results if they don’t align their AI strategies with their business strategies. The AI revolution surely can’t just be saving a few bucks in operations.
  
  Facts:
  - GenAI revitalized AI, with 66% of BFS enterprises indicating it drove them to update and refine their AI strategies.
  - Just 12% of BFS enterprises have global, enterprise-wide AI strategies. The other 88% are defined by silos across regions, functions, or lines-of-business (LOBs).
  - AI strategy definition is owned by IT in 79% of BFS enterprises.
  - 65% of BFS enterprises indicated their top objective for AI is driving bottom-line impact through productivity.
- The What – 2025 is the year BFS enterprises make AI real.
  The pilot-palooza that dominated 2024 is giving way to substantiated business cases and funding pointed at critical foundational data and technology modernization initiatives.
  
  Facts:
  - BFS firm’s AI budgets are expected to increase 25% in 2025, commanding 16% of total tech budgets. ROI expectations are set at two years.
  - The top AI investments are in data modernization (58%) and GenAI software (53%).
  - The leading AI use cases showcase the proven classics of data analysis and process automation complemented by emerging stars around marketing and software development and testing powered by GenAI.
- The How – Remove roadblocks to AI value with effective AI governance and talent strategies.
  The path to being AI-First is paved with various challenges. Many foundational needs are being addressed in the current funding and investment cycle. However, BFS firms must also consider and solve for AI governance and AI talent to enable true scale.
  
  Facts:
  - The top three challenges barring the way to AI success are data quality and access, security and privacy, and talent.
  - Just 23% of BFS enterprises have mature AI governance and risk management practices, which impacts the ability to tackle key data quality and security and privacy challenges.
  - 45% of all AI talent utilized by BFS firms is external, with 70% of it residing in nearshore or offshore locations underscoring the critical role of third-party service partners.
- The Bottom Line: Your AI strategy is your business strategy.
  The AI-First leaders in financial services must align their AI strategies with their business strategies, establishing clear purpose and executing with effective governance and the elevation of humans.