AI Is Fundamentally Transforming Banking — But Only 25% of Banks Are Using It for Competitive Advantage: BCG Report

The banking industry is standing at a pivotal point in 2025. Artificial Intelligence (AI) is no longer an emerging trend—it is a game-changer for the banking industry, unlocking new frontiers in efficiency, accessibility, and economic growth. BCG, with its upcoming report, “The AI Reckoning in Banking,” outlines how artificial intelligence—especially generative and agentic AI—is fundamentally transforming the banking industry. The report highlights a widening gap between banks that are leading the AI shift and those falling dangerously behind.

Key findings of the report include:

• Only 1 in 4 banks are using AI to build a competitive edge. The rest are experimenting on the margins—often without strategic alignment, clear ROI metrics, or a path to scale.
• AI is dismantling traditional banking advantages. Tools like GenAI and agentic AI are making it easier for customers to switch providers, reducing margins through pricing transparency, and shifting customer control to digital platforms.
• Profit models and core services are under pressure. AI-driven underwriting, real-time credit risk, and embedded finance ecosystems are eroding fee-based income and redefining the bank’s role in the value chain.
• Most banks lack the infrastructure to scale AI. Legacy systems, fragmented data, and insufficient orchestration capabilities are blocking real-time, integrated AI applications. Fixing these gaps demands significant investment and executive-level commitment.
• The talent and governance gaps are widening. Two-thirds of banks struggle to hire AI talent, and many still need to train leaders to interpret or challenge AI outputs. Meanwhile, regulatory uncertainty is slowing adoption, despite growing pressure to act proactively.

The message is clear: bankers who focus AI investments on high-impact areas—and align tech with talent and process—are pulling ahead fast.