The financial services industry has officially moved from experimentation to execution on artificial intelligence, with a new report revealing that just 2 per cent of institutions now report no AI use.
According to the Financial Services State of the Nation 2026 report by Finastra, the sector has reached a decisive “tipping point.” The research, which surveyed over 1,500 senior professionals across 11 regions including the UK, US, and Singapore, found that six in 10 institutions have improved their AI capabilities over the past year.
From pilot to production
The data suggests that AI is fast becoming the “connective tissue” of modern finance. 43 per cent of institutions now cite AI as their top innovation lever.
The most prevalent use cases where institutions are actively running or piloting programs include:
- Risk management and fraud detection (71 per cent)
- Data analysis and reporting (71 per cent)
- Customer service and support assistants (69 per cent)
- Document intelligence management (69 per cent)
Looking ahead, the priority list for 2026 is dominated by AI-driven personalization, agentic AI for workflow automation, and the critical challenge of AI model governance and explainability.
Security spending to soar
As reliance on AI and digital infrastructure grows, so too does the investment in protecting it. The report forecasts that security investment will rise by an average of 40 per cent in 2026. This sharp increase reflects a landscape defined by growing digital risk and tighter regulatory scrutiny.
Chris Walters, CEO at Finastra, commented: “Technology decisions now sit at the center of trust, resilience, and customer experience. Institutions are expected to move quickly, but also responsibly, as regulatory scrutiny increases, and customers demand financial services that work reliably, securely, and personally every time.”
Optimism amidst disruption
Despite the scale of the transition, industry confidence remains robust. 87 per cent of respondents expressed high levels of optimism about the opportunities ahead personally, while 86 per cent are optimistic about their institution’s outlook.
Customer experience remains the primary battleground, with 38 per cent of institutions noting that improved service and personalized experiences are now their customers’ top demand. Notably, only 4 per cent of firms globally report offering no personalized services at all.
To support these advanced capabilities, 87 per cent of respondents plan to invest in modernization over the next 12 months. Cloud adoption remains a key enabler, with nearly a third (29 per cent) prioritizing it to lower costs and increase scalability.
The UK market specifically shows strong intent but faces hurdles; UK respondents ranked second globally in citing budget constraints as the biggest barrier to tech modernization (49 per cent), compared to a global average of 41 per cent.
Walters added: “This year’s findings show a sector moving decisively beyond experimentation and into execution. We look forward to working closely with our customers as strategic partners as they navigate this new landscape.”