WHY THIS MATTERS: The Finastra report confirms the definitive end of the proof-of-concept phase for AI in global financial services. With only a negligible fraction of firms reporting no engagement, the critical mass has been reached, signaling a fundamental, sector-wide shift towards enterprise-scale AI integration. This pivot to execution is not optional; it is the core of digital transformation for the next decade. This trend is inextricably linked to the rapid increase in required security investments—an expected 40% rise—as institutions recognize that scaling sophisticated automation across critical functions like payments and lending requires proportionate fortification against growing digital risk and tightening regulatory scrutiny. Consequently, the true value-add for firms is shifting from simply having an AI project to demonstrating responsible, governed, and profitable integration, particularly in high-impact areas like enhanced risk management and customer personalization
Financial services has reached a decisive AI tipping point, according to new research from Finastra, a global leader in financial services software. Only 2% of financial institutions now report no use of artificial intelligence, signaling a clear shift from experimentation to execution across the industry.
The Finastra Financial Services State of the Nation 2026 report finds that six in 10 institutions improved their AI capabilities over the past year, with leaders increasingly focused on scaling AI responsibly, securely, and profitably across payments, lending, compliance, and customer engagement.
The research also shows security rising rapidly up the agenda. Institutions expect security investment to increase by an average of 40% in 2026, reflecting growing digital risk, tighter regulatory scrutiny, and deeper reliance on technology across core operations.
The 2026 research surveyed senior professionals at financial institutions and banks across France, Germany, Hong Kong, Japan, Mexico, Saudi Arabia, Singapore, the UAE, UK, the U.S. and Vietnam.
Key findings include:
- Customer experience becomes the front line. 38% of financial institutions say improved service and more personalized experiences are now their customers’ top demand. Only 4% globally report offering no personalized services, highlighting how critical customer experience has become to competitiveness and trust.
- Industry confidence remains high. Despite ongoing disruption, optimism is strong. 87% of respondents expressed high levels of optimism about the opportunities ahead at a personal level, while 86% are optimistic about the outlook for their institutions as technology and operating models continue to evolve.
- AI adoption near universal – with 43% of institutions citing AI as their top innovation lever, it’s fast becoming the connective tissue of finance. The top four AI use cases, with institutions either running programs or piloting AI in these areas include: risk management and fraud detection (71%), data analysis and reporting (71%), customer service and support assistants (69%) and document intelligence management (69%). The top three priorities for the year ahead include AI-driven personalization, agentic AI for workflow automation, and AI model governance and explainability.
- Modernization is now a top priority. Nine in ten (87%) respondents plan to invest in modernization over the next 12 months, driven by the need to scale AI, strengthen resilience, and deliver superior customer experience. Partnerships with fintech providers are the default approach for 54% of institutions.
- Cloud adoption underpins modern transformation – Nearly a third (29%) of respondents prioritize cloud adoption, reflecting its role in lowering costs, increasing scalability, and enabling personalization, compliance, and faster innovation.
“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,” said Chris Walters, CEO at Finastra. “This year’s findings show a sector moving decisively beyond experimentation and into execution.
He added: “We look forward to working closely with our customers as strategic partners as they navigate this new landscape with modern, secure and innovative software solutions.”
Access the full Finastra Financial Services State of the Nation 2026 report here.
FF NEWS TAKE: The consensus around AI’s status as the top innovation lever confirms its necessity, but the report rightly frames the challenge as one of execution, not adoption. The biggest takeaway is the mandated focus on AI governance, explainability, and agentic systems for workflow automation. We should closely monitor two things: the success of institutions implementing robust AI model governance, and whether the 54% majority relying on fintech partnerships can swiftly achieve the necessary modernization to capitalize on this tipping point.1
