Artificial intelligence (AI) technology is utilized by nearly all UK financial services firms, with only 1% opting not to implement it, according to a new report from Finastra. The Financial services state of the nation 2026 survey highlights a significant shift in the sector as institutions move from debating the merits of AI to focusing on its effective and responsible deployment.
Finastra CEO Chris Walters noted, “Only 2% of [global] respondents say they are not using AI at all, which underscores how decisively the industry has crossed the threshold.” The report identifies AI as the “connective tissue” of the finance sector, driving innovations that extend beyond back-office automation. AI is now integral to functions such as real-time fraud detection, personalized product recommendations, intelligent underwriting, and dynamic customer engagement.
AI is becoming the connective tissue of banking – the intelligence layer that links data, channels, and services into something coherent and responsive
Finastra report
The report elaborates that AI not only reduces friction in decision-making but also tailors customer experiences in an intuitive manner. The top use cases in AI for financial firms include risk management and fraud detection (71%), data analysis and reporting (71%), customer service and support assistants (69%), and document intelligence management (69%). Looking ahead, the sector prioritizes AI-driven personalization, agentic AI for workflow automation, and AI model governance and explainability.
In a survey involving over 1,500 senior executives from large finance firms across 11 regions, it was revealed that the deployment of AI is prompting increased investments in other technological areas. Specifically, spending on security is projected to rise by an average of 40% in 2026, largely driven by AI-related threats. The report states that “escalating digital threats – particularly those linked to AI” are significant factors behind this anticipated surge in security expenditure. A notable 43% of firms cited evolving risks as their principal security challenge, while 40% pointed to the deployment of AI itself as a concern.
Modernise for AI
The push for AI investment is also creating an imperative for financial firms to modernize their technology infrastructure. According to the report, nine out of ten surveyed companies plan to invest in modernization initiatives this year to better scale their AI capabilities. Central to this modernization effort is the adoption of cloud technology, with 29% of respondents prioritizing this transition. The report emphasizes that “cloud is no longer a destination; it is the operating environment for modern finance,” with 84% of respondents utilizing some form of cloud solutions.
Walters remarked, “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.” The findings suggest a sector moving decisively beyond experimental phases towards practical implementation.
Returns on AI investments are becoming increasingly evident, as research from Lloyds Banking Group indicates that 59% of firms reported productivity gains driven by AI in 2025, a notable increase from 32% in 2024. Additionally, 21% of respondents believe AI is directly contributing to business growth, compared to just 8% the previous year. Further, a third of respondents (33%) noted that AI is enhancing customer experiences, up from 14%, while the same percentage reported deeper customer insights through AI, an increase from 18% in the prior survey.
The Finastra report encapsulates a transformative period for the financial services industry, where AI is not merely an add-on but is reshaping the fundamental framework of banking. As the sector grapples with both the benefits and challenges presented by AI, its commitment to modernization and heightened security will be pivotal in navigating the future landscape of finance.
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