Just a quarter of financial institutions are ready to use AI technology, according to a new report from Boston Consulting Group (BCG).

The consultancy firm said that financial institutions need more than “isolated pilots” or “cautious upgrades” to maintain a competitive position.

While most companies in the financial sector are experimenting with the technology, BCG said that AI strategy needs to be part of business strategy.

The report said that large language models (LLMs) have limitations, such as hallucinations, and can struggle with real time data feeds which makes many banks wary of AI technology.

Around a third of companies plan to spend over $25 million on AI in 2025, or around 0.5 to one per cent of revenues.

But BCG said that too much of this spending is going towards productivity improvements rather than “broader transformation”, which the company said suggests that firms are “playing it safe.”
Additionally, the research found that around 60 per cent of banks have not defined financial performance indicators to track the impact of AI technology.

BCG said that genAI technology has moved past niche applications and is expanding into core financial workflows, such as autonomous chat agents, loan approvals and generating automated documents.

The company added that the “window to get ready for these changes is closing” as within around five years the banking landscape will look fundamentally different and leaders need to define what this means for their institution.

The report highlighted positive examples of AI adoption. JPMorgan Chase has implemented a genAI tool called LLM Suite, accessible to 200,000 employees, and offers training programmes to assist employees in integrating AI tools into their workflows.

Elsewhere, BBVA has partnered with the University of Navarra to launch a training initiative targeting over 150 managers.

This scheme focuses on the use of genAI to improve executives’ productivity by optimising their strategic decision making and daily operations.

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