Damian Stirrett, Group Vice President and GM, UK and Ireland, ServiceNow
The banking industry is facing a once-in-a-generation inflection point, driven by the rapid evolution of technology, new regulations and customers’ heightened expectations for seamless digital experiences. This transformative wave is redefining the future of banking. For executives, AI and modern cloud-based platforms present a double-edged sword: a gateway to enhanced customer and employee experiences, operational efficiency, and innovation—but also a source of heightened cyber threats and complex regulatory challenges. However, one thing is clear: embracing new technologies is no longer optional. It’s a strategic imperative for staying ahead in an era of change.
In the past, digital transformation efforts have unlocked value for banks, but failed to deliver fully on expectations, according to ServiceNow’s The State of AI-Powered Transformation in Banking report. Today’s executives believe that a new approach is required to deliver on customer expectations, moving beyond simple digital transformation projects to business transformation driven by AI. Nearly three-quarters of executives (71%) in Europe believe that to compete, banks need to move to end-to-end technology platforms, with more than half believing that a tech-driven approach drawing on AI is essential to achieving this transformation.
In today’s banking era, leveraging AI and cloud technology is essential for adapting to changing markets and customer demands. Embracing true business transformation drives growth, efficiency, and long-term success.
Evolving demands
For bank executives, AI is rapidly becoming central to how they are meeting rising customer expectations. Customers now expect banking to be as smooth and frictionless an experience as shopping online or using Big Tech platforms, like Amazon or Google, which are known for their intuitive interfaces, seamless integration across services, and personalised user experiences.
Research shows that meeting customer expectations is a key focus for technology in banking more broadly. For instance, nearly half (47%) of executives across Europe are using technology to enhance customer privacy and security. Similarly, 46% are employing it to simplify the onboarding process, while 43% are using technology to analyse customer needs and deliver more tailored, improved experiences. This broader use of technology shows its importance in helping the banking sector align with the standards of convenience and personalisation set by leading tech companies – an area where AI is increasingly playing a critical role.
Banks are facing unprecedented competition from outside their industry, as tech-enabled disruptors attract customers with seamless, app-based experiences that set a new standard for convenience and personalisation. To stay competitive, industry executives believe banks must transform not only their services, but the way they operate internally. Digital workflows and automation are critical for moving away from outdated practices and meeting customer expectations. However, organisational silos remain a significant challenge, cited by 41% of European executives, along with the constant evolution of regulatory requirements.
Time for change
To achieve true business transformation, a fundamentally new approach to work is essential. Business leaders and IT need to work together, aligning their business and digital strategies. Fragmented, siloed approaches are not enough. Instead, seamless, end-to-end technology solutions are required. Leaders in the sector are aware of the urgency of this shift. In ServiceNow’s research, 96% of respondents across Europe said they were already implementing an end-to-end technology platform, with 24% at an advanced stage. Adopting cloud and software-as-a-service (SaaS) approaches allow businesses to scale and grow more effectively in today’s fast-paced market.
Banks need to connect their services on one AI-powered end-to-end platform to improve customer experience. This not only offers consumers smoother experiences, but it also delivers a better employee experience. AI-enabled workflows can handle routine tasks, along with the big data analysis required to improve services. This in turn frees workers to focus on solving complex problems that add real value to the business, such as fostering customer relationships, making critical decisions, and driving innovative ideas forward.
Mastering AI
AI is already changing the way forward-thinking banks deal with everything from risk management to compliance. According to ServiceNow’s research, top use cases of AI include compliance and fraud detection. End-to-end AI automation not only helps banks keep pace with regulations but also facilitates demonstrating compliance to auditors. With regulations such as the EU’s Artificial Intelligence Act, banks are increasingly aware of the regulatory implications of AI innovation, with 39% of finance executives acknowledging this concern.
Generative AI, while still in its early stages in the banking sector, is already finding practical applications. AI models can analyse large amounts of historical data and transaction patterns to detect anomalies typical of fraud or crunch large amounts of data to mitigate risks. Over the next three years, an increasing number of banks intend to use generative AI to do everything from managing compliance to performing analysis and managing IT. Generative AI will also help banks to build personalised, frictionless customer experiences built around intuitive self-service interfaces.
A new kind of bank
The shift towards AI-driven operations and end-to-end IT platforms represents more than just an upgrade – it’s a reinvention of the banking industry. This will be crucial for banks to compete with younger, technology-enabled competitors, and will reshape the future of the sector. Moving beyond today’s limited technology will be a requirement to deliver the services that today’s demanding customers require.
For employees, AI offers the promise of a transformed workplace – liberating them from routine tasks and empowering them to focus on innovation, creativity, and building stronger customer relationships. By embracing this transformation, banks can position themselves as ready not only to meet the needs of tomorrow’s customers but also to lead the way in shaping the future of financial services.
