Tech Mahindra Unveils Survey Report On Transformative Impact Of AI In Banking Sector

Tech Mahindra, a global provider of technology consulting and digital solutions, has unveiled its latest survey report titled "Building the AI-Driven Bank of Tomorrow." Developed with East & Partners, the report explores how artificial intelligence (AI), generative AI (GenAI), and agentic intelligence are transforming the banking sector. It highlights the emergence of intelligent and indispensable financial ecosystems.

The report is based on interviews with 150 senior banking executives from 25 countries, including regions like the Americas, Europe, the Nordics, and Asia-Pacific. It provides insights from CIOs, CTOs, and CDOs of major banks and non-bank financial institutions. Key areas of transformation identified include legacy modernization, regulatory compliance, customer experience, and data governance.

AI Investment Trends

A significant finding is that 81% of global banks have dedicated AI budgets. These allocations are expected to nearly double to 17% of total IT spending by 2028. This indicates a shift from experimentation to large-scale adoption. Additionally, over one-third (37%) of financial institutions are investing heavily in GenAI for an early-mover advantage. European banks are leading this global trend.

Data governance remains a challenge as only 20% of banks have robust real-time frameworks. Institutions adopting Data Mesh architectures and Explainable AI models see better personalization and compliance outcomes. Meanwhile, legacy modernization efforts are active in 92% of banks worldwide. However, only 14% have exceeded expectations in these initiatives.

Regional Insights on AI Spending

Banks in the Americas lead with an average IT allocation of 12% to AI, equating to approximately US$660 million annually. European institutions follow at 9%, averaging US$499 million in IT budgets. The APAC region allocates 7%, while the Nordics allocate 6%. Both regions are expected to increase their focus on AI and GenAI by 2028.

Globally, 51% of banks are directing IT spending towards enhancing regulatory compliance. Meanwhile, 48% focus on operational stability. Customer experience emerges as the top AI use case for nearly 70% of banks, surpassing automation and compliance priorities.

Kshitij Kumar from Tech Mahindra stated: "Across the BFSI industry, AI has moved from experimentation to execution, yet many institutions still grapple with fragmented legacy systems and the complexity of embedding AI responsibly at scale." The report serves as a strategic guide for banks navigating the evolving AI landscape with data-backed insights and actionable benchmarks.

The report aims to assist CXOs in aligning technology with culture and purpose to create future-ready financial ecosystems. It addresses challenges such as defining ROI, tackling cybersecurity risks, and overcoming data silos. Strategic frameworks outlined help accelerate modernization while embedding AI responsibly for secure digital experiences.

Tech Mahindra's 'AI Delivered Right' strategy supports this transformation journey through its Agentic AI platform TechM Orion. This platform includes over 50 ready BFSI agents designed to accelerate customers' transition towards a digital and intelligent banking future.