What ‘next gen banking’ really looks like today

Mobile banking, cloud adoption, and digital payments laid the foundation. By 2016, innovations like open banking, automation, and AI began reshaping how institutions approached operations, customer engagement, and risk. At the same time, data became central—breaking down silos, enabling real-time insights, and powering everything from risk models to personalized experiences. Then came the pandemic—a turning point that forced digital-first strategies into the mainstream almost overnight. Since then, banks have embraced the tenets of next-gen transformation: API-first architecture, hyper-personalization, embedded finance, and real-time AI-powered decision-making. But while the intent is widespread, execution hasn’t kept pace.

Today, we’re at an inflection point. Banks understand that innovation must be holistic, not fragmented across silos. They know that solving one problem in isolation often creates another. It also goes without saying that compliance and governance need to be built in from the ground up. In some cases, the scale of ambition, combined with sheer technical complexity and economic uncertainty, has created a strange moment of stasis. Many institutions have multiple AI pilots in place, but few have scaled them into production. McKinsey’s Global Survey reveals that while 71% of financial institutions report AI creating significant value in at least one business function, only a quarter have successfully deployed AI across multiple areas. (McKinsey, 

And yet, successful innovation is happening. Proven AI solutions already exist for fraud detection, compliance automation, customer engagement, and leaner back-office operations. These are not distant possibilities, they’re deployable, commercial solutions that deliver rapid ROI when implemented with the right governance and focus.

So, what’s the best way forward? The answer isn’t grand-scale reinvention. It’s picking the right starting points. Financial institutions are best served by prioritizing to focus on high-impact, AI-powered use cases that solve real problems today. After all, innovation doesn’t need to be revolutionary to be valuable, it just needs to work.

Transformation priorities for banks moving into next-gen banking

As banks look to modernize and stay competitive, certain characteristics are emerging as essential to what it means to be next-gen.

At the core of every next-gen capability—whether it’s AI, automation, or personalization—is data: clean, connected, and actionable. 

From that basis, we see four key areas for strategic investment and transformation key to how financial institutions will operate, serve, and protect their customers going forward.

1. Putting security first

A defining characteristic of next-gen banking is being fully digital, and that means more digital channels, more customer touchpoints, and unfortunately, more digital threats.  Globally, payment card fraud cost businesses $33.8 billion in 2023. (Nilson Report) 

Security must be the starting point of any transformation strategy. Banks need to be ready to defend against increasingly sophisticated fraud tactics while also ensuring seamless, low-friction user experiences. Cybersecurity must and will evolve to become predictive and proactive, using AI to prevent threats before they emerge. 

The financial incentives for this transformation are compelling—one IBM study found that AI and automation in security reduce breach costs by an average of 26.9% (Ponemon Institute). In real terms, with greater efficiency and reductions in compliance costs and risk for an organisation, the financial gains can be even more significant. 

How to get there:

2. Compliance built in

Next-gen banks aren’t just digital, they’re agile. But regulatory environments are evolving fast, and compliance remains one of the most resource-intensive parts of the business. A 2023 study by LexisNexis Risk Solutions found that financial institutions spend an average of 5-10% of their annual revenue on compliance-related costs, with mid-sized banks facing a disproportionately higher burden. Research from the Financial Stability Institute shows that since 2008, the annual volume of regulatory changes that banks must track and implement has increased by over 500%. 

According to KPMG’s Banking Outlook Survey, 73% of financial CIOs are now investing in AI-powered compliance tools as their top technology priority.

The opportunity now is to shift from reactive to proactive compliance, using AI to automate and monitor processes in real time.

How to get there:

3. Operational agility in the back office

Digital transformation often focuses on the customer-facing front end—but true efficiency comes from transforming the back office. A 2023 Deloitte Banking Outlook revealed that 67% of financial institutions are now investing in AI-powered automation technologies specifically for back-office operations. Next-gen banking demands leaner, smarter internal operations that can adapt and scale. By investing in AI-powered process automation, banks can reduce costs, improve speed, and reallocate human talent to higher-value work. 

How to get there:

4. Intelligent customer engagement

Customers now expect instant, personalized, and always-available service, and AI is an engine that can help your financial institution deliver that.

Industry data shows that 66% of customers now expect companies to understand their unique needs and expectations (Salesforce). 

Next-gen banking is not just secure and efficient—it’s smart. It anticipates customer needs, reduces friction, and delivers consistent experiences across all channels.

How to get there:

The future of banking

Looking ahead, the role of AI in banking will only deepen. 85% of banking executives believe that AI will become the primary differentiator between banks within five years (Economist Intelligence Unit). In that time, we’ll see AI shift from a support function to the central engine of how banks operate and interact with customers. 68% in the industry believe AI will fundamentally change how banks gather information and interact with customers (Accenture Banking Technology Vision).

We can also expect to see financial services become hyper-personalized, with 94% of banking executives reporting they believe personalization will be critical to customer acquisition and retention (PwC Financial Services Technology). There is a strong consensus that banking experiences will be increasingly seamless and embedded within the digital ecosystems people use every day—from e-commerce platforms to messaging apps. By most executive estimates (78% according to Capgemini’s World Retail Banking Report), embedded finance will be mainstream within five years.

Turning strategy into action

This future won’t arrive in a single leap—it will be built gradually, through the smart, strategic deployment of AI solutions that solve real problems today. The statistics reveal not just aspirational thinking but concrete investments and strategic priorities that are already reshaping the banking landscape. As these trends converge, we’ll witness a fundamentally transformed banking experience that’s more intelligent, personalized, integrated, secure, and flexible than ever before.