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New SAS-sponsored research by Economist Impact exposes banking’s crossroads – and its forward path, unveiling five imperatives for leading in the ‘Digital Intelligence Era’
As financial institutions worldwide confront intensifying economic volatility, explosive tech acceleration and the rise of digital rivals, they face an existential squeeze. Banks must act now or risk irrelevance in an AI-accelerated future, warns new research on the future of banking by Economist Impact, supported by data and AI leader SAS.
The report – Intelligent Banking: The Future Ahead, based on insights from 1,700 senior executives surveyed across six continents and in-depth interviews with select banking and fintech executives – offers banking players, large and small, a compass for navigating today’s digital intelligence revolution.
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“A defining decade lies ahead for banking, driven by converging regulatory fragmentation, tech disruption, and escalating, interconnected risks,” said Stu Bradley, Senior Vice President of Risk, Fraud and Compliance Solutions at SAS. “To persevere – and lead – in the Digital Intelligence Era, financial firms must restore consumer trust at scale by fortifying data governance and innovating with integrity.”
Technology as a double-edged sword
The study finds near universal generative AI adoption; 99% of surveyed executives report some degree of GenAI implementation. However, many institutions have struggled to realize tangible returns: More than half of execs indicate their early GenAI initiatives yielded limited to no financial benefit.
Also, while GenAI innovation boosts fraud detection, criminals wield it to create deepfakes and synthetic identities that defy conventional detection methods. Nearly 80% of surveyed executives expect cyberattacks, fraud and financial crimes to have major operational impacts in the decade ahead. This underscores firms’ need for advanced, AI-powered defenses supported by robust data management and governance frameworks.
And supercharged fraud is but one potential peril.
“GenAI’s promised benefits, like streamlined operations and more personalized customer experiences, also introduce significant operational, ethical and compliance risks,” said Melanie Noronha, Principal of Policy and Insights at Economist Impact. “Banks must balance innovation with vigilance at every turn.”
Risk management: No longer business as usual
Today’s macroeconomic volatility – characterized by interest rate fluctuations, liquidity stresses and fractured financial systems – has likewise made intelligent risk management central among institutions’ resilience strategies. Report insights reveal that:
- Interest rate swings are exposing liquidity vulnerabilities, eroding fixed-income assets’ market values and shrinking customer deposits.
- In response, banks are deploying AI for dynamic stress testing, liquidity risk modeling and real-time risk analytics.
- Cross-border compliance risks are intensifying due to fragmented regulatory frameworks around data privacy, AI and cybersecurity.
“Banks must enable adaptable risk management into every layer of their digital and operational transformations,” said Noronha. “In a world of accelerating change, resilience is more than a safeguard – it’s a catalyst for growth and competitive advantage.”
Governance and regulation enable innovation
Far from viewing regulation as a constraint, most banking executives (68%) see emerging rules on artificial intelligence, open banking and blockchain as innovation enablers.
Clear frameworks offer banks the ability to accelerate responsible technology adoption while fostering customer trust and regulatory compliance. AI frameworks can also serve as blueprints for integrating future innovations, like quantum computing.
To strengthening governance, banks are embracing AI ethics, cross-team collaboration, and automation in risk monitoring and reporting. For example, leading institutions such as Standard Chartered and DBS Bank are implementing dedicated AI governance models to balance innovation with transparency and fairness, setting new industry benchmarks for responsible innovation.
Competition redefines the banking industry
Traditional banks expect intensifying competition from digital-only banks, fintech disruptors, Big Tech and even central bank digital currencies. Many are pursuing embedded finance initiatives to create new revenue streams.
Still, strategic partnerships, particularly with fintech and Big Tech, are among the fastest routes to scale innovation and unlock new customer segments. Partnerships carry risk, however – 43% of executives cite data-sharing with third parties as a major concern.
In response, the study notes, banks are adopting joint governance, clear data protocols and integrated cybersecurity to safeguard collaboration.
“Among traditional banking players, inertia is a significant threat,” said Noronha. “Banks’ failure to convert technology, governance and talent into real, customer-centered innovation could spell their demise.”
The banking playbook: 5 imperatives for a future-fit innovation
Intelligent Banking: The Future Ahead is a follow-on to the landmark Banking in 2035 study, debuted by Economist Impact and SAS in late 2022.
The collaborators’ latest report identifies five essential strategies for leading in the intelligent banking age:
1. Strengthen data and AI governance to drive ethical innovation and operational resilience.
2. Build customer trust through transparency, data protection and ethical AI practices.
3. Streamline compliance with automation cross-functional collaboration.
4. Pursue strategic partnerships with fintech and Big Tech firms to expand reach and capabilities.
5. Accelerate enterprise innovation by upskilling talent and modernizing infrastructure.
“The future won’t wait, and neither can banking leaders,” said Alex Kwiatkowski, Director of Global Financial Services at SAS. “Those who lead with purpose, powered by digital intelligence and responsible innovation, will not only augment their own bank’s resilience and relevance – they’ll help redefine the industry, while laying a strong foundation for future growth.”
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