How banks can factor in the consequences of change

Increasingly, banks recognise that emerging technologies are pivotal to achieving cost efficiencies and improving organisational and project delivery agility. In particular, barometer findings indicate that banking leaders identify artificial intelligence (AI) as the most significant driver of technology transformation programmes, followed by data security and customer trust.

However, it’s vital that banking executives ensure digital transformation and the use of emerging technology serve not just as a competitive differentiator, but as a strategy to mitigate risk and advance overarching business objectives. Achieving this requires expanding the focus beyond immediate bottom-line benefits toward a comprehensive, 360-degree strategic outlook.

Adopt a long-term perspective

While banks are relatively advanced in technology adoption, executives face the challenge of ensuring digital initiatives align with strategic priorities. This requires pivoting towards long-term goals and factoring in the consequences of change. For example, AI is driving significant changes to the workforce. According to the C-suite barometer findings, 33% of leaders report AI is replacing jobs, while 55% say it is already creating some new roles.

Such changes to workforce dynamics require developing core competencies and skills as a priority. As central institutions in societal and economic stability, deepening understanding of emerging technology’s influence from within promotes responsible AI adoption that underpins customer trust. Knowledge improvement measures taken also help to ensure that data-driven frameworks not only reflect risk management objectives but strengthen them. In addition, developing a dynamic recruitment policy prioritises talent acquisition so that banks have the managers of tomorrow in place, positioning themselves for a suistainable future.

Verify and validate outcomes

AI adoption by banks is primarily driven by the goals of enhanced forecasting and informed planning. Fifty per cent of C-suite barometer respondents highlighted better decision-making as the top priority, with 43% using AI to gain a competitive advantage. Realising these outcomes requires having precise business objectives, robust data and strong collaboration between technology and business units. In particular, cross-functional knowledge sharing is essential for maximising digital transformation results.

Importantly, executives must address the risks of errors and misinterpretations by AI, often referred to as ‘hallucinations’. While banks increasingly use AI to compare and interpret regulations, human expertise and oversight is essential to verify source information used and validate analysis conclusions. This rigorous verification is critical, particularly for risk management and modelling geopolitical uncertainty scenarios. It’s vital to understand that AI’s approach to complex risks involving liquidity, credit and market risks requires precise data tailored to strategic objectives.

Assess regulatory tensions

Driving efficient cross-border growth, reinforcing compliance and streamlining operations remain top priorities for banking leaders. Over 90% of surveyed institutions plan international expansion. While prime expansion targets include the US, Canada, France and Germany, the high-growth potential of China and the Asia-Pacific (APAC) region is increasingly on banks’ expansion list. The predominant threat to expansion plans remains regulatory compliance, cited by 38% of executives.

Banks’ compliance strategies are being tested by divergent global regulatory approaches. In particular, the US under President Trump is taking an aggressive deregulatory approach that has loosened capital requirements and reduced consumer protection policies. At the same time, Europe is seeking to simplify regulations to maintain banks’ competitiveness. Bank executives must anticipate ongoing regulatory shifts and proactively incorporate a range of potential outcomes into their expansion strategies. In particular, some regulatory changes may be superficial and require ongoing vigilance.

Navigate uncertainty

In an environment of persistent economic and geopolitical uncertainty, banks need to increasingly develop robust scenario planning and predictive capabilities. Leveraging AI, where appropriate, to better navigate complex risks and regulatory demands can help alleviate the challenges.

Equally, having clear business objectives, cross-functional collaboration, and a proactive approach to both technology and regulatory change are now essential for sustainable banking leadership.