Around 51 per cent of financial institutions plan to increase their investment in artificial intelligence over the next 12 months, with a further 22 per cent maintaining current spending levels, according to a new survey from Lloyds Banking Group.

The Financial Institutions Sentiment Survey (FISS) indicates that the UK’s financial sector is entering a new phase of AI maturity, with firms reporting measurable benefits. The report, which surveyed more than 100 senior leaders across the UK’s largest banks, asset and wealth managers, insurers, and financial sponsors, found that nearly 60 per cent have seen improved productivity from AI adoption – up from 32 per cent a year ago.

Benefits from AI technology are broadening, with 33 per cent of respondents stating that AI is enhancing client experience, compared to just 14 per cent in 2024. Similarly, 33 per cent of senior leaders said they are gaining deeper customer insights using AI tools, up from 18 per cent the previous year. Lloyds noted that these results demonstrate AI’s progression from “pilot to performance” for UK financial institutions, with two-thirds of respondents believing AI will be a key driver of economic growth.

Despite these advances, the survey also highlights ongoing concerns about the pace of national adoption. Seventy per cent of respondents believe the UK should accelerate its national AI strategy to remain globally competitive. This sentiment is reflected in the finding that 91 per cent of institutions now view AI as more of an opportunity than a threat.

The survey further reveals that 54 per cent of senior leaders expect AI to deliver a competitive advantage, while 53 per cent anticipate cost savings, and half believe AI will help build a more technologically skilled workforce. Nearly half of the institutions surveyed have established dedicated AI teams, and 20 per cent have partnered with external AI providers to speed up adoption.

“We’re seeing AI move firmly into the execution phase. Institutions are building on early investments and delivering tangible outcomes, such as productivity gains and sharper customer insights,” said Rohit Dhawan, director of AI and advanced analytics at Lloyds Banking Group. “At Lloyds, we now have over 800 models in operation, representing more than 200 AI use cases, designed to enhance colleague and customer experience. We believe that, with the right focus, the UK has an opportunity to lead in responsible AI adoption across financial services.”

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