UK financial institutions double down on AI as productivity surges

Artificial intelligence (AI) has shifted from experimental pilots to measurable performance across the UK’s financial sector, with firms reporting sharp gains in productivity and customer engagement.

According to the latest Lloyds Financial Institutions Sentiment Survey (FISS), half of UK financial institutions plan to increase their AI investment in the next 12 months, building on a year of rapid adoption and impact.

The survey – which gathered insights from over 100 senior leaders at banks, asset and wealth managers, insurers, and financial sponsors – found that 59% of firms now report improved productivity from AI, up dramatically from 32% in 2024. Other benefits are also accelerating:

33% are using AI to enhance client experience (vs 14% in 2024)
33% are gaining deeper customer insights (vs 18% in 2024)
21% say AI is directly driving business growth (vs 8% in 2024)

This surge in tangible outcomes is fuelling a decisive shift in sentiment. A record 91% of institutions now see AI as more of an opportunity than a threat, up from 80% a year earlier.

Investment plans reflect that optimism: 51% of institutions expect to raise AI spending over the coming year, with a further 22% maintaining current levels. Almost half (48%) have already established dedicated AI teams, while one in five are partnering with external providers to speed up deployment.

Looking forward, financial institutions view AI as a strategic lever. Over half believe it will deliver competitive advantage (54%), unlock cost savings (53%), and drive business growth (52%). Half also see AI as a tool for upskilling the UK workforce, underscoring its potential long-term economic impact.

Indeed, two-thirds (63%) of respondents believe AI will be a key driver of UK economic growth. But with 70% calling for faster progress on a national AI strategy, many warn that the UK risks losing ground to global competitors.

Lisa Francis, Head of Institutional Coverage at Lloyds Bank Corporate & Institutional Banking, said:

“This year’s FISS findings show that UK financial institutions are not only investing in AI, they’re building it into the fabric of their businesses and seeing measurable gains.

“The productivity uplift alone is a compelling sign that these technologies are already reshaping the industry,” Francis added.

Rohit Dhawan, Director of AI and Advanced Analytics at Lloyds Banking Group, added: “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. At Lloyds, we now have over 800 models in operation, representing more than 200 AI use cases. With the right focus, the UK has an opportunity to lead in responsible AI adoption across financial services.”