Banks hit AI plateau as 80% see no bottom-line impact

Many lenders plateau after deploying isolated tools instead of full transformation, said McKinsey.

Artificial intelligence (AI) can help simplify banks' workflows, but 80% of banks globally who have some version of AI-led applications have yet to see significant impact on their bottom-line.

“The impact of AI, gen AI, and agentic-AI-led applications in the sector has been mixed. Nearly 80% of financial institutions that we work with in Asia report using some version of AI-led applications. But a similar proportion globally reports no significant impact on their bottom line,” Abhilash Sridharan, partner and service operations lead for McKinsey & Co. in Asia, said in an episode of McKinsey Operations Talks.

One challenge are functional and business silos. Banks also chase impact from generative AI alone which has inherent limitations, according to Sridharan.

“[It’s] important to pair it with a full-stack lens, where you blend gen AI with agentic AI, traditional AI automation, and digital applications to maximize value capture across the different domains,” he said.

Banks should also deploy narrow use cases and point solutions.

“It is very easy to pick and choose the easiest possible areas for you to go after—for example, building a chatbot for customer care, building knowledge management applications for your employees, or building a fast credit memo writer for a subset of the businesses,” Sridharan said in the podcast.

“And then you plateau right after that. That’s essentially where you stymie the impact from AI versus driving end-to-end transformation of domains, which are business backed and have AI at the center,” he said.

Financial institutions should “Amazon-ize” their ability to drive AI-led capabilities across their organisation, he said. “The retail bank, the SME [small and medium-size enterprise] bank, the midcorporate institution, and the institutional bank shouldn’t build stand-alone AI capabilities, because the ROI would be through the roof.”