Banks double AI budgets but lag behind in data governance
New research from Tech Mahindra shows that only 1 in 5 banks worldwide have robust, real-time data governance frameworks in place.
The findings were drawn from a global survey report, titled "Building the AI-Driven Bank of Tomorrow," produced in partnership with East & Partners. The research was based on interviews with 150 senior bank executives - including Chief Information Officers, Chief Technology Officers, and Chief Data Officers - across 25 countries spanning the Americas, Europe, the Nordics, and Asia-Pacific. The report explores how artificial intelligence (AI), generative AI (GenAI), and agentic intelligence are influencing strategies in the global banking sector.
AI investment continues to rise
The survey found that 81% of banks globally have already set aside dedicated budgets for AI, with these allocations projected to nearly double to 17% of total IT spend by 2028. This increase signals what the report describes as a shift from AI experimentation to adoption at enterprise scale.
With European banks leading, over one third (37%) of financial institutions are now investing heavily in GenAI to try to secure an early-mover advantage. Regional differences are also significant, with banks in the Americas allocating the highest share of IT budgets to AI at 12%, estimated to be worth roughly USD $660 million annually. European institutions currently allocate 9%, with average budgets of approximately USD $499 million. The Asia-Pacific region and Nordics, currently allocating 7% and 6% respectively, are both expected to increase priorities around AI and GenAI by 2028.
Data governance and digital transformation
Despite large-scale investments, the report identified gaps in data governance frameworks. Only 1 in 5 banks have what is described as a robust, real-time data governance structure. Banks that are moving towards modern Data Mesh architectures and utilising Explainable AI models are said to be realising stronger outcomes for personalisation and compliance.
Modernising legacy systems is another major area of focus. The research indicates that 92% of banks globally are engaged in legacy system modernisation initiatives. However, just 14% of these initiatives have exceeded expectations to date, with 30% on track, 17% falling short, and nearly a third (31%) scaling down their programmes to optimise cost and value.
Regulatory priorities and operational stability
Alongside innovation and digital transformation priorities, banks face pressures in regulatory compliance and operational resilience. The report found that globally, 51% of banks are allocating IT spending to enhance regulatory compliance while 48% are focusing on operational stability.
Customer experience has also emerged as the top area for AI deployment. Almost 70% of surveyed banks cited customer experience as their main use case for AI, ahead of automation and compliance applications.
Industry perspectives
Kshitij Kumar, Global Head of the Service Line: Banking, Financial Services & Insurance, Tech Mahindra, said, "Across the BFSI industry, AI has moved from experimentation to execution, yet many institutions still grapple with fragmented legacy systems and the complexity of embedding AI responsibly at scale. The report serves as a strategic playbook for banks to navigate the evolving AI landscape with data-backed insights, proven frameworks, and actionable benchmarks to accelerate transformation. Tech Mahindra, with its 'AI Delivered Right' strategy and Agentic AI platform TechM Orion consisting of 50+ ready BFSI agents, remains committed to accelerate customer's journey towards the bank of tomorrow - one which is digital, intelligent, and indispensable."
The report aims to support senior banking executives and CXOs in aligning their technology, organisational culture, and business strategies in order to build resilient, human-centric financial ecosystems. It addresses challenges such as defining return on investment, managing cybersecurity risk, and breaking down organisational data silos. According to Tech Mahindra, the survey offers strategic frameworks and execution models designed to help banks accelerate modernisation, embed AI responsibly, and deliver more personalised, secure, and compliant digital services.
