How are CFOs navigating AI investment priorities?

The banking sector stands at an important inflection point as leaders navigate competing pressures around technology investment, regulatory burden and strategic growth, according to KPMG's 2025 CEO Outlook on Banking and Capital Markets. 

For finance chiefs, the challenge centres on balancing capital allocation between transformation initiatives and defensive positioning amid economic headwinds including tariffs, inflation and liquidity concerns.

KPMG’s research indicates that banking leaders are maintaining investment momentum despite market uncertainty, with spending decisions increasingly directed towards technology infrastructure rather than traditional expansion models.

Capital allocation priorities shift

KPMG's findings show that 20% of chief executives identify advanced digitalisation, connectivity and AI as primary levers for growth, suggesting a concentration of budget resources into technology-enabled capabilities.

The appetite for mergers and acquisitions persists, though the research indicates a preference for strategic transactions focused on competitive advantage rather than scale alone.

Geoff Rush, Global Head of Banking and Capital Markets KPMG International, says: "Given high operational and regulatory costs, scale [in terms of assets and customer numbers] is critical for banks to be able to spread these costs effectively, driving M&A activity."

He adds: "Banks are looking for deals that will expand their distribution capabilities, differentiate their value propositions and help them gain access to new markets and regions."

Counter to the positive investment outlook, banking executives flagged substantial risk factors. 

Cybercrime and cyber insecurity ranked highest among concerns at 86%, pointing to ongoing security infrastructure costs that finance chiefs must factor into technology budgets.

Technology investment accelerates

The research reveals that 65% of banking chief executives cite AI as their top investment priority, with 59% expecting autonomous AI systems to deliver significant operational impact. 

For finance leaders, this indicates a shift in capital deployment towards emerging technologies with potentially substantial returns.

Financial institutions are implementing AI across customer engagement functions, including onboarding processes, Know Your Customer requirements and transaction monitoring for financial crime prevention. 

The focus on deployment speed rather than pilot programmes suggests urgency around competitive positioning.

Budget allocation data shows 70% of chief executives plan to dedicate between 10% and 20% of total budgets to AI initiatives in 2026, representing a material commitment that finance chiefs must justify through productivity gains, risk mitigation and advanced analytics capabilities.

Owen Lewis, Global Lead of AI in Banking and Capital Markets KPMG Ireland, says: "AI has moved from hype to a critical component of strategy in banking." 

He adds: "AI is now central to operational resilience, customer trust, productivity and competitive edge. There is an increasing belief that AI is not just about automating tasks, but about fundamentally reimagining how banks operate and serve customers."

KPMG identifies obstacles that could affect AI investment returns, including regulatory uncertainty that complicates long-term capital planning, ethical considerations around algorithmic bias that may create compliance costs, and IT infrastructure challenges related to data quality and system readiness.

Workforce restructuring implications

The research indicates that 78% of banking leaders view workforce AI readiness as a potential negative factor for organisational performance if not managed properly, highlighting the connection between technology spending and human capital investment.

Rather than reducing headcount, KPMG reports that institutions are redeploying personnel into higher-value functions such as data interpretation, risk management and product development.

This approach could affect operating expense ratios differently than traditional cost-reduction programmes, requiring finance chiefs to develop new metrics for workforce productivity.

Geoff Rush adds: "AI is no longer a side project for banks — it's the engine driving operational resilience, customer trust, productivity and future growth. 

“The future of banking belongs to those who invest in people as much as in technology. Skilling, flexible work and clear career pathways are now strategic imperatives — because AI's true value is unlocked by empowered, adaptable teams."