This article first appeared in The Banker on Thursday 6th March 2025.
For several years, the buzz has been that artificial intelligence can help make banks smarter, more efficient and more profitable. McKinsey estimated last year that generative AI alone could bring the banking industry as much as $340bn a year in additional value.
In practice, though, banks have had mixed success in scaling the latest technologies. Sure, some have made progress, such as the retail bank that used AI to generate personalised nudges that help customers with financial planning, or the regional bank that used GenAI to boost coding productivity by 30 per cent.
However most banks are still experimenting with proofs of concept, such as document summaries or basic emails. Few have identified a path to value or seen substantial returns on their investment.
Experience has demonstrated that just adding new AI technology on top of existing processes will not lead to transformational change; rather it could lead to a spaghetti of technical debt. Given that banks are already facing tricky conditions, in the form of lacklustre productivity and competition from new entrants like fintechs and neobanks, that is not an appealing proposition.
Larry Lerner is a partner in McKinsey’s Washington DC office, and Violet Chung is a senior partner Hong Kong office.
To access the full article please visit The Banker, "How banks can turn AI’s promise into real impact"