AI has become a core part of UK financial institutions’ operations, moving firmly from pilot projects to measurable business performance, according to the latest Lloyds Financial Institutions Sentiment Survey.
The annual survey, which gathered insights from more than 100 senior leaders across the country’s largest banks, asset and wealth managers, insurers and financial sponsors, shows that firms are seeing concrete gains from their AI strategies.
Over the past 12 months, 59% of institutions reported improved productivity through AI, compared with 32% in 2024. Enhancing client experience is now a focus for 33% of firms, more than doubling from 14% the previous year. Similarly, 33% said AI has delivered deeper customer insights, up from 18%, while 21% noted that it has directly driven business growth, a sharp rise from just 8% in 2024.
Confidence in AI’s potential is growing across the sector, with 91% of respondents viewing the technology as an opportunity rather than a threat, compared with 80% in the previous year’s survey. This optimism is translating into greater financial commitment, as 51% of institutions plan to increase AI investment in the coming year, while a further 22% expect to maintain current levels.
Looking forward, UK financial institutions see AI as a strategic advantage. Some 54% believe it will deliver competitive edge, 53% expect it to enable cost savings, 52% say it will drive further growth, and half of respondents see it playing a key role in developing a more technologically skilled workforce.
Adoption is also being supported by structural changes within firms. Nearly half (48%) have already set up dedicated AI teams, while 20% are collaborating with external providers to accelerate deployment. Beyond the corporate environment, 63% of institutions expect AI advancements to benefit the broader UK economy. Still, there is a sense of urgency, with 70% urging the government to accelerate the national AI strategy to remain globally competitive.
Lloyds Bank Corporate & Institutional Banking head of institutional coverage Lisa Francis said, “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, designed to enhance colleague and customer experience, and we believe that, with the right focus, the UK has an opportunity to lead in responsible AI adoption across financial services.”
Lloyds Banking Group director of AI and advanced analytics Rohit Dhawan said, “We remain focused on supporting financial institutions to embed the technology in a way that drives measurable outcomes.”
The findings from this year’s FISS highlight a pivotal moment for the UK financial services sector, as AI becomes increasingly embedded into day-to-day operations and is viewed as a driver of long-term competitiveness and economic growth.
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