As AI reshapes global industries, the financial services sector finds itself at a crossroads. Artificial intelligence (AI) is transforming businesses worldwide, driving gains in efficiency, risk management, and customer experience; yet the finance industry’s adoption of AI remains sluggish. In contrast, adjacent sectors such as healthcare and automotive are racing ahead with AI.
According to Stanford University’s Human-Centered Artificial Intelligence Report for 2025—one of the most insightful and in-depth studies of the swiftly evolving AI landscape—2023 saw the FDA approve 223 AI-enabled medical devices, up from just six in 2015. Self-driving cars were no longer experimental; Waymo, one of the largest US operators, provided over 150,000 autonomous rides each week. Read the tea leaves:
People are increasingly willing to trust their lives to AI. Can the financial services industry catch up with this wave of AI-led innovation without compromising the caution and prudence that have long defined its ethos? The answer is: faster than we can foresee or imagine.
The finance sector is no stranger to technology. As early as 1918, the Fedwire Funds Service conducted the first electronic money transfer in history, laying the groundwork for modern digital payments. By the 1950s, banks were investing heavily in mainframe computers and had Magnetic Ink Character Recognition (MICR).
Apparently, it is time to underscore the urgency with insights from a recent Gartner webinar, predicting that:
Over the next 20 years, they introduced Automated Teller Machines (ATMs), credit cards, and the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network, followed by online banking in the 1990s. The sector has been a pioneer in continuously embracing technology, driven by its need for speed, accuracy, and security.
Prepare! The machine customers are coming
However, the current air of caution is reasonable. The industry is weighed down by decades of investments in legacy systems, constrained by compliance requirements, and guided by a sensible need to prevent inadvertent AI misadventures from eroding the hard-won trust of its customers. Nevertheless, the industry also recognizes that the stakes are high; it must embrace AI sooner rather than later. In a recent Gartner webinar, banking and insurance analysts provided the answer to the question of “how soon?” Their top predictions for financial services include:
- By 2027, AI and business strategies will be indistinguishable within the ten fastest-growing insurance firms.
- By 2028, 25% of customer interactions in banking will be handled by AI-powered machine customers.
- By 2029, CIOs in insurance will spend 30% of their time managing machine employees, as AI redefines internal operations.
But the most telling forecast by the analysts is the arrival of AI-enabled machine customers. By 2028, 25 percent of total customer service interactions between customers and their banks are expected to be enabled by machine customers. In the next two to three years, machine customers could be using AI for several tasks, including automated trading, credit scoring, filing claims, underwriting help, insurance recommendations, etc. When customers become AI-savvy, businesses cannot stay far behind.
A recalibrated approach
The challenge of recalibrating technology in the financial services industry is inevitable. Finance is a legacy industry marked by decades of investment in complex, interdependent systems. Replacing these systems is both costly and risky.
The risk of change, especially with AI still maturing, is high. The core function of the industry—managing other people’s money—requires a level of reliability and predictability that few other sectors demand.
The industry is wary of letting machines take control and operate on autopilot. There is no workaround for this anxiety. The only way AI can be widely introduced into financial and fiduciary systems is by ensuring human oversight remains paramount. The industry should begin with low-risk, routine tasks and gradually build confidence before entrusting AI with more critical functions.
The reason for a step-by-step approach is rooted in the fact that the potential for abuse, bias, error, and ethical lapses is real. This is why we have complex regulatory frameworks in the industry in the first place.
Nothing—neither machines, algorithms, nor humans—should be completely trusted regarding financial transactions and decisions. A combination of all should be leveraged in the interest of the customer. Trust is the ultimate currency in the industry, and it must remain non-negotiable.
The 80/20 rule for phased adoption
The incremental approach is essential. Financial services leaders should apply the 80/20 rule, focusing on AI for the 20 percent of tasks that account for 80 percent of a company’s effort or operating costs.
- Service operations (40%)
- IT (40%)
- Marketing and sales (36%)
- Product development and compliance (31%)
The process is well underway. According to Stanford University’s report, the leading uses of AI in the financial services industry include service operations (40 percent), IT (40 percent), marketing and sales (36 percent), product and service development (31 percent), and risk and compliance (31 percent). The numbers also indicate the industry has a long way to go before AI becomes an intrinsic part of operations.
The outcome of applying AI becomes quickly evident to those who use it. At my company (Quility Insurance), for instance, AI interventions have reduced human interaction with customer support tickets, by 70 percent.
The ultimate goal, of course, for financial service providers should be to harness AI for service delivery. However, a caveat is that high-risk processes require nuanced judgment, so human oversight must be baked into the processes.
Building on the foundation of trust
AI is not about mastering a technology. It should be used by the industry to further build on the foundation of trust.
Trust is the key determinant of AI adoption. Cultures and industries that trust new technologies tend to adopt them more quickly. For example, India’s rapid adoption of mobile payments was fueled by trust in mobile technology, whereas the US remains more reliant on credit cards. The finance industry must build trust in AI through transparency, ethical standards, and demonstrable success in low-risk applications.
The 2025 Edelman Trust Barometer provides insights into geographies that are likely to adopt AI more rapidly than others. A section of the report shows that trust in AI is higher in the developing world than in the developed world. India, where 77 percent of those polled expressed trust in AI, tops the list.
India is followed by Nigeria, Thailand, China, Indonesia, Saudi Arabia, Kenya, and the UAE. The research reveals that India is 45 points more trusting of AI, and China is 40 points more trusting of AI than the US. Consequently, finance service providers in the US will likely find it more challenging to convince their customers on the use of AI. To accelerate adoption, it is essential to build on the trust factor.
The goal should be to use AI to enhance human capability. For example, in the life insurance industry, the average age of underwriters is rising, experience is being lost as the workforce retires, and fewer young professionals are entering the field. AI can fill this gap, supplementing the workforce rather than supplanting it.
The three key steps to move forward would include:
- Start small, scale wisely: Begin with low-risk, high-volume processes where AI can deliver clear benefits, building organizational confidence and customer trust.
- Maintain human oversight: Retain human supervision for high-risk or ethically sensitive decisions, using AI as a support tool rather than a substitute.
- Learn from others: Analyze successful AI adoption in adjacent regulated industries and adapt best practices.
The conservative adoption of AI in the finance industry is not a weakness; it is a strength. By proceeding thoughtfully, the industry can harness AI’s benefits while safeguarding trust, ethics, and stability. With each successful step, the sector can move closer to a future where AI is a trusted partner.
Contact Details:
Email- ashok.jakati@gmail.com
Name – Ashok Jakati
