AI is no longer experimental for the UK’s financial institutions, with the tech now driving real gains in frontline performance, according to the latest research from Lloyds.

According to the bank’s latest Financial Institutions Sentiment Survey, the financial sector is entering a new phase of AI maturity, with firms reporting tangible business benefits and increased investment in the technology over the past year.

The annual survey, which captures insights from more than a hundred senior leaders across the UK’s largest banks, asset and wealth managers, insurers, and financial sponsors, reveals a sharp rise in AI adoption and impact, with nearly 60% reporting improved productivity from AI adoption, a figure almost double that of last year.

A third (33%) of financial institutions said that AI had helped to enhance the client experience, up from just 14% in 2024, while another 33% agreed the technology had given them deeper customer insights, rising from 18%.

Perhaps more importantly, more than a fifth (21%) of businesses said that AI is now directly driving business growth, a striking increase from just 8% found in Lloyd’s last survey.

“We’re seeing AI move firmly into the execution phase,” said Rohit Dhawan, director of AI and advanced analytics at Lloyds Banking Group.

“Institutions are building on early investments and delivering tangible outcomes, such as productivity gains and sharper customer insights.”

This momentum is fuelling a shift in sentiment, with 91% of financial institutions now viewing AI as more of an opportunity than a threat, up from 80%, all of which is ultimately leading to a sharp increase in investment. 

Lloyds found that more than half (51%) of institutions plan to increase their AI spending over the next twelve months, with another 22% planning to maintain their current levels of investment.

With these investments, financial institutions are aiming to make AI a strategic market lever, with 54% expecting it to deliver a competitive advantage and 52% believing it will drive business growth.

To support this, close to half (48%) of businesses have set up dedicated AI teams, while 20% have partnered with external AI providers to accelerate adoption, with the result that half of institutions say AI will eventually provide them a much more technologically skilled workforce. 

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Beyond this, there is growing optimism about AI’s potential to benefit the broader economy, with 63% of institutions believing that advancements in AI will support UK economic growth in general. However, many feel that more momentum is needed, with 70% saying the country should accelerate its national AI strategy to keep pace globally.

“This year’s FISS findings show that UK financial institutions are not only investing in AI, they’re building it into the fabric of their businesses and seeing measurable gains,” Lisa Francis, head of institutional coverage at Lloyds Bank Corporate & Institutional Banking.

“The productivity uplift alone is a compelling sign that these technologies are already reshaping the industry.”