A new whitepaper from Visa Consulting & Analytics suggests banks achieving the strongest results are embedding AI into real-time customer services and operational decision-making, rather than limiting its use to isolated productivity projects.

The whitepaper, From AI Promise to AI Performance claims that banks that successfully integrate AI into their core operations could emerge as the dominant players in European retail banking by the end of the decade.

The study which informs the whitepaper, based on responses from 325 senior banking executives across 17 European markets, found that the sector is moving beyond experimentation as financial institutions begin deploying AI more widely across their organisations.

More than 90% of European banks already use some form of AI across their major business functions, while 86% of respondents believe the technology will fundamentally reshape retail banking by 2030.

A further 61% expect institutions that adopt AI early and use it effectively to outperform or dominate their competitors.

However, the findings suggest that adopting AI alone will not guarantee a competitive advantage, with the outcomes achieved by banks depending heavily on where and how the technology is deployed.

Almost half of the institutions surveyed remain focused primarily on using AI to reduce costs or improve employee productivity. By comparison, fewer than one in three identify customer experience or fraud prevention as their main reason for investing in the technology.

Real-Time AI Use Produces Stronger Results

According to VCA, banks deploying AI in high-volume, real-time environments are achieving the greatest returns from the technology.

Institutions using AI for fraud detection, real-time payment decisioning and personalised customer interactions are reported to be 40% more likely to achieve transformational business outcomes than those applying it in more isolated areas.

By contrast, the impact of AI is more limited when it is used more peripherally, including within product development or lending, with the benefits tending to plateau sooner.

The research divides banks into four groups based on their approach to AI adoption.

Around 48% of respondents are categorised as “Efficiency Seekers”, with their investments primarily focused on cost reduction, operational savings and employee productivity.

“Trust Builders” represent 30% of the institutions surveyed and prioritise the use of AI to improve customer outcomes, including through faster fraud detection and more personalised services.

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A further 15% are described as “Competitor Chasers”, which are investing in the technology largely in response to pressure from elsewhere in the market.

The remaining 7% are “Compliance Keepers”, whose AI activity is principally focused on meeting regulatory requirements.

Of the four groups, Trust Builders appear to be achieving the strongest results. These institutions are more common among digital-first banks and are more likely to report that AI is helping improve customer trust.

They are also seeing greater productivity gains. The study found that 42% of employees at Trust Builder institutions save at least two hours each week through AI-enabled processes, compared with 28% at Efficiency Seekers.

The research also indicates that banks will require modern and flexible technology foundations capable of supporting AI deployment at scale.