52% of bank leaders view technology upgrades as critical for competing with fintech firms and sustaining growth [1]. New technologies will impact financial institutions' operations in 2026, separating early adopters from late movers. This article examines banking technology trends, defining banking and finance over the next few years.
Banking transformation in 2026 requires consolidating complex systems while deploying customer-facing GenAI. Banks investing strategically in unified operations and digital channels will capture competitive advantages in an increasingly digital-first industry.
Technology trends at the forefront of banking
To better understand where the industry is headed, we should look at where banks invest. KPMG research shows that security and fraud prevention, data-driven personalization, and regulatory compliance top the list of priorities for the next 12 months.
The following technology trends in banking align closely with these investment areas.
1. Banks merge fraud and cybersecurity teams
Cyberattacks against banks are surging. 75% of banks report increased attacks, prompting 89% to boost their cybersecurity budgets [1]. At the same time, financial threats are becoming more sophisticated, blending traditional fraud tactics with advanced cyber techniques.
Banks currently operate fraud prevention and cybersecurity as separate departments with different priorities and tools. This siloed approach is no longer effective because modern attacks don't fit neatly into one category: attackers combine phishing, social engineering, account takeovers, and technical exploits in coordinated campaigns.
The industry is unifying these separate functions. By 2031, at least half of large financial institutions will merge their fraud and cybersecurity departments into unified security operations [2]. This organizational shift allows teams to share threat intelligence faster and coordinate responses against complex, multi-vector attacks.
Security vendors are following suit. Gartner predicts that by 2029, over half will offer unified fraud prevention platforms that combine multiple protective functions into one system [1]. These integrated platforms give merged teams the tools they need to detect, analyze, and respond to threats holistically rather than in fragmented silos.
2. AI creates emotionally intelligent banking experiences
Banks will design conversational AI systems that build emotional connections with customers, creating personalized interactions that feel genuinely caring and supportive [3]. These AI systems will learn individual customer preferences, communication styles, and financial goals to provide tailored guidance that fosters long-term loyalty. The technology moves beyond basic transaction processing to become a trusted financial companion.
This evolution of trends in banking technology expands digital banking's role in addressing broader customer well-being challenges. Many customers experience financial stress, anxiety, or decision paralysis that affects their financial choices. AI systems will be designed to recognize these emotional states and provide appropriate support, resources, or gentle guidance toward professional help when needed. Banks position themselves not just as financial service providers but as partners in customers' overall well-being journey.
Read more: AI in Fintech: Use cases and best practices
3. Human skills amplify digital banking
While AI handles emotional recognition and initial support, human expertise remains irreplaceable for complex situations. Banks face growing demand for emotionally intelligent interactions when customers need empathy and human connection during financial stress or major life decisions [3]. Current frontline staff often lack these sophisticated interpersonal skills.
Banks are implementing human augmentation technologies that transform employee capabilities in real-time. These systems provide frontline staff with sentiment analysis, behavioral guidance, and emotional coaching during customer interactions. The technology doesn't replace human judgment but enhances it through AI-powered insights about customer emotional states, suggested responses, and escalation recommendations. This creates a hybrid model where technology amplifies natural human empathy and interpersonal skills.
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4. Peer-to-peer banking support replaces traditional service models
Customer matchmaking in banking shifts service delivery from staff-only support to community-driven assistance [3]. Banks create technology platforms where experienced customers help newcomers with questions, share product knowledge, and provide peer mentorship. This model emerges from three key drivers: ongoing labor shortages that make staffing expensive, customer expectations for round-the-clock service, and research showing people often trust peer advice more than official bank messaging.
Banks need four technology components to make this work: trust systems that verify identities and track helpful behavior, plus matching tools that connect customers with similar needs. They also need community management platforms to monitor conversations and knowledge systems to capture peer insights for future use. This approach transforms banks from direct service providers into community builders. The result extends service capacity without adding staff while creating stronger customer relationships through authentic peer connections.
5. Banks redirect 50% of IT budgets from maintenance to innovation
One of the latest trends in banking technology is strategic spend rebalancing [4]. Banks face mounting technology costs driven by inefficient resource allocation. Business units often lack ownership of tech expenses, leading to unchecked spending. Overly cautious risk management blocks new feature development. Legacy systems resist modernization efforts. Departments purchase duplicate tools without central oversight. Acquired technologies integrate poorly with existing systems. These inefficiencies drain resources that could fuel innovation.
Banks can redirect over 50% their IT spending to high-impact initiatives by streamlining operations and eliminating redundancies [4]. Leading banks strive to achieve a workforce composition where 75% are "doers" like developers and engineers, while most banks remain below 50% [4]. This rebalancing focuses resources on innovation rather than maintenance while building internal capabilities. Strategic technology partnerships offer a solution by helping banks consolidate redundant systems and redirect over half their IT spending to innovation.
6. GenAI automates data management
AI-enhanced data management is one of the latest banking technology trends addressing banks' longstanding information challenges. Banks possess richer datasets than most industries, but struggle to extract value from their information assets.
Despite recognizing the need for better data management, most banks remain in the early stages of modernization. KPMG research shows that only 10% of banks have fully developed and operational data capabilities, while 54% have identified the need but haven't begun planning implementation [1].
Inconsistent data quality creates reliability issues across business functions. Incomplete traceability of data flows complicates regulatory compliance and limits the adoption of advanced technologies. These data management failures prevent banks from leveraging their information advantage for competitive differentiation.
Generative AI offers a solution by automating data lineage capture and metadata generation. Pilot programs show productivity gains of 40% to 70% in specific data tasks and 20% to 25% improvement in data onboarding timelines [4]. GenAI tools can automatically correct duplication and formatting errors while identifying and removing data anomalies. The technology enhances traceability by automating data mapping and clarifying complex information flows across systems. This automation transforms data management from a cost center into a strategic capability that enables faster decision-making and regulatory compliance.
7. Blockchain enables portable banking identities across platforms
Innovative banking technology trends, such as blockchain-based digital identity services, help customers use their verified credentials across multiple platforms [3]. Currently, customer identity and accounts work only within each bank's system. Blockchain technology lets banks create digital identity services that customers can use to access other financial services and apps. Banks can verify who their customers are and help them make transactions both inside and outside traditional banking.
This changes banks from controlling closed systems to providing trust services in open networks. Customers get seamless identity verification across multiple platforms without starting over each time. Banks stay relevant by becoming the trusted source that confirms customer credentials in blockchain networks. This creates new ways for banks to make money through identity verification services while keeping them essential in the growing world of decentralized finance.
8. Banks make payments free, monetize transaction data instead
Payment monetization through data analytics represents a shift in how banks generate revenue from money movement [3]. Currently, banks earn fees from payment processing and transaction charges. This model creates friction for customers and businesses who pay for basic money movement services. Banks are moving toward making payments free while monetizing the valuable data generated from transaction flows. Payment data reveals customer spending patterns, cash flow timing, and business performance metrics that help optimize financial decision-making.
Free payment processing encourages higher transaction volumes and deeper customer engagement. Based on payment insights, banks can offer cash flow optimization services, predictive analytics, and business intelligence tools. This model reduces physical cash usage by making digital payments more attractive than cash transactions. The strategy creates new revenue streams through data-driven advisory services while improving customer relationships through reduced friction. Banks transform from transaction processors into financial intelligence providers that help customers optimize their money management.
9. Banking systems migrate to cloud-native design
Cloud-native core banking modernization drives infrastructure upgrades as banks replace decades-old legacy systems with modern architectures. While 91% of financial institutions utilize cloud services, genuine cloud-native adoption remains limited [5]. Capgemini's 2024 research reveals only 12% qualify as "cloud innovators"-institutions that effectively implement cloud-native architectures and scalable platforms to achieve measurable business advantages [5].
Traditional core banking platforms create bottlenecks that prevent rapid product launches and limit integration with contemporary financial technologies. Banks struggle with systems that require months to implement simple changes and cannot support real-time processing demands.
Cloud-native architectures use microservices, containerization, and API-first design to enable rapid deployment and seamless third-party connections. This transformation allows banks to launch new products in weeks rather than months while maintaining regulatory compliance and security standards.
10. Banks transform into financial platforms
Open banking ecosystem development creates interconnected financial services networks where banks collaborate with fintech partners, embedded finance providers, and regulatory systems through standardized APIs. This banking technology trend moves beyond traditional closed banking models toward platforms that enable third-party developers to build applications and services around financial data and transactions. Banks can offer customers access to specialized tools for budgeting, investing, lending, and payments without developing every capability internally.
The ecosystem model allows banks to focus on their core strengths while partnering with innovative companies that serve specific customer needs. Regulatory frameworks in many regions now require open banking capabilities, making ecosystem participation essential rather than optional. Banks that build robust API platforms and developer communities can monetize their infrastructure while expanding service offerings. This strategy transforms banks from product providers into platform orchestrators that enable broader financial innovation. KPMG survey data reveals 58% of banks plan embedded finance implementations within one year, demonstrating the rapid shift toward platform-based business models [1].
Conclusion
Current banking technology trends show how financial institutions must transform operations, customer service, and revenue generation. The trends connect rather than operate independently. Cloud-native systems enable better AI and data management. Customer matchmaking works best with strong security and human augmentation. Technology rebalancing frees resources for emotional AI and blockchain development. Banks acting on these trends gain advantages through lower costs, better customer experiences, and diversified revenue.
Sources:
- KPMG LLP. (2025). 2025 Banking Survey: Technology. KPMG International Limited.
- Ayoub, D., Redshaw, P., O'Neill, S., & Sharma, V. (2025, January 30). Emerging tech: The future of online fraud prevention. Gartner Research.
- Financial Services Business Leader Research Team. (2024, August 29). Future of banking: 6 visions for leaders to prepare for 2030. Gartner Research.
- BCG Expand Research & GlobalData. (2023). Boston Consulting Group.
- World Cloud Report - Financial Services (2025). Capgemini
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