KPMG 2025 Banking CEO Outlook: Key Findings on AI, Growth & Cybersecurity

Report Overview and Methodology

The KPMG 2025 Banking and Capital Markets CEO Outlook represents one of the most comprehensive executive surveys in the global financial services sector. Conducted between August 5 and September 10, 2025, this 11th edition of the annual survey captures the perspectives of 110 Banking and Capital Markets CEOs from 11 key markets worldwide, including the US, UK, Germany, France, Japan, China, India, Australia, Canada, Italy, and Spain.

All respondents lead organizations with annual revenues exceeding US$500 million, with a third commanding revenues above US$10 billion. The survey covers commercial banking, capital markets and investment banking, retail banking, and diversified financial institutions operating across multiple segments. This report arrives at a pivotal moment for the industry, as banks navigate the intersection of geopolitical volatility and financial stability concerns, rapidly accelerating AI adoption, and evolving regulatory frameworks.

The findings paint a picture of an industry that is remarkably optimistic despite persistent uncertainty — banking CEOs are not just hopeful about the future, they are actively investing to shape it. From generative AI to agentic systems, from cybersecurity defenses to ESG integration, this report reveals how the world’s top banking leaders are positioning their institutions for the decade ahead.

Economic Outlook and Business Confidence

Despite living in uncertain times marked by tariffs, wars, inflation, and rapid rate hikes, banking CEOs demonstrate remarkable confidence. 83% of CEOs surveyed are confident in their company’s growth prospects over the next three years, a significant increase from 78% in 2024. Even more striking, confidence in the banking sector as a whole has surged from 66% last year to 81% in 2025.

This optimism is grounded in several factors. Technology is a key growth enabler, helping banks broaden channels through e-commerce, mobility, and health apps while boosting margins through AI-powered productivity gains. The top operational priority to achieve growth is advancing digitalization and connectivity across the business (20%), reflecting the “must-have” capability needed to deliver a connected customer experience.

Leaders are very focused on growth strategies that combine technological innovation with strategic acquisitions. As the private equity landscape shifts, banking CEOs see opportunities in both organic growth and carefully targeted M&A activity. The confidence extends beyond individual companies to a broader belief that the banking industry has the resilience and resources to thrive through disruption.

Earnings Growth Expectations and M&A Appetite

The earnings outlook reflects the growing confidence. 41% of CEOs now expect 2.5-4.99% earnings growth over the next three years, up dramatically from 30% in 2024. Meanwhile, 20% foresee earnings increasing by 5-9.99%, compared to just 13% the previous year. Only 3% anticipate zero growth, signaling near-universal expectations of expansion.

On the M&A front, appetite remains robust but has shifted toward more strategic transactions. 46% anticipate moderate-impact M&A activity, while high-impact M&A appetite declined slightly to 41% from 48% in 2024. This shift reflects a more targeted approach: banks are primarily seeking fintechs, digital lending platforms, and RegTech firms to accelerate innovation without overextending capital.

European banks see a particular strategic need for scale, with a trend toward domestic consolidation and even cross-border deals despite regulatory complexity. As Geoff Rush, KPMG’s Global Head of Banking and Capital Markets, notes: “Given high operational and regulatory costs, scale is critical for banks to spread these costs effectively, driving M&A activity.” There is also growing hope for a more favorable regulatory environment in the Euro region.

Cybersecurity: The Number One Risk for Banks

Cybersecurity has cemented its position as the dominant concern for banking CEOs. 86% identify cybersecurity as the most likely factor to impact organizational growth over the next three years, up from 81% in 2024. At 43%, cybersecurity is ranked as the top challenge facing banks — more than any other sector in KPMG’s global survey, reflecting the unique position banks hold with large customer bases and access to highly confidential personal and corporate data.

Attack surfaces are inevitably expanding due to digital banking platforms, open banking APIs, and AI itself. Hackers and criminals are employing AI to breach banks’ cyber defenses, pursue payment fraud, and install ransomware. The dual nature of AI is striking: it simultaneously raises the cyber threat and boosts banks’ ability to detect and defend against bad actors.

The level of concern is reflected in specific threat categories: 95% of CEOs are concerned about fraud detection and prevention, 94% about identity theft and data privacy, 86% about vulnerability to cyber-attacks, and 73% about risks from quantum computing on encryption. Consequently, 57% of CEOs are prioritizing cybersecurity above all other investments as a means to mitigate risk. This mirrors broader concerns seen in McKinsey’s State of AI 2025 analysis about the expanding attack surface created by enterprise AI adoption.

AI Investment Priorities and Budget Allocation

AI has moved decisively from experimentation to strategic priority in banking. 65% of banking CEOs state that Gen AI remains a top investment priority, and the financial commitment is substantial: 70% plan to allocate between 10-20% of their budgets to AI in the next 12 months. Another 12% plan to allocate even more — between 20-30% of their budget.

The top benefits CEOs are seeing from AI implementation reveal a focus on risk and intelligence: 24% cite greater fraud detection and cyber-attack response as the primary benefit, followed by enhanced decision-making and data analysis capabilities (22%), increased diversity of skills and capabilities (13%), increased efficiency and productivity (10%), and increased profitability (8%).

Banks are taking a broad end-to-end value stream approach to AI deployment, seeking gains in productivity, customer engagement, and regulatory reporting. They are reimagining AI’s use in the full customer lending, onboarding, and know-your-customer (KYC) processes, as well as fraud and financial crime prevention including transaction monitoring. The use of AI agents is growing fast, supporting customers through chatbots, enhancing back-office processes, and bolstering risk and compliance functions.

Agentic AI and ROI Expectations in Banking

One of the most significant findings in the 2025 report is the banking sector’s embrace of agentic AI. 59% of banking CEOs expect agentic AI to have a significant or transformational impact on their operations. This represents a fundamental shift from viewing AI as a tool for automation to seeing it as an autonomous agent capable of complex decision-making.

Perhaps the most dramatic shift is in ROI expectations. 69% of banking CEOs now anticipate realizing ROI from AI investments within 1-3 years, a staggering increase from just 13% in 2024. This acceleration highlights AI’s growing promise as a catalyst for enhanced profitability through automation, risk management, and advanced analytics. Another 16% expect ROI within 6 months to 1 year, while only 12% still anticipate a 3-5 year timeline.

However, ambition is tempered by real-world constraints. 61% cite the slow pace of AI regulation as a major barrier — not because banks want a regulatory vacuum, but because uncertainty makes it harder to invest boldly at scale. Ethical challenges (56%), data readiness (55%), and lack of regulation (55%) are the biggest obstacles to implementation. The sector’s bottlenecks are now organizational and cultural, not just technical. Insights from Gemini 2.5’s technical advances suggest the foundation models powering these banking AI systems are rapidly improving.

Tuning the Banking Workforce for an AI World

The workforce agenda in banking is being fundamentally rewritten by AI. 78% of CEOs say that AI workforce readiness or upskilling could negatively impact the organization if not addressed, creating a clear sense of urgency. The response is overwhelmingly focused on development rather than displacement: 83% are prioritizing workforce reskilling to leverage AI, while only 34% anticipate workforce reductions.

The long-term workforce strategy reveals a nuanced approach: 75% are focusing on retaining and retraining high-potential talent, 68% are redesigning roles and career paths to reflect AI collaboration, 64% are hiring new talent with AI and tech capabilities, and 60% are deploying staff from traditional roles to AI-enabled roles. The focus is on redeploying talent to higher-value roles — interpreting insights, managing risk, designing new products — rather than simply cutting costs.

80% of CEOs say AI is reshaping workforce development, up from 61% in 2024. Banks are moving away from traditional career ladders, investing in continuous learning, and embedding AI literacy throughout their organizations. CEOs want their workforces to welcome rather than fear AI — to work alongside agents and see the technology’s potential for creating better experiences for both employees and customers.

Rethinking Skills and Talent Retention

79% of banking CEOs say AI has redefined what entry-level skills look like, up sharply from 53% in 2024. This dramatic shift reflects how quickly AI is transforming not just what banks do, but who they need to do it. Attracting and retaining AI talent remains a significant challenge, with the biggest hurdles being bridging the skills gap (30%) and identifying candidates with the right mix of technical and collaborative skills (30%).

Banks are learning that AI success requires more than coders and data scientists. They need people who can translate business needs into AI solutions, be creative and innovative, and work across functions and generations. 76% believe experimentation is key to successful AI adoption, with appropriate guardrails in place. One of the most important leadership skills cited is “broader digital and technological literacy” (25%).

The sector is also grappling with demographic headwinds: 92% report moderate-to-high impact from an aging workforce, with retirement trends (32%) and generational skill gaps (28%) topping labor market concerns. On the working environment front, hybrid work has become the new normal: 76% expect hybrid arrangements to dominate (up from just 10% in 2024), with 55% favoring three days in the office.

ESG Strategy and Sustainability Integration in Banking

Banking CEOs are navigating the complex intersection of geopolitical pressures and sustainability imperatives. 51% say their top response to geopolitical and sustainability pressures is prioritizing compliance and reporting standards to meet investor and regulatory demands. This urgency is driven by the rapid evolution of global disclosure frameworks including IFRS Sustainability Standards, EU Taxonomy, and India’s BRSR Core.

The industry is moving beyond mere compliance. 60% of CEOs say sustainability is embedded into their business, and 45% are trying to align sustainability goals with core business strategy. The emphasis is shifting from reporting and compliance toward understanding physical and transition risks — and how that knowledge can be used to preserve value and identify new opportunities across the portfolio.

Banks are increasingly integrating ESG into risk, credit, and finance functions, changing roles, responsibilities, and KPIs to reflect new priorities. Many parts of the world have now been through their first climate reporting cycles, often relying on manual processes with significant data gaps. The next phase focuses on improving accuracy, repeatability, and efficiency — areas where AI shows tremendous promise. As McKinsey’s 2025 analysis confirms, the integration of ESG into core business strategy is becoming a competitive differentiator across industries.

AI as a Driver of ESG Innovation

The intersection of AI and ESG represents one of the most promising frontiers in banking. 75% of banking CEOs view AI as a driver of responsible innovation, enabling climate-aligned products and ESG-linked portfolios. And 72% say AI helps identify resource efficiency opportunities, highlighting its practical value beyond compliance.

The specific applications are compelling: 85% see potential for AI to enhance climate risk modeling and scenario planning, 81% believe it can improve sustainability-related data quality and reporting, 79% say it can reduce emissions and improve energy efficiency, and 69% see value in monitoring environmental impact across operations. Only 51% currently see AI’s role in monitoring environmental impact across supply chains, suggesting an area of significant untapped potential.

Given that the bulk of bank emissions are Scope 3 — financed or insured emissions — the banks should prioritize supporting their clients’ efforts to reduce emissions. CEOs state that one of the top barriers to achieving net zero goals is the complexity of decarbonizing supply chains (20%), an area where AI can provide real-time evaluation, scenario analysis, and optimization. For banks, AI is not just a productivity tool — it is becoming essential infrastructure for navigating the energy transition.

As the full KPMG report emphasizes, the banking sector has historically proved effective at pivoting and adjusting to change. The findings from this survey suggest that the combination of AI-powered innovation, workforce transformation, and ESG integration will define the competitive landscape for years to come. Industry leaders who invest in all three pillars simultaneously — as highlighted by the IMF’s Global Financial Stability Report and the BIS Annual Report — will be best positioned to deliver sustainable growth and resilience.