The financial services sector is on the cusp of a technological revolution, with artificial intelligence (AI) poised to reshape how private banks operate and deliver client services. New research from Cerulli Associates reveals that while fewer than half of bank advisors currently use AI, this figure is projected to surge to 77% by 2027—a clear sign that the industry is rapidly embracing digital transformation. This shift is not just about adopting new tools; it’s about redefining the very nature of financial advice, client engagement, and operational efficiency.
The data underscores a growing trend: AI is no longer a futuristic concept but a practical tool already in use by 42% of bank advisors. Private banks are leading the charge, with 56% already leveraging AI and an impressive 80% expected to integrate these technologies by 2027. The applications of AI in banking are vast, ranging from text-based large language models and real-time investment data analysis to portfolio construction, risk management, and even buy-and-sell recommendations. These tools are enabling advisors to deliver more personalized experiences, optimize tax outcomes, and ultimately, spend more time on what truly matters—building relationships with clients.
Yet, despite this momentum, significant hurdles remain. High costs are the most cited barrier, with 55% of executives pointing to financial constraints as a major obstacle. Beyond budgetary concerns, advisors’ limited experience with advanced AI tools and data security risks are also slowing adoption. Smaller community and regional banks, in particular, face an uphill battle. Without the resources of larger institutions, they struggle to invest in enterprise-level technologies, leaving them at a competitive disadvantage.
The disparity in AI adoption between banks and registered investment advisors (RIAs) is also noteworthy. According to F2 Strategy, RIAs are reportedly four times more likely to use AI than banks and trust companies. This suggests that while banks are making strides, they still lag behind in fully harnessing the potential of AI. However, the gap may close as more banks recognize the strategic advantages of AI integration.
For advisors, the benefits of AI are clear. As Matt Zampariolo, research analyst at Cerulli, notes, AI-enabled tools can further customize client accounts, tailoring them to individual needs, risk tolerances, and liquidity requirements. By automating data analysis and portfolio optimization, AI frees advisors to focus on high-value activities like planning and relationship-building. This shift could not only enhance client satisfaction but also play a crucial role in advisor recruitment and retention. More than 80% of private bank and trust advisors surveyed by Cerulli said their firm’s technology stack is at least somewhat important when considering whether to stay with their current employer or move elsewhere.
The broader implications for the banking sector are profound. As AI adoption accelerates, early movers could gain a significant competitive edge. Banks that successfully integrate AI into their operations may not only improve efficiency and client outcomes but also attract top talent and retain existing advisors. For end investors, particularly those under 50, digital capabilities are becoming increasingly important. While only 39% of all surveyed investors are comfortable with AI in their financial provider relationship, this figure jumps to 53% for younger investors. This generational shift underscores the need for banks to adapt quickly to meet evolving client expectations.
The bank wealth management channel is also experiencing robust growth, with a 14% increase in 2024, led by private banks, which saw asset growth of 16.5% and added more than $585 billion in assets under management. Private bank advisors, who manage an average of over $418 million in client assets, are among the most productive in the industry. As technology becomes a key factor in advisor satisfaction and recruitment, banks that invest in AI and other digital tools may find themselves better positioned to capitalize on this growth.
In conclusion, the integration of AI into banking is not just a technological evolution—it’s a strategic imperative. Banks that act now to evaluate and integrate AI tools will be better equipped to navigate the challenges and opportunities of the future. As the industry continues to evolve, those who embrace AI will likely emerge as leaders, shaping the next chapter of financial services.