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Ramp Up Cyber Spending As AI Reshapes Industry Priorities

NEW YORK—Artificial intelligence is rapidly becoming the defining force shaping banking strategy, with 80% of banking executives now expecting AI to significantly disrupt their business and operating models within the next three to five years, according to KPMG's 2026 Banking Technology Survey.

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The survey of 200 U.S. banking executives found institutions are responding by accelerating investments in cybersecurity, payments modernization and technology-driven acquisitions.

"AI, payments modernization, cybersecurity, and tech-driven M&A are no longer separate agendas," said Peter Torrente, KPMG's U.S. Banking Sector Leader, who said banks are increasingly being challenged to keep pace across technology, risk and growth simultaneously.

Cybersecurity remains a top concern. More than three-quarters (76%) of banking leaders reported an increase in cyberattacks over the past year, while 92% said they are boosting cybersecurity budgets. In addition, 84% are increasing cybersecurity spending specifically to address AI-related risks, with AI-generated code vulnerabilities, deepfakes and AI bots cited among the leading emerging threats.

The survey also found banks are aggressively modernizing payment systems. More than 70% plan to implement instant payments through RTP or FedNow within the next year, while nearly three-quarters expect to use AI-enabled biometrics for payment security and access management within three years. Banking executives said operational efficiency, regulatory requirements and aging legacy systems are among the primary drivers behind modernization efforts.

Technology is also playing a larger role in merger and acquisition strategies. Seventy-seven percent of executives said technology will be a primary factor in acquisition decisions over the next two to three years, with banks seeking AI, data analytics and cybersecurity capabilities. At the same time, executives identified core banking systems, cybersecurity and data integration as the biggest technology risks when combining institutions.

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