UK banks invest in hiring as benefits from AI remain elusive
Workforces at major banks have continued to expand, with firms investing in talent as they are yet to see positive company-wide transformation from AI adoption.
This is according KPMG’s 2026 State of the Banks report, which looked at the performance and activity of banks in the United Kingdom in 2025.
Job cuts as a result of AI adoption may be rife in other white-collar industries, but according to KPMG’s data, most banks actually grew their workforces in 2025 and increased their staff cost per employee.
The company said this suggested that banks were continuing to invest in specialist skills and transformation activity despite facing pressure to cut costs.
Banks are driving towards AI adoption, with more than half reporting that they had at least one AI use case implemented that was delivering measurable benefits. However, these benefits are concentrated in specific functions, and there has so far been little evidence of enterprise-wide financial performance benefits.
“Scale and cost control are increasingly important in the current environment, but banks also need to show that their investments are translating into sustainable revenue growth,” said KPMG UK & Switzerland Head of Banking Steve Payne.
“The competitive landscape will continue to evolve, and while this will place pressure on firms to continue to invest in AI, they need to get the fundamentals right first.”
“Robust data and operational resilience need to be firmly in place for the full benefits to be realised,” he said.
When it comes to which banks are adopting AI the fastest, KPMG said the data shows high-street banks and neobanks are showing the highest levels of AI maturity.
The banking market as a whole is separating into two tracks, one where bigger banks are building their returns through scale and funding advantages, while smaller banks and neobanks have seen weaker returns while competing ferociously for market share.
Building societies, specialist lenders, and neobanks increased their share of customer deposits and lending between 2021 and 2025. Building societies recorded an increase of approximately £84 billion in customer deposits, and neobanks recorded an increase of £25 billion.
High street banks’ share of customer deposits fell from 85% to 79% as customers spread their money across a wider range of providers, the report stated.
