European banks' bets on AI start to pay off

European banks are starting to see a tangible impact from AI on their performance and plan to speed up the adoption of new tools in the coming years.

Many lenders said on recent earnings calls and conferences that expanding the use of AI-powered tools to engage with clients and improve efficiency has supported revenue growth and cost reduction.

Lloyds Banking Group PLC realized an estimated £50 million in cost and revenue benefits from about 50 generative AI (GenAI) use cases it deployed in 2025, and expects over £100 million of benefit linked to GenAI in 2026, CEO Charlie Nunn said on a Jan. 29 earnings call. Nunn suggested revenue gains would be more important in unlocking the full benefits of the technology.

"When you look at our industry, what's more [distinctive] is our ability to differentiate our services and build broader relationships on the revenue line than driving efficiency. We will do both, but efficiency, if we can do it, other people can do it," Nunn said.

Lloyds can attribute 60% of the £1.9 billion of gross cost savings realized in the last three-to-four years to digitalization and AI. The adoption of agentic AI should enable the bank "to continue that trend of efficiency," Nunn said.

French group BNP Paribas SA quantified €635 million in cost and revenue benefits from its use of AI for 2025, which should rise to €750 million in 2026 and grow further over the medium term. It sees a different path in the cost-revenue dynamic.

"The value created by AI was focused so far on revenues for the most part, but now it will increasingly benefit costs and risks, including operational risk," CEO Jean-Laurent Bonnafé said during a Feb. 5 earnings call.

Over the next three to five years, UBS Group AG sees 80% of the value derived from AI deployment being in the redesign of back-end processes to gain efficiency. While some will benefit banks' bottom line, most will benefit clients, CEO Sergio Ermotti said at a Feb. 9 conference.

Productivity gains

Spain's fifth-largest lender Bankinter SA gauged the AI impact on its earnings by measuring employee productivity and expense against customer business volumes.

With €36 million worth of customer volumes managed per employee, Bankinter "compares favorably to peers" which have a weighted average of €21 million managed per employee, CEO Gloria Ortiz Portero said during a Jan. 22 earnings call. Bankinter allocates €4.6 million of expense per €1 billion managed for clients, while competitors' cost averages €6.5 million for the same volume, Portero noted. This translated to an efficiency ratio of 36.1% in 2025 compared to the 39% average of Spanish peers, Portero said.

An IT investment of about 10% of gross income should support Bankinter's aim to bring its efficiency ratio to below 35% in 2026, CFO Jacobo Diaz Garcia said on the same call.

ING Groep NV CEO Steven van Rijswijk referred to the ratio of full-time employees (FTE) over customer balances to demonstrate savings linked to the use of AI during a Jan' 29 earnings call. A lower ratio signals more business generated per member of staff.

The Netherlands' largest bank cut this ratio by over 7% in 2025 compared to 2023. The further utilization and scaling of GenAI should boost efficiency and help ING hit its target for a 10% lower FTE-over-customer balances ratio in 2026 versus 2023, a year earlier than previously planned, van Rijswijk said.

Hard to measure

Still, some banks are finding it less easy to measure the impact of AI on their operations.

AI initiatives should contribute to reducing Banco Bilbao Vizcaya Argentaria SA's cost-to-income ratio to about 35% in 2028 from 38.8% in 2025, CEO Onur Genc said on a Feb. 5 earnings call. Yet, he noted it was too early to measure how much the efficiency gains linked to AI alone would be.

AI will increasingly support UniCredit SpA's aim to reduce costs by 1%, or roughly €100 million net of investment per year, through 2028, CEO Andrea Orcel said on a Feb. 9 call. How much will be from AI specifically is difficult to gauge because the bank must assess the "social impact" of the redesign of labor-intensive processes and will need time to reskill staff, Orcel said.

"One thing is an Excel spreadsheet, another thing is doing this to people," Orcel said.

Increasing investment

Banks are more forthcoming on their AI investment plans.

Sweden's largest lender Skandinaviska Enskilda Banken AB (publ) plans 500 million kronor investments in AI, regulatory and technological resilience, and digital assets in 2026, CFO Christoffer Malmer said Jan. 29.

Turkey's Yapi ve Kredi Bankasi AŞ is investing between $125 million and $130 million annually in technology and AI, including maintenance and HR costs, Chief Strategy Officer Erendiz Kursad Keteci said during a Feb. 5 earnings call.

Commerzbank AG raised its digital investments budget to €600 million from €500 million, with an increasing share allocated to AI, CEO Bettina Orlopp said Feb. 11.

"AI will change banking," Orlopp said.

UBS believes the winners in banking AI will be those that deploy it to create better and cheaper products that boost market share, Ermotti said. While the changes in the industry may not happen as fast as people anticipate, they are going to be "much more profound than everybody expects," he said.

"I'd rather err on the conservative side in being overly ... focused on that topic, than being complacent," said Ermotti.