Banking technology trends 2027: new technology in the banking sector and the future of banking

Banks earned a record $1.2 trillion in net income in 2024, yet the market prices them at about one times book value. McKinsey’s Global Banking Annual Review 2025 puts that valuation nearly 70% below the average for other industries. The same report notes that banks spend about $600 billion a year on technology while productivity stays low. Technology is no longer a side project. It decides who keeps customers and who loses margin.

This guide covers the top trends and the banking technologies in 2027 that matter most. It describes how each of these technologies works, what it costs, and where banks should start. Financial institutions of every size face this shift. Avenga supports this work for lenders through its financial services practice.

Key takeaways

The main trends of 2027 center on governed automation, open data, and a cleaner core. Each point below links to a section of this guide.

• Automation is the biggest force. McKinsey sees a net cost base reduction of 15 to 20% for banks that use it well, and up to four points of added return on tangible equity.
• Agentic systems need discipline. Gartner predicts that over 40% of such projects will be canceled by the end of 2027.
• Open banking is widespread. In the UK, usage reached 15.16 million users in July 2025, up 34% in a year.
• The core is the bottleneck. A cloud-native core lets banks launch new products and services faster.
• Security is a design rule. IBM puts the global average breach cost at $4.44 million.
• Pick by use case and return. Match each technology to a measurable customer experience gain before you fund it.

What is the next big thing in banking?

The next big thing in banking is agentic AI inside governed workflows. Software agents will handle tasks such as case triage, document checks, and customer requests, while people approve the decisions that carry risk. McKinsey expects a breakout agentic business model within three to five years.

These tools work only when the data, the controls, and the core systems are ready. That is why the other trends in this guide matter as much as the models themselves.

How has the banking technology landscape evolved?

The evolution of banking technology followed customers. Branches gave way to digital channels, then to mobile apps, and now to new digital banking that lives inside other products. Each step changed the banking landscape and widened access to banking services. Digital transformation in banking now means rebuilding data and cores, not adding apps.

The new banking technologies reshaping the field include cloud platforms, open data, and technologies like AI. These key technologies rest on advanced technologies in the core. Banking software that once ran on one legacy host now runs as services. Technology in the banking industry also draws cutting-edge technologies from fintech, and technology innovation works when banking applications and banking solutions share clean data.

Banking tech trends move fast, so banks need modern technologies that they can change safely. Technology solutions that add new features without clear owners create risk. Shaping the future of banking is a team effort across business, risk, and engineering. New technology in banking industry settings is transforming the banking industry one process at a time, and the future of finance will favor banks that learn quickly. Banking trends change each year, so review the plan every quarter.

What are the latest trends in banking technology for 2027?

These trends fall into three groups: smarter operations, open and embedded services, and a safer base. The table lists ten trends and the benefit each one brings to modern banking.

The sections below cover each trend in turn.

Banking technology trends to watch in 2027

Banking technology is transforming the industry from the back office to the mobile screen. Each trend below ends with a practical step.

Trend 1: agentic and generative AI

This is the strongest force in the banking industry today. McKinsey reports that front-runners could lift return on tangible equity by up to four percentage points, and that the net effect on the cost base is a 15 to 20% decrease. It also warns that profit pools across banks could fall by $170 billion, or 9%, if banks do not reposition their business models. More than half of consumers already use generative tools of their own.

Banks apply machine learning to credit risk, service, and fraud checks. Generative models draft documents and summarize cases. Agentic systems go one step further and carry out multi-step tasks, such as gathering documents for a loan file.

The risk is hype. Gartner expects over 40% of agentic AI projects to be canceled by the end of 2027, mostly because of unclear return and weak controls. Start with one narrow process, one data set, and one owner. Avenga builds this kind of governed agentic work for lenders.

Banks do not stall on automation because of the model. They stall because nobody owns the process, the data, and the stop rule. Name an owner first.

Mike Crosby, Director of Business Development, Avenga

Trend 2: embedded finance

Embedded finance places payments, credit, and insurance inside the apps where people already spend time. A shop, a software platform, or a car maker becomes a distribution channel for banking services. The bank supplies the license, the risk engine, and the balance sheet.

This model changes how banks compete, and traditional banking models must adapt. Fintech and banking partners now share one customer experience. Banks with clean APIs gain reach. Banks without them lose it. Pick one partner segment and one product to test first.

Trend 3: hyper-personalization and customer experience

Customers expect banking experiences that feel as good as the best consumer apps. McKinsey finds that nearly all surveyed consumers say they would eventually switch providers if their bank did not keep up with technology.

Hyper-personalization uses data on spending, goals, and life events to time the right offer. A saver sees a goal tracker. A small business sees a cash-flow alert. The work depends on clean data and clear consent. Measure results by retention and product use, not by messages sent.

Trend 4: open banking and API-led services

Open banking allows customers to share their account data with licensed third parties. The UK open banking network reached 15.16 million users in July 2025, and services were used a record 2.04 billion times in that month. Variable recurring payments hit 4.26 million, over 14% of these transactions.

Open banking APIs turn a bank into a platform. Partners can add features to online banking, mobile banking apps, and business tools. Treat each API as a product, with an owner, a service level, and a security review.

Trend 5: cloud-native core banking

The core banking system holds accounts, balances, and rules. Old cores slow every change, because one release touches everything. Cloud banking represents a different model. Modular core banking platforms run as services, so teams can ship one product without touching the rest.

A cloud-native core also cuts run cost and opens the door to real-time digital banking transactions. Migration needs care. Avenga’s work on migrating Marginalen Bank to Mambu shows one path. Avenga’s application modernization practice and cloud services follow a stepwise route, one product line at a time.

Trend 6: cybersecurity and fraud detection

Banking security is a constant operating cost, and controls that enhance security protect trust. IBM’s latest report found a global average breach cost of $4.44 million. It also found that 13% of organizations reported a breach involving a model or application, and that nearly two-thirds lack governance policies for it.

Banks use machine learning for fraud detection, anomaly spotting, and identity checks. They also need strong security measures at the design stage: segmented networks, tested recovery plans, and least-privilege access. Avenga’s cybersecurity team supports banks with this work.

Trend 7: blockchain technology and tokenization

A shared ledger offers a record that several parties can trust. In banking, the practical uses are tokenized deposits, faster cross-border payments, and trade finance records. Pilots work best in narrow corridors with clear rules.

Treat the ledger as plumbing, not a product. Customers care about speed and cost, not the ledger.

Trend 8: quantum computing and quantum-safe security

Quantum computers could one day break the encryption that protects bank data today. They could also speed up risk modeling and portfolio work. Most banks will not run quantum hardware soon, but they should plan for quantum-safe encryption now.

Start with an inventory of where encryption protects long-lived data. Then rank systems by how long the data must stay secret.

Trend 9: ESG technology and sustainable finance

Banks must track climate risk and report on it. ESG technology uses data platforms and analytics to measure financed emissions, score loans, and prepare reports. Cloud tools also make it easier for small firms and rural customers.

Good ESG data starts with good source data. Fix the data first, then automate the reports.

Trend 10: regulatory technology

It automates checks for anti-money laundering, know-your-customer rules, and reporting. Software reads rules, tests transactions, and flags exceptions for review. Banks that automate this work cut manual effort and reduce errors.

Keep a human in the loop for every decision that affects a customer. Record why the system flagged each case.

What challenges do banks face when adopting new technologies?

Banks face four top obstacles when implementing new technologies: legacy systems, weak data, skills gaps, and regulation. Each one slows a project in a different way.

Legacy systems make every change costly. Weak data makes models unreliable. Skills gaps leave teams unable to run new platforms. Regulation demands proof of control. Culture helps, but only when leaders back it with budget, clear owners, and time. Banks that foster a culture of innovation set small goals, ship often, and publish what they learn.

How can banks choose which technologies to adopt?

Choose technologies by customer benefit, data readiness, and risk, then test small. Use this six-step process for integrating new technology.

1. List customer problems. Start with friction in onboarding, payments, lending, and service.
2. Score each trend. Rate benefit, cost, risk, and time to launch.
3. Check your data. Models and personalization fail on poor data. Fix quality and access first.
4. Map regulation. Note which rules apply in each market before design starts.
5. Pilot with a clear owner. Run one narrow test, set success metrics, and agree on stop rules.
6. Scale what works. Move proven pilots onto reliable cloud platforms with monitoring and support.

This process keeps technology investment tied to business goals. It also gives leaders a defensible order of work.

Conclusion: focus wins in banking technology

The trends of 2027 share one idea. Technology now sits at the center of regulated finance, and the winners treat it as an operating decision. Pick two or three trends that fit your customers and your data, then choose options you can govern. Name an owner for every pilot and measure the return.

Avenga helps financial institutions engineer that base, from AI at the core to governed delivery. If you plan your next move, talk to our team.

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Mike Crosby

Director of Business Development

Mike Crosby has 30 years of experience in enterprise sales. He forges strategic partnerships within the Banking and Financial Services vertical across EMEA. Mike creates long-term value for Avenga clients by aligning technology with business objectives.