54% of FIs Partnering with Fintechs for AI Deployment and Banking Modernization
- AI has moved from experimentation to widespread, real-world deployment across financial services
- Most financial institutions are modernizing legacy systems so AI can scale securely
- Over half of FIs now partner with fintechs to accelerate AI-driven modernization
For far too long, banking institutions relied upon outdated, legacy technologies and systems. Unfortunately, these have become incompatible with today's fast-paced industry where financial institutions must continually adapt to the needs of their customers and keep up with their competition. And, much of the challenge centers around the adoption of artificial intelligence.
So, how embedded is AI within banking? Well, according to Finanstra's latest report entitled Financial Services State of the Nation 2026, only 2% of financial institutions report no use of AI, underscoring that the technology has shifted from experimentation to widespread, real-world deployment across the financial services industry.
Highlights from the Report
According to the report, artificial intelligence (AI) and modernization are powering the industry’s next phase of growth. AI acts as the catalyst—unlocking new possibilities and driving innovation—while modernization provides the foundation, enabling AI to scale securely and operate effectively across the enterprise. For AI specifically, the report notes that 43% cite AI as their top innovation lever.
Additionally, the report shares more details on the adoption of AI with 60% of FIs improving their AI capabilities in the past year and 63% running or piloting agentic AI programs.
But AI alone is not enough. AI is deployed as part of a modernization strategy. In fact, 87% of FIs plan to invest in modernization, with 50% modernizing all aspects of business. This has provided these FIs with a leg-up against competition, with 72% believing they are ahead of competitors.
Modernizing Legacy Payments
Legacy payments are seen as a major challenge for modernization. However, 38% of organizations have deployed or improved AI use cases in their payments technology. This includes paper checks where AI has effectively automated the process. Prior OCR technologies has been replaced by AI systems that are achieving over 99% accuracy and read rates.
But FIs are not going at it alone. 54% of financial institutions are turning to fintech partnerships to accelerate modernization and address skills gaps. These collaborations offer a fast track to new capabilities without the full cost and complexity of hiring specialized talent or building systems in-house.
For community banks and credit unions that do not possess the necessary internal resources to deploy these technologies directly, many are turning towards upgrading their core platforms to leverage these innovative technologies as many fintechs are directly integrated within their platforms.
2025 was seen as a major year for adopting new technologies. Those financial institutions that have committed to modernizing their platforms will see themselves pull away from their competition.