Banks Race Toward AI-Driven Decisions Despite Governance Gaps

CARY, N.C., Oct. 22, 2026 /CourierPR/ -- Banks are increasingly turning to artificial intelligence (AI) to make key credit, treasury, and risk decisions, according to a new survey by FT Longitude and SAS. However, the rapid adoption of AI is outpacing the implementation of governance frameworks, raising concerns among industry leaders.

The survey, based on a global poll of 300 banking leaders across 31 countries, found that 63% of respondents would trade transparency for better AI performance. This sentiment reflects a growing willingness among banks to leverage AI's potential, even if it means sacrificing some level of explainability. Seventy-six percent of banks expect autonomous risk and credit decisions at scale by 2031, but only 18% have fully operational, embedded AI governance processes today.

Despite the high expectations, the current state of AI governance in the banking sector is concerning. Only 19% of banks have real-time AI model drift monitoring, and 42% lack defined "kill switches" to deactivate AI models that cross preset boundaries. Additionally, just 36% continuously retrain or update AI models, highlighting the need for more robust governance frameworks.

The study also revealed that 82% of banking leaders are already using generative AI for decision-making, while 41% report using agentic AI. Combined with traditional, predictive AI, such as machine learning, AI adoption has reached near universal levels, with 299 of the 300 banks surveyed using AI in their credit and risk decision-making processes.

However, the gap between AI adoption and governance is widening. Twenty-six percent of surveyed institutions lack a dedicated AI model risk policy, and 92% of respondents reported that at least one large language model within their institutions was developed or operates outside formal governance frameworks.

The survey found that AI already plays a substantial role in banking operations. Fifty-nine percent of banks have partially or widely embedded AI in their decision-making processes, with AI influencing departmental decisions at least monthly in 53% of organizations. AI is partially or widely embedded in 63% of credit risk processes and 55% of asset and liability management (ALM) and risk steering processes.

Canadian digital bank Tangerine, which began using AI to feed into lending decisions in 2023, has seen this progression while balancing people and technology.

While banks recognize the importance of good governance, the survey also revealed an alarming tension between performance and transparency. Nearly two-thirds (63%) of banking leaders said they would be willing to use a black-box model, one with little or no decision-making transparency, if it offered better performance, returns, or liquidity than an explainable alternative.

"Adoption leaps, governance lags," said Tyler Pichach, Global Head of Payments, AI Strategy and Go-to-Market at Microsoft.

As AI becomes more autonomous and takes on more consequential tasks, governance has to evolve with it. The opportunity is to put the right guardrails, monitoring, and human oversight in place so banks can move faster with AI while maintaining the trust and accountability financial services demands.