Banks need to build resilience through change: DIFC Report

The second Future of Finance report of 2026 finds a new dynamic emerging as the global banking sector operates at the height of its profitability, which is reshaping the environment in which financial institutions operate. Traditional banks are now being exposed for their structural weaknesses that have been in operation for years, from sluggish productivity to ageing operational systems unfit for an AI era.

Challenger banks, built on lean, streamlined operating models, are now setting the tempo for achieving productivity gains by embedding AI deeply across their systems. Their digital platforms take on repetitive, time consuming work faster and more accurately, allowing staff to focus on higher value tasks. So tasks like loan approvals, KYC checks and fraud or cyber-security monitoring, can be AI-driven and it reduces errors due to less manual effort, lowering both labour and compliance costs. AI tools are also used to predict needs before clients articulate them, delivering fast and hyper-personalised services that legacy banks struggle to match at scale.

The coming years will require a blend of resilience and reinvention as institutions navigate new competitive pressures, expanding growth markets and rapidly evolving customer behaviours.

In emerging markets customer expectations are evolving very quickly, especially among younger, digital-first users who are used to seamless, on-demand experiences in every aspect of their lives. They are no longer product-focused but driven by outcomes: how easily they can manage, move, and grow their money and how much they are in control of their money. They expect real-time visibility, instant transactions, and access to global financial services from a single, intuitive platform. They also expect transparency and tools that help them make better decisions, not just access to products.

Having said that, we are not finding shortcomings of a model, this is an attempt to accelerate the evolution of the entire banking sector. Many institutions are investing in improving speed, reducing friction, and enhancing digital experiences to meet these expectations.

What’s particularly important is the pace of behavioural change. Different generations are interacting with money in very different ways, and those gaps are widening. As AI becomes more embedded in everyday life, expectations will continue to accelerate. The real opportunity is for all institutions to stay close to these shifts - understanding how customers’ needs are evolving and responding quickly with solutions that feel relevant, intuitive, and genuinely helpful.

Data is paramount in every AI transformation. Unlike natural resources, the value of data grows when it’s cleaned, connected and effectively deployed. For banks, the real advantage lies in how well they extract value from their real-time and proprietary information. This makes designing modern, intelligent cloud-based data architectures a top priority. Once solid data foundations are in place, banks can streamline operations by delegating routine tasks to AI systems. For example, in the report, PwC has estimated data-driven AI insights can help increase prospects-to-paying customer conversion rates by up to 30 per cent, while enabling up to half of staff to shift to higher-value roles, such as client advisory, complex risk analysis and strategic product innovation.