UK banks increase hiring as AI fails to deliver company-wide benefits

UK banks grew their workforces and increased staff costs per employee in 2025, even as more than half reported having at least one AI use case delivering measurable benefits. The findings, from KPMG's 2026 State of the Banks report, suggest that enterprise-wide financial gains from artificial intelligence remain elusive - and that firms are still betting on people to drive transformation.

Headcount rises despite cost pressure

Job cuts linked to AI adoption have hit other white-collar sectors, but KPMG's data shows most banks expanded their teams last year. Staff cost per employee also rose. The report said this points to continued investment in specialist skills and transformation activity, even as banks face pressure to control costs.

"Scale and cost control are increasingly important in the current environment, but banks also need to show that their investments are translating into sustainable revenue growth," said Steve Payne, KPMG UK & Switzerland Head of Banking.

AI benefits remain siloed

More than half of banks surveyed had implemented at least one AI use case that produced measurable results. But those benefits stayed concentrated in specific functions. The report found little evidence so far of AI improving financial performance across entire organisations.

Payne cautioned that foundational work must come first. "The competitive landscape will continue to evolve, and while this will place pressure on firms to continue to invest in AI, they need to get the fundamentals right first," he said. "Robust data and operational resilience need to be firmly in place for the full benefits to be realised."

A two-track banking market

KPMG's data also reveals a market splitting into two paths. Larger banks are building returns through scale and funding advantages. Smaller banks and neobanks, meanwhile, have posted weaker returns while competing aggressively for market share.

High street banks and neobanks showed the highest levels of AI maturity. But the deposit base is shifting. High street banks' share of customer deposits fell from 85% to 79% between 2021 and 2025. Building societies added roughly £84 billion in customer deposits over that period, while neobanks gained £25 billion, as customers spread money across more providers.

Why this matters for executives and strategy leaders

The report undercuts the assumption that AI adoption automatically shrinks headcount or lifts margins. Banks are hiring while they experiment with AI, and the payoff remains narrow. For leaders setting budgets, the message is clear: AI investment without solid data infrastructure and operational resilience won't translate into company-wide returns. The competitive pressure to invest is real, but the fundamentals still determine whether that spending pays off. Senior managers weighing AI senior leadership courses or AI strategy for CEOs should expect a timeline measured in years, not quarters, before enterprise-wide financial benefits materialise.