FinTech Firms Double Down on AI and Cloud While Grappling With Data Challenges

Financial institutions are accelerating investments in artificial intelligence, blockchain, and cloud technologies, but persistent issues with data quality and legacy infrastructure continue to complicate their digital transformation efforts, according to a recent analysis published by FinTech Magazine.

The report, based on a global survey of over 500 technology and operations leaders across wealth management, asset management, and capital markets, highlights a growing urgency within the sector to modernize systems and embrace next-generation tools. Among the key findings: 80% of firms are making moderate-to-large investments in AI this year, while 72% are now actively investing in generative AI, nearly doubling from last year.

Surging Investment in Emerging Technologies

Blockchain and digital assets are also gaining traction, with 71% of respondents investing in distributed ledger technologies, up from 59% the year before. Meanwhile, 64% of institutions report significant spending on cryptocurrency initiatives, signaling continued momentum in digital finance.

These developments coincide with the broader market adoption of AI tools and rising trading volumes in crypto-based exchange-traded funds. Yet, despite the bullish outlook on emerging tech, firms are still contending with major operational hurdles.

Data Quality and Legacy Systems Still Holding Back Progress

Roughly 40% of financial executives say data quality problems persist in their organizations. While 58% agree that a cohesive data strategy is key to maximizing tech ROI, nearly half of respondents (46%) believe legacy infrastructure is hindering progress, particularly when it comes to operational resilience.

A significant 41% also feel their technology strategy isn't evolving fast enough to keep up with market demands—a sentiment that echoes across many financial institutions undergoing digital change.

Data Harmonization and AI’s Role in Productivity

One of the top strategic goals emerging from the report is data harmonization—the effort to unify disparate data sources into a single, consistent system. 58% of executives identified it as the most effective way to unlock the full potential of digital transformation.

Generative AI is expected to play a growing role in boosting productivity. 68% of respondents believe GenAI will primarily drive gains in workforce efficiency, while 35% expect measurable returns on their AI investments within six months. Still, many expect tighter regulation of digital assets and AI-generated content, with 73% anticipating increased governance in the near future.

Cloud Technology Solidifies Its Role as a Transformation Backbone

Cloud platforms continue to be the backbone of financial digital transformation. 86% of firms are now integrating cloud into their systems, and 84% are making moderate-to-large investments in cloud services this year. When asked which technology has the greatest impact on their business, 31% of executives cited cloud platforms, and more than a quarter plan to increase cloud spending over the next two years.

Budget Priorities and the Shift to Integrated Solutions

In response to these demands, financial institutions are boosting their technology innovation budgets. Firms expect to allocate 29% of their total IT spend to innovation, up 7% from last year. There’s also a notable shift away from fragmented solutions, as more firms look for end-to-end platforms that can offer consistency across workflows and products.

Industry experts emphasize that transformation can no longer be achieved by simply adding point solutions. True digital change will require structural overhauls that prioritize clean data flows and seamless integration across the enterprise.

As one executive cited in the report explained, “Straight-through processes and visibility into consistent data are the keys to unlocking real innovation. There’s only so far you can go before you need to fix the foundation.”

The findings point to a pivotal moment in financial services, where innovation is no longer optional—and where those that can align AI, cloud, and data strategies effectively will be best positioned to lead the next wave of transformation.

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