AI adoption in financial services is accelerating, with strong gains in middle and back offices for risk, fraud, and operations, while front-office use remains limited. Most firms use centralized AI models but are exploring federated approaches. Benefits include automation, cost reduction, and faster compliance, while challenges include data privacy, hallucinations, and regulatory risks. Adoption success hinges on alignment with strategy, data governance, and workforce readiness. True customer-facing AI remains 2+ years away, but firms must act now to prepare for scalable, responsible AI integration.

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