Canadian banks and insurers are rapidly scaling generative AI, treating it as a strategic necessity rather than an experimental add-on, according to KPMG Canada's 2025 GenAI Business Survey.
More than 90% of financial services leaders now see GenAI as critical to competitive advantage, and 86% are investing despite macroeconomic uncertainty. Insurers are generally further along the adoption curve than banks, but both are moving beyond pilots into core operations.
Several forces are also pushing GenAI into the mainstream -- more reliable and secure models, observable productivity gains among early adopters, and rising customer expectations for digital‑first, personalized services. Senior respondents, mostly C‑suite, VP and director‑level, report GenAI is already reshaping how institutions analyze markets, price and underwrite risk, detect fraud, engage customers and run back‑office operations.
“Generative AI is now a strategic imperative for Canadian financial services organizations,” said Geoff Rush, partner and national industry leader, Financial Services, KPMG in Canada. “Over 90% of leaders see it as a critical competitive advantage.”
In market analysis, nearly half of insurers and more than 40% of banks use GenAI‑enabled analytics to process large volumes of market data and competitor information, helping identify emerging risks and growth opportunities.
In personalization, GenAI is enabling context‑aware recommendations in real time, such as proactive mortgage prompts for banking customers or tailored coverage options in digital insurance journeys, according to the report. Customer engagement is being reshaped through conversational AI and GenAI‑enhanced chatbots that now handle a growing share of routine inquiries, triaging complex cases and assisting human agents with “next best actions.”
On the risk side, GenAI is being layered onto existing engines to monitor transactions, flag anomalies and support more granular stress testing. Operationally, firms are automating document summarization, policy and contract review, claims assessments and internal knowledge management. “For Canadian banks, generative AI is driving a step‑change in productivity and deepening customer engagement,” said Stephanie Owen, Partner, Management Consulting, KPMG Canada.
The survey indicated around 30% of insurers report “advanced” adoption, meaning GenAI is fully integrated across core workflows. Banks are more often in “partial adoption” – past proofs of concept but still rolling out GenAI selectively, with a focus on productivity and sales.
Sector strengths include rich, increasingly structured datasets and a relatively innovation‑friendly culture. Strong consumer uptake of digital banking and direct‑to‑consumer insurance has also created a receptive market for GenAI‑enabled offerings. Chris Cornell, Partner and National Sector Leader, Insurance, KPMG Canada, said what differentiates Canadian firms is their willingness “to adapt and innovate at scale,” while stressing that strategies must fit each organization’s risk appetite and maturity.
Barriers are significant. About 30% of banks and insurers cite data quality as a major challenge, with fragmented or poorly governed data undermining GenAI outputs. Cybersecurity and privacy risks are also top of mind, with 95% of leaders worry about breaches or misuse of sensitive information, and 60% said they have already experienced a cyber incident. Many acknowledge their AI governance frameworks remain immature, with unclear ownership and slow decision‑making.
To scale GenAI, nearly half of institutions are investing in talent and 44% in advanced platforms, while roughly 60% are modernizing core IT systems to embed GenAI into day‑to‑day workflows. Most expect tangible returns within one to three years, but are tracking productivity and adoption before top‑line revenue.
