As an industry veteran working and advising banks and credit unions, I’ve seen technology trends come and go, but AI stands out as a true game-changer, one that’s no longer on the horizon but firmly embedded in the daily operations of many institutions. After reviewing the latest CB Insights State of AI report for Q3 2025, it’s evident that AI is transforming how financial services providers enhance efficiency, personalize customer experiences, and tackle fraud. Yet, amid this surge, challenges like data silos and regulatory hurdles persist, particularly for smaller community banks and credit unions.

AI Funding Remains Strong

The CB Insights report paints a picture of resilience in the AI sector, with global equity funding holding above $45 billion for the fourth straight quarter, even as deal volume dipped 22% to 1,295. This points to a trend of larger, more focused investments. The average deal size year-to-date in 2025 has jumped 86% to $49.3 million from 2024. In the U.S., where much of this activity is concentrated, mega-rounds like Anthropic’s $13 billion Series F at a $183 billion valuation underscore investor confidence.

M&A activity also hit near-record levels with 172 deals, often involving AI agent companies snapped up by established players to accelerate product development. Compared to bank M&A at 149 deals YTD, we can see that AI is a hotbed of activity. For banks and credit unions, the potential of agentic AI, systems that autonomously manage tasks like real-time fraud alerts or tailored financial advice is moving quickly. For example, Ramp, an expense management platform, raised $500 million in Series E funding, valuing it at $22.5 billion, while Quavo, focused on disputes management, secured $300 million in growth equity. These moves reflect a broader push toward AI-driven operational streamlining amid rising costs and competition.

Accelerating AI Adoption in U.S. Financial Institutions

From my vantage point, U.S. banks and credit unions are ramping up AI integration faster than ever, driven by the imperative to boost efficiency and member satisfaction. America’s Credit Unions notes that credit unions are moving beyond basic chatbots to deploy AI for personalized services and back-office improvements. Interface.ai highlights how AI streamlines call routing, authentication, and intent capture, slashing handling times and transfers.

Reseda Group’s analysis shows intelligent automation gaining ground as institutions automate routine tasks amid talent shortages and cost pressures.

American Banker’s 2025 survey of 130 leaders reveals about 60% using AI to elevate customer service, with virtual assistants at the forefront. Bank Director’s 2025 Technology Survey emphasizes data strategies and AI maturity, noting struggles with legacy integration. The Evident AI Index 2025, indicates uneven progress, majors scale AI for risk and compliance, while smaller entities lag on resources.

Real-World Applications and Persistent Challenges

AI’s impact in banking is tangible across several fronts:

• Customer Service: Generative AI enables natural language chatbots for round-the-clock support.
• Fraud Detection: Machine learning scrutinizes transactions in real time, cutting losses by up to 30% in some cases.
• Personalization: Analytics deliver bespoke recommendations, enhancing cross-selling.
• Operations: Automation eases loan processing and compliance, freeing staff for higher-value work.
  
  

That said, hurdles remain. Data silos limit AI’s potential, and oversight from regulators. Community banks, grapple with talent and implementation costs which is an issues I have seen client engagements.

Charting the Path Forward

The CB Insights data signals AI’s upward trajectory and niches like generative engine optimization reshaping commerce. U.S. banks and credit unions should focus on agentic AI and data governance, begin with pilot projects, seek expert partners, and invest in upskilling for smooth AI integration.

At CCG Catalyst, we’re dedicated to guiding financial institutions through this AI-driven evolution. Reach out to discuss tailored strategies for your organization. Follow me on LinkedIn or our company page for more insights. Those who act decisively will not just survive but be part of tomorrow’s banking landscape.