Financial institutions across the UAE have reached a decisive AI tipping point, according to new research from Finastra, a global leader in financial services software. Just 2% of financial institutions globally now report no use of artificial intelligence, signaling a clear shift from experimentation to execution as AI becomes embedded across core banking, payments, lending and compliance functions. Institutions in the UAE are among the most proactive in scaling AI responsibly and securely.
The Finastra Financial Services State of the Nation 2026 report shows institutions across the Middle East increasingly focused on scaling AI responsibly, securely and profitably as digital transformation accelerates and customer expectations continue to rise. The emphasis has moved beyond pilots to ensuring technology performs reliably at scale.
The research highlights strong momentum in the UAE, where 53% of institutions are deploying AI to improve accuracy and reduce errors, and 44% are using AI to lower operational costs, reflecting a pragmatic approach centered on efficiency, reliability and execution.
Security is rising rapidly up the agenda. Financial institutions globally expect security investment to increase by an average of 40% in 2026, driven by escalating cyber threats, deeper reliance on digital platforms, and tighter regulatory scrutiny. The UAE stands out as one of the most proactive markets, with nine in ten institutions planning to increase security spending over the next 12 months, underlining the importance of resilience and trust as digital adoption deepens.
Modernization has moved firmly to the top of the strategic agenda. Nearly nine in ten (87%) institutions globally plan to invest in modernization over the next 12 months, enabling AI at scale, strengthening operational resilience and supporting improved customer experience. Confidence in modernization is particularly strong in the Middle East, with UAE among the most active markets for core banking modernization.
Despite ongoing disruption, optimism across the sector remains high. 87% of respondents report strong personal optimism, while 86% are optimistic about the outlook for their institutions, as technology and operating models continue to evolve.
“Across the Middle East, technology decisions now sit at the center of trust, resilience and customer experience,” said Chris Walters, CEO at Finastra. “Institutions in the UAE are moving decisively beyond experimentation, focusing on responsible AI, modernization and security to deliver reliable, personalized financial services, at scale.
He added: “This year’s findings show a sector that is confident but disciplined. Success is no longer defined by how fast institutions innovate, but by how dependably they execute”.
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