JPMorgan Chase Analysts Predict AI Costs Could Trigger Bank Mergers

The pace of artificial intelligence spending required in the financial services sector may force smaller banks into mergers, Bloomberg reported Tuesday (Feb. 17), citing analysts at JPMorgan Chase.

Competitive demands are forcing banks of all sizes to invest in AI, and this trend favors large banks and some regional ones that are better able to afford that investment, the analysts said, according to the report.

Financial services is one of the sectors that has seen a selloff in the stock market due to investors’ concerns about how AI may affect corporate profits, per the report.

Financial institutions are embedding agentic AI systems into their operational core, including compliance, treasury, risk and payments infrastructure, PYMNTS reported Friday (Feb. 13).

In October, PYMNTS reported that AI in banking is entering its “next era” in which conversational interfaces evolve from simple Q&A bots to tools capable of strategic insight and contextual counsel.

The PYMNTS Intelligence report “Is AI the Master Key to Banking’s Next Era?” found that nearly 3 in 4 bank customers want greater personalization, and embedded conversational AI could win back 72% of bank customers by providing that tailored experience.

TD Bank Group implemented 75 AI use cases in 2025, TD Bank Group President and CEO Raymond Chun said in December during an earnings call.

“These use cases span from transforming loan underwriting to creating intelligent leads to deepening relationships to meet more of our clients’ needs,” Chun said during the call.

In September, Bank of America announced that it is using AI to help its Global Payments Solutions team serve clients. The bank said its AI tool lets employees pose “simple to complex” client queries and get answers within seconds. It added that before this tool, a sophisticated inquiry might take an employee an hour to carry out.

The PYMNTS Intelligence report “High Impact, Big Reward: Meet the Gen AI-Focused CFO” found that the cost of deploying AI is the second biggest drawback of generative AI adoption, following only integration complexity. The report said 46.7% of enterprises cited cost as a concern at a time when these companies are rushing to integrate AI.

For all PYMNTS AI coverage, subscribe to the daily AI Newsletter.