Could blockchain and AI finally reshape finance?

Despite years of digitisation, finance remains costly. Blockchain and AI promise faster, cheaper services by cutting legacy tech, intermediaries, and friction.

Aug 21, 2025

When we were children, my father, who worked in a bank, would bring home long sheets of paper with holes punched in the margins. These were printouts from the computer centre, with no data on them, of course. We used the paper for painting and drawing.

Those were the days when banks were already using computers, albeit not locally. It would be another decade before PCs appeared in branches. Although the finance industry was always at the forefront of digital technology, it doesn’t really feel this way. Why is that, and will blockchain and AI tell a different story?

The finance industry is one that is continuously ripe for disruption. Each new technological development sparks both hope – and fear. However, while there has been change, there has not been so much disruption. Could blockchain and AI create a different story this time?

Although finance was one of the first industries to go digital, banking services often still feel expensive, slow and frustrating. Why is that? A related question: How are blockchain and AI different from previous technologies, and how will they shake things up to make finance cheaper, faster and more accessible for everyone?

Banks started using computers way back in the 1950s. Early machines automated check processing and accounting, which was revolutionary at the time. Over the decades, things got more high-tech: electronic stock markets in the 1970s, then ATMs popping up everywhere, and by the 1990s, online banking was taking off. Mobile apps and fintech startups arrived later, promising a new age of convenience.

But here’s the catch: despite all this progress, a lot of banks still run on legacy systems – outdated software and mainframes from decades ago. These systems are expensive to keep running and tough to upgrade:

Global banks spent $36.7 billion maintaining outdated payment systems in 2022, with projections showing this figure rising to $57 billion by 2028 – a 7.8% compound annual growth rate in wasted expenditure. For context, this equals 64% of the average bank’s IT budget dedicated solely to keeping obsolete systems operational rather than funding innovation. McKinsey analysis reveals only 5-10 cents of every technology dollar generates new business value, with the remainder consumed by legacy infrastructure upkeep.

That means the fancy app on your phone is usually just a shiny wrapper around a slow, creaky pre-web backend. That’s why banking costs stay stubbornly high – the foundations haven’t fully caught up with the new tech.

Why is banking still so expensive?

It’s not just old tech holding things back. Finance is heavily regulated. Banks have to follow tons of rules: anti-money laundering, fraud prevention, KYC (know your customer), data privacy, and more. That means armies of people working on compliance, plus additional layers of manual checks.

Add to that the fact that most financial transactions go through multiple middlemen – think correspondent banks, clearinghouses, and custodians – especially for international payments. Each step adds fees and slows things down, even with digital tools like SWIFT in place.

And then there are the costs of security. Cybercrime is a huge threat to banks, so they spend billions every year on cybersecurity defences:

Today, financial-services companies devote 13 percent of their overall IT budget, on average, to cybersecurity.

All of this – legacy tech, regulation, intermediaries, and security – piles up into the fees customers ultimately pay.

Enter blockchain: cutting out middlemen and boosting transparency

We have talked about blockchain. We have talked about its promises. This conversation has been going on for years.

Blockchain offers a very different way to handle money and contracts. Instead of relying on banks and clearinghouses to verify transactions, blockchain uses a decentralised ledger that everyone can see but no one can tamper with.

Smart contracts – automated agreements coded on the blockchain – can trigger payments, loans, or compliance checks without any human intervention. That means faster settlements, lower fees, and less paperwork.

Plus, regulators and users get real-time access to transparent transaction records. This can make fraud and compliance checks far easier – and cheaper.

On top of that, decentralised finance (DeFi) platforms let people lend, borrow, and trade directly – no bank necessary. These services run 24/7 and can reach people worldwide who might not have access to traditional banks. The potential is manifold:

From streamlining payment systems to modernizing regulatory compliance, blockchain has the potential to transform traditional business models and practices, ushering in a new era of efficiency, security and transparency in financial services.

AI: making finance smarter and faster

Artificial intelligence (AI) is the other big tech game-changer for finance. AI models analyse mountains of data to spot fraud faster and more accurately than humans ever could. They also speed up loan approvals by better predicting credit risk, personalise investment advice, and automate repetitive tasks like onboarding new customers.

AI-driven chatbots provide customer support around the clock, saving banks tons in staffing costs while improving the user experience. On the trading floor, AI algorithms can react instantly to market shifts and optimise portfolios with a speed and precision that humans can’t match.

AI has the potential to reduce operational costs and improve customer experience by automating routine tasks and personalising services.

Many financial institutions are leveraging artificial intelligence to help optimize costs. In fact, 36 percent of financial services professionals reported that AI applications decreased their company’s annual costs by more than 10 percent, according to a 2023 NVIDIA survey.

A powerful combo

Put these two together and you get a potent mix for finance. AI can analyse blockchain data to catch fraud or assess risk in real time. Smart contracts powered by AI could automatically adjust terms based on changing conditions.

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We’re already seeing startups like Numerai use blockchain to reward data scientists for building AI models that improve hedge fund strategies. Chainalysis combines AI with blockchain analytics to monitor suspicious activity and help banks meet compliance requirements.

This combo could usher in decentralised autonomous finance: systems running complex financial services without human middlemen, 24/7, at a fraction of today’s costs.

The challenges ahead

That said, it’s not all smooth sailing between here and there. Blockchain networks still have issues scaling to handle millions of transactions per second. Regulations around blockchain and cryptocurrencies remain uncertain in many countries.

AI has its own hurdles: models can be biased, decisions hard to explain, and privacy is a constant concern. AI has a dark side.

Behind the sleek interfaces and intelligent assistants lurk dangers that are less obvious but deeply consequential. Bias coded into algorithms can reinforce historical injustice. Surveillance technologies can track people with chilling precision. Automated decision-making can strip away individual freedoms and deepen existing inequalities. And at the core of these issues is a simple but troubling fact: the more we rely on AI, the more we must ask who controls it, how it operates, and what values are embedded within its seemingly neutral code.

Blockchain and AI make finance faster and leaner, but both come with energy costs. Traditional blockchains like Bitcoin are energy-heavy, yet newer ones like Solana or Base are far more efficient. AI, on the other hand, relies on energy-intensive data centres to train and run large models used in fraud detection, trading, and automation. As adoption grows, so does the need to balance performance with sustainability.

The bottom line

Finance has made great strides with digital tech, but the cost and complexity of legacy systems, regulations, and security keep prices high. Blockchain and AI offer a fresh start – automating many tasks, cutting out costly middlemen, and making finance more transparent and accessible.

The future could be one where anyone, anywhere, can access affordable, secure financial services – powered by decentralised ledgers and smart machines. It won’t happen overnight, but these technologies are lighting the way to a fairer, faster financial world.

However, traditional banks continue to dominate the vast majority of the market in most European countries. Although they are growing rapidly, neobanks have yet to achieve a significant market share. The future may be here, but it will probably be some time before it is distributed more evenly.