Procurement is a vital force in financial institutions—but today’s banks are missing out on value if they haven’t adopted a tech-focused vision for procurement. If a procurement team prioritizes tactical operations over strategic vendor management, they lose ground in contract oversight and negotiations, leaving themselves vulnerable to savings leakage and price hikes. The potential for risk doesn’t end there. When banks don’t integrate technology with procurement, they may forgo crucial savings opportunities. For example, they may miss out on analyses of software license usage and utilization, thus leading to more software spend than necessary in order to run their businesses.

Forward-thinking banks and other financial institutions are using advancements in technology to modernize procurement and create value. But are they ready to seize the potential of automation and agentic AI? Without clearly defined priorities and a scaled transformation strategy, FSI procurement functions may be in danger of losing momentum. 

FSIs have taken a more agile approach to growth as post-Covid interest-rate shifts and a rise in tech investments have reshaped business operations. Institutions are reimagining their strategies for third-party spend to improve efficiency and build value. Meanwhile, FSIs are doubling down on technology to improve customer service and stay competitive; last year, 80% of financial services firms said they expected to increase their IT spend, with most investing in analytics, cloud, cybersecurity, and generative AI. The industry has also built its own agentic AI solutions as a means of controlling costs and reducing dependence on external tech providers.

As FSIs explore the role of technology in business functions, procurement is emerging as an unexpected source of value. In recent years, procurement has taken on a more strategic role by using technology as a competitive differentiator. AI and automation are reshaping the functions, creating opportunities to improve processes, guide strategic spending, and reduce costs.

This is a pivotal moment for procurement and technology to become strategic partners in the future of financial services. By understanding current conditions and the ways technology can improve procurement’s profile, FSIs can capture value in game-changing areas.

Technology as a core differentiator

In financial services organizations, procurement has historically played less of a strategic role than in other industries. It manages sourcing, negotiates contracts, ensures compliance, and keeps costs down. But as technology becomes both a strategic asset and a source of competitive differentiation, procurement must continue to build on its transformative business capabilities.

Now FSIs can turn to procurement for next-level business influence on vendor relationships and technology solutions. Today’s FSIs are making significant technology investments that directly improve key business outcomes, including maintaining a competitive edge and exceeding customer expectations.

Tech-savvy FSIs also can navigate vendor relationships more easily. If organizations embed procurement in their tech strategies, they open doors to long-term collaborative vendor partnerships that promote stability and eliminate the risks associated with switching providers. Working with leading technology companies also keeps FSIs at the forefront of transformation and ensures access to future innovations. FSIs no longer need to build core platforms in-house; with external vendors, they can develop expert-led capabilities that align with firm priorities while positioning themselves as customers of choice for sizable, cutting-edge technology providers. These partnerships can support services such as generative AI-enabled insurance distribution, which boost efficiency while making a commercial impact.

How will procurement deliver the greatest value? Exploring three priority areas can help financial services keep up with demand while breaking new ground.

Priority 1: Realize savings potential

Procurement can deliver savings for financial services across bank-specific and indirect spending, and AI is expanding opportunities to generate value from everyday processes. The technology is already changing how organizations manage supplier costs, contract cycles, delivery models, and in-house systems.

A strategic partnership between procurement and technology can amplify savings across buying and spending categories. On the buying side, AI can power cost analysis, forecast pricing trends, and help organizations identify the best suppliers. To improve spending, FSIs can use AI as an advanced operations tool, predicting demand and automating processes to enhance performance. Each innovation benefits procurement and the entire organization. 

FSIs should consider not only how AI has reshaped spending so far but also its implications on future decision making. AI—particularly agentic AI—can automate tactical work and create more time for human experts to focus on high-value strategic activities. With these insights, FSIs can make decisions based on information that would have taken too long to gather manually.

Priority 2: Transform operating models

The most advanced financial institutions are already redesigning their procurement operating models to maximize value. Organizations are embedding procurement earlier in the technology life cycle, partnering directly with chief technology officers, CIOs, chief data and AI officers, and product owners. Category strategies are evolving away from cost savings toward innovation, speed, resilience, and customer impact.

Procurement is foregoing traditional relationships with technology providers in favor of ongoing collaboration and innovation. This shift is elevating procurement’s role within FSIs as the function moves from administration to technology leaders and long-term value creators. As a result, FSIs can benefit from growth driven by improved customer experiences, operational efficiency, and resilience.

This transformation requires procurement teams to fundamentally change their approach to skill building by developing deeper expertise in AI and emerging technologies. Understanding generative AI models, cloud architectures, cyber technologies, data governance, and Software as a Service (SaaS) economics is becoming essential. Procurement professionals must speak the same language as technology and business leaders and bring a commercial lens to complex technical decisions.

Priority 3: Lead the way with next-level procurement hubs

Consider today’s offshore sourcing hubs: With the need for ongoing operational oversight and human capital management, such procurement solutions can easily become sources of logistical complexity. How can FSIs leverage technology to make these hubs more efficient? With agentic AI, financial institutions can reshape the future of today’s core procurement functions with innovation and speed. Technology can support every aspect of the supplier relationship, and by incorporating agentic AI into execution planning, procurement can take on a more strategic role.

AI can transform procurement processes in ways that reshape business. With AI-enhanced sourcing, organizations can make better decisions around supplier discovery and selection. The technology will generate new opportunities in buying, invoicing, and contract management while automating time-intensive aspects of supplier transactions. It also gives procurement a path to greater sustainability, using forecasting capabilities to amplify impact while reducing third-party risk.

How should FSIs begin their procurement technology transformations?

FSIs should take an ambitious, analytical approach to embedding value in tech-forward procurement. With a clear understanding of external spend and operating costs, leaders can develop a two- to three-year strategy rooted in sequenced use cases—ones that guide transformation across the procurement value chain, from demand intake to contract execution.

A successful transformation plan includes three essential levels:

• Define future ambition: Procurement can set a vision for implementing AI and automation in the request process, commercial negotiation, and contract generation—and establishing agentic, multistep workflows that set the business up for success.
• Analyze present-day goals: Institutions can analyze their current capabilities in terms of technology and automation related to spending, contracts, and suppliers to ensure AI strategies will be grounded and scalable.
• Identify paths forward: By investing in a small number of “best bet” use cases with high near-term return on investment, procurement can map ways to optimize AI across crucial channels and deals.

With this approach, FSIs have been able to move from incremental savings to transformative costs savings. Procurement teams have increased staff efficiency by over 30% and even up to 50%; consistently saved 5%–8% on addressable third-party spend; and changed the trajectory of value creation by using a strategic, integrated approach to tech adoption.

Bain partners with FSIs end to end on this agenda. These organizations face unique opportunities to modernize their procurement functions. By building a fact base and cost baseline, exploring transformation potential, and designing use-case portfolios and roadmaps, they can realize value and sustain change.

A leading international bank needed to reimagine procurement to better understand third-party spend, improve user experience, and realize AI’s potential. With category strategies and a long-term roadmap for AI-driven automation and savings, it turned procurement into a strategic value engine to drive savings and cross-functional collaboration. Bain also worked with a global bank to realize greater oversight over supplier life cycle operations and a multibillion-dollar annual spend. A digital and agentic AI transformation strategy improved data structures, change management, and task coordination, helping the bank increase efficiency and savings.

Procurement meets the moment and shapes the future

Financial institutions that embrace the tech-powered evolution of procurement will unlock greater innovation, accelerate generative AI adoption, improve resilience, and deliver superior customer experiences. Those that don’t risk falling behind—not because they choose the wrong technologies but because they lack the capabilities and structures needed to extract value from key partners.

Organizations that thrive will empower procurement to become a strategic architect of technology value and a steward of innovation. Technology spend and expectations are rising—it’s time for procurement to do the same.