This InSight Analysis provides a detailed overview of the software and IT services market in the Italian banking sector, highlighting the key drivers and obstacles to IT investment, the positioning of major vendors, and medium-term investment trends.
In 2024, the Italian banking sector continued to demonstrate resilience despite a challenging global environment. According to PAC and KPMG analyses, the country’s major banking groups reported a combined profit of €26.7 billion (+7.7% compared to 2023) and a ROE of 13.4%. Profitability was driven primarily by strong net interest income, supported by lending rates rising faster than funding costs, as well as renewed growth in fee-based revenues. Credit quality remained excellent, with the gross NPL ratio falling to 2.3%, more than 16 percentage points below the 2014/15 peak, thanks to strengthened credit processes and past derisking actions. Capitalization also stayed robust, with an average CET1 ratio of 14.7%. However, rising operating costs indicate that efficiency remains an area for improvement.
In 2025, banks operated in an environment marked by persistent geopolitical tensions, evolving customer behavior, continued consolidation, and new regulatory requirements. The rise of open banking and neobanks further intensified competitive pressure, pushing banks toward omnichannel offerings and deeper digital transformation.
PAC’s 2025 survey reveals that banks are prioritizing the redesign of products and services, as well as the strategic use of corporate data, especially through AI-enabled personalization, enhanced commercial effectiveness, and strengthened data governance. Core banking modernization is a key medium-term trend. Cloud adoption (IaaS, PaaS, SaaS) is now considered a strategic approach.
Artificial intelligence is another major investment area. Banks are implementing AI for customer interaction, KYC and onboarding, cybersecurity threat detection, document management, and credit processes. Complementing this, cybersecurity remains a top priority as banks work to meet DORA requirements, strengthen ICT risk management, and improve incident response capabilities.
Finally, banks are exploring emerging technologies such as blockchain, used for stablecoins, KYC processes, and digital sureties, as well as, to a lesser extent, quantum computing for risk modeling and future-proof cryptography.
Recommended advisory: PAC Leadership Session – Financial Services Industry – AI Adoption
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