Bain & Company: How AI is Changing Procurement in Finance

Procurement functions at financial institutions are evolving from back-office cost centres into AI-enabled strategic value drivers, according to new research from Bain & Company.

In its latest report, Procurement in Financial Services: A Tech-Powered Value Creator, Bain argues that rising investment in cloud, analytics, cybersecurity and generative AI is elevating procurement’s role within banks and insurers as organisations seek greater efficiency, resilience and competitive advantage.

The consultancy says procurement teams that remain focused primarily on tactical sourcing and contract management risk missing opportunities to reduce costs, optimise software spending and build stronger long-term technology partnerships.

According to the report, 80% of financial services firms expected to increase IT spending last year, with many organisations also developing internal agentic AI capabilities to reduce dependence on external technology providers.

Procurement takes on strategic role

Bain's report says the shift is creating a pivotal moment for procurement and technology functions to work more closely together, particularly as financial institutions increasingly position technology as a core business capability rather than a support function.

The report found that so-called “tech leaders” within banking employ significantly larger engineering workforces than their peers, with engineers accounting for an average 16% of employees compared with 9% at other banks.

As technology spending grows, procurement is taking on a more strategic role in managing vendor ecosystems, negotiating software and cloud agreements and supporting enterprise-wide transformation programmes.

The report argued that procurement is emerging as an unexpected source of value within financial services organisations as AI and automation reshape operations and supplier management.

AI unlocks savings and efficiency

Bain identified three major priorities for procurement leaders in financial services: unlocking savings potential, transforming operating models and building next-generation procurement hubs powered by AI.

The consultancy adds AI-enabled procurement tools are already helping organisations improve supplier selection, analyse costs, forecast pricing trends and automate sourcing and contract management activities.

According to Bain, organisations adopting more advanced procurement operating models have achieved staff efficiency improvements of more than 30%, with some reaching 50%, while also consistently saving between 5% and 8% on addressable third-party spend.

The report also highlighted the growing role of “agentic AI” in procurement operations. Bain described agentic AI systems as capable of autonomously executing workflow tasks including supplier evaluation, sourcing strategy development, negotiation support, contract analysis and invoice validation.

Rather than fully replacing procurement teams, the consultancy suggested AI would increasingly automate repetitive and administrative work, allowing procurement professionals to focus on strategic activities and supplier collaboration.

Skills and operating models evolve

Bain's report outlines that leading financial institutions are embedding procurement teams earlier in technology and product lifecycles, with closer collaboration between procurement leaders and CIOs, CTOs, chief data officers and AI teams.

The consultancy argued that category strategies are also evolving beyond traditional cost-reduction goals towards broader priorities including innovation, resilience, speed and customer experience.

As a result, procurement professionals are expected to develop deeper expertise in areas such as generative AI, cloud architecture, cybersecurity, SaaS economics and data governance.

The report suggested that future procurement operating models will rely on a combination of automation, human oversight and AI-driven orchestration across the procurement lifecycle, from demand intake and supplier discovery through to contract execution and payment validation.

Bain concluded that financial institutions embracing technology-enabled procurement transformation will be better positioned to accelerate AI adoption, improve operational resilience and strengthen customer experience.

“Organisations that thrive will empower procurement to become a strategic architect of technology value and a steward of innovation,” the report stated.