Lloyds Banking Group targets £2bn in cost savings through AI strategy, but bets against AI agents

Is Lloyds Bank's techie boss a secret AI contrarian?

Charlie Nunn, chief executive of Lloyds Banking Group, loves talking about technology. The former Accenture partner wants to put customer deposits on a blockchain and made his senior staff take a course on "leading with AI". But part of his new four-year strategy is in effect a bet that AI won't conquer all. Lloyds wants to boost income with several initiatives that are, at heart, about cross-selling products to customers. A priority in its insurance division, for example, is "realising cross-group synergies" -- the classic bancassurance model of selling policies and investment products to bank customers. Then there's an "integrated transport ecosystem" -- encouraging customers to search for a new car, arrange the financing and get it insured in one place. Even the bank's new network of rental properties becomes a pipeline for selling home insurance and mortgages. This makes sense for an established group like Lloyds. Its retail division has a relationship with around half of UK adults. That's 28mn people who, generally speaking, would rather not spend time finding the perfect pet insurance. Many will opt for the convenience of buying through their bank app, even if they could theoretically get a better deal elsewhere. Lloyds is hardly the only bank making this sort of move. Every big lender in the UK is hoping new "targeted support" regulations will make it easier to sell wealth management services to existing customers. Historically, the only real risk was pushing extra products too hard and falling foul of mis-selling rules. Now, though, there's a new risk. What if consumers start delegating financial tasks to agentic AI? The more that happens, the more cross-selling starts to lose its shine. When a bot can search the whole motor finance market in seconds, each product would have to compete on its own merits. Big banks may still offer the best price thanks to cheaper funding and proprietary data, but they can no longer rely on a captive audience. Already almost a fifth of UK consumers use AI to help with their personal finances, according to the Financial Conduct Authority. That said, Britain isn't likely to descend into an AI financial free-for-all: a regulatory review in July highlighted the risk that rapid switching by AI agents would damage financial stability. That should provide some reassurance about Lloyds' position. Nunn might be the biggest tech evangelist in UK banking, and AI remains a big part of Lloyds' plan to be more efficient, as it is at all banks. But since AI threatens to undermine rather than assist his cross-selling ideas, it's a good job most people don't share his level of enthusiasm.

Lloyds Bank bets on AI to cut £2bn in costs by 2030 as profits jump

The "Accelerate 2030" plan leans on automation to push Lloyds' cost-to-income ratio below 45%. CEO Charlie Nunn says AI is "going to impact work." Lloyds Banking Group is betting on artificial intelligence to strip £2bn from its costs by 2030, the clearest sign yet that Britain's biggest high-street lender sees automation as central to its future. The target, unveiled alongside half-year results that showed pre-tax profit up 23%, lands just as Morgan Stanley warns European banks could shed a fifth of their jobs to AI. The plan has a name and a number. Branded "Accelerate 2030," it aims to push Lloyds' cost-to-income ratio below 45% by the end of the decade, down from around 50% today, with AI doing much of the heavy lifting. The savings are meant to compound an earlier round. Lloyds says it delivered £2bn of "growth cost savings" under its previous five-year plan, so Accelerate 2030 effectively doubles down on the same playbook, this time with automation at its centre. Chief executive Charlie Nunn was candid about the human cost. AI is "going to impact work," he said, adding that it will "require us to reskill people and hire new people" as roles change shape across the bank. He split the ambition in two. Roughly half of the AI push is "about differentiating and extending what we do for customers into new areas," Nunn said, while "the other 50% is around helping our colleagues do their tasks more efficiently." On jobs, he was noticeably vaguer. Nunn declined to say whether the £2bn plan would mean fresh redundancies, a silence that will unsettle staff at a bank that has already been trimming hard. The recent record gives that caution weight. Lloyds cut 1,600 roles in early 2024 and put around 3,000 more at risk in a performance review last September, so the AI drive arrives on top of existing pressure. The branch network is shrinking too. Lloyds is closing 232 branches in 2026, and Nunn framed the strategy as one that will "follow the customer and our customer data" rather than physical footfall. The spending behind the pivot is substantial. The group has committed more than £13bn to digital services, including a new smart wallet and the integration of Curve, the fintech it acquired in late 2025. Some of the technology is already live. Lloyds struck a deal with Google in May to build an internal AI agent platform, and is targeting mortgage approvals in around three days, a fraction of the industry norm. The customer-facing bets are meant to earn their keep too. The new smart wallet and the Curve integration are pitched as ways to keep users inside Lloyds' apps, central to Nunn's argument that AI should grow revenue as well as trim cost. It is also experimenting at the frontier of finance. The bank has been exploring tokenised deposits and blockchain settlement, betting that the plumbing of banking, not just the customer app, can be automated. Lloyds is far from alone in the shift. Across the sector, lenders are recasting AI from an efficiency tool into a headcount strategy, a change of tone that has become impossible to hide. The warnings have grown louder. Wall Street's biggest banks cut 15,000 jobs while posting record profits, and their executives have largely stopped pretending the two are unrelated. Smaller players are moving the same way. Digital challenger Starling recently cut 130 jobs in an AI and restructuring push, showing the trend runs well beyond the incumbents. Not everyone is convinced the maths adds up. Australia's largest bank has complained that corporate AI is running up bigger bills and generating "work slop", a reminder that promised savings can prove elusive. For Lloyds, the pitch to investors is straightforward. Rising profits, a falling cost ratio, and a credible AI story are exactly what the City wants, even if the human side of the ledger is left deliberately blurry. Announcing £2bn in savings is the easy part; proving that AI can hit the target without hollowing out service or morale is the harder one, and 2030 is closer than it sounds.

Lloyds Bank to cut £2bn in costs as part of AI-powered strategy

Chief executive says the four-year plan will lead to greater efficiency but gives no details of potential job losses Lloyds Banking Group will cut another £2bn of costs as part of a four-year plan under which its chief executive will use new tech and AI to drive growth. Charlie Nunn said the strategy, which the UK's largest high street lender will launch in January, would involve investing £13bn into the business by 2030, including for "pioneering technology" to lure new business, improve efficiency and increase payouts for shareholders. That will involve rolling out "AI-powered advice" for wealth and workplace pensions, and using it to offer personalised offers based on customer behaviour, and give "support and guidance" to relationship managers, who are assigned to specific accounts. While Nunn praised colleagues for guiding customers through "increasingly complex services, he said, "we can make it even better, and even simpler, because we're not good enough today, relative to our ambition". When asked how staff would be affected by £2bn in planned cuts, Nunn said he would consider all the same business areas that were in the bank's crosshairs over the past five years, including better technology, reviewing physical office space and "improving our ability to increase productivity", without giving details of any potential job losses. "So, when we look to this next stage, those kind of levers will continue in front of us," he told journalists on Thursday. "And we do think that there are new opportunities for agentic AI to both differentiate our services and grow more efficiently: IE provide services we've never been able to provide. "That is going to impact work. It is going to require us to continue to re-skill people and hire new people, but that's been my history for 30-odd years in financial services." As for the future of Lloyds's 550 branches, Nunn said "it will be important part of our proposition, but we're going to follow the customers and our customer data around our branches." The strategy also pointed to international expansion, with Lloyds aiming to grow its corporate and institutional bank in the US and Europe, marking a big shift from the retrenchment that followed the lender's bailout at the height of the 2008 financial crisis. Nunn said he was also betting on AI and blockchain technology to cut waiting times for mortgage approvals to about three days; the bank would also boost rewards and loan discounts to retain loyal customers. Lloyds will double down on its car loan division, which is still waiting to settle the long-running motor finance commission scandal, by creating a one-stop-shop app for drivers wanting to buy, insure and set up charging points for electric vehicles. Chris Beauchamp, chief market analyst at the investing and trading platform IG, said: "Nunn's strategy to move away from the traditional lending business continues to deliver for Lloyds, though it is still a work in progress. "The push towards the US and more corporate banking is understandable, but Lloyds would hardly be the first UK name to follow this demanding path - success here is far from guaranteed. Lloyds has the heft in its home market, but a move to a bigger global player is a significant undertaking." It came as the bank reported better-than-expected second-quarter profits, which rose to £2.3bn between April and June, a 14% jump from the same period last year. It meant bosses could payouts for shareholders, with a 1.58p a share dividend and the first ever share buyback announced at half-year, worth £1bn. Lloyds's share price rose 1.7% in response to the news on Thursday morning.

Here we go again - Lloyds Banking Group sets off on Accelerate 2030, its latest tech-driven transformation, with lots of AI incoming

Talent, data and technology are the key unlocks of this. Lloyds Banking Group has been in the throes of successive business and technology transformations for many years - see diginomica passim - and now stands on the verge of the latest strategic initiative - Accelerate 2030. According to Group CEO Charles Nunn, this will "re-imagine customer journeys, increase Group connectivity, and deliver a productivity step-change, all enabled by pioneering technology". And yes, that means AI and lots of it! Lloyds Banking Group is the UK's third-largest in the UK, behind HSBC and Barclays, with approximately £900 billion in total assets. Its retail business boasts relationships with half of the UK adult population, with a physical presence in around 1,000 communities and nearly 22 million mobile app users to its name. The Group has long been a heavy investor in technology and that's not about to change, Nunn makes clear: We have significantly modernized our infrastructure, actively unlocking our legacy data estate and technology. Investments in our people has been a key enabler of this with around 11,000 technology and data hires since 2021. These actions mean that our organization is better equipped to deliver significant change at pace. This has created the platform for increased innovation, driving clear benefits for both customers and the group. At the same time, we've established leadership positions across new technologies, launching industry-first use cases and realizing value from AI. Accelerate 2030 Nunn's positioning of Accelerate 2030 is that it should be seen as an evolution of what's gone before, building on a business model that he's confident provides the right foundation for this next phase. The mission is clear, he says: Our purpose of helping Britain prosper remains at the core of Accelerate 2030, supported by a clear promise to our customers to make finance simpler, smarter and more connected for every moment that matters. Building upon our existing strengths, we will re-imagine experiences to delight our customers, better connect than ever before, making the group more than the sum of its parts and deliver a productivity step change to create value. All of this will be enabled by pioneering technology and a clear commitment to investing in the business. The strategic priorities here will be delivered via three key pillars - grow the core, innovate to deepen and diversify, and simplify to out-perform. Nunn explains: 'Grow the core' is focused on re-inforcing our position as the UK's financial services leader. We will meet more needs in areas of strength and accelerate in faster-growing areas where we have headroom, maintaining or gaining share across the core franchise. To achieve this, we will re-imagine customer experience, embedding AI to make things simpler and more personalized than ever before. 'Innovate to deepen and diversify' is focused on increasing group connectivity whilst extending into higher-value fee-generating adjacencies and building new businesses. We will also increase the group's presence in third-party and AI channels to be where our customers are. And finally, 'simplify to out-perform' is focused on how we'll create the capacity, pace and discipline to enable our acceleration. Investments in our people, data and AI are the cornerstones of this and are critical to enabling our growth ambitions and a productivity step change. This includes a further £2 billion of gross cost saves. Homes and cars Agentic AI-powered customer journeys will drive further improvements in our ability to grow and serve customers significantly more cost effectively, he adds, as well helping to reward the mot valuable customer groups: We've taken the first step here by re-launching our rewards portal earlier this year. More than 8 million of our customers have already used this and are benefiting from discounts and cash-back offers participating in challenges and monthly price draws. Now this is just the start, and we want to take this much further. In the future, we'll leverage AI to make better use of our extensive data and provide offers with even greater personalization tailored to key life moments and based on spending behaviors. Rewards will also be increasingly based on loyalty and relationships across the whole of the group. This will include differentiated pricing, providing greater benefits to our most valuable customers. And to encourage regular engagement, customers will be able to track the value of rewards over time. AI will also have a big role to play in the mortgage business, where the Group holds a 19% UK market share, Nunn says: From this position of strength, we understand that there are currently many challenges for prospective and existing owners, including savings for deposits, affordability and complexity in the mortgaging journey. We want to change that and deliver a broader transformed home experience. The homes journey of the future will be AI and Blockchain-powered, increasing both personalization and speed. Agentic AI will make it easier than ever for customers to get advice and better value on their mortgages and broader homeownership needs. This will position the group to have closer, longer-lasting and deeper relationships with its mortgage customers, complementing our leading position with intermediaries. And as the UK's largest motor financing and leasing provider, the aim is to provide.a single trusted platform for broader transport needs, he ads: We will create a smoother, more empowering experience for customers. The first phase of this is already live today within the Lloyds app. Customers already have access to tools, including MOT, tax and insurance reminders. We'll add more functionality over time before broadening the eco-system to serve more needs supported by greater connectivity with the wider group and industry partnerships. To bring this to life, in future years, customers will be able to search verified listings from branded partners to select their next vehicle within the app. AI will offer tailored guidance, helping customers choose vehicles that suit their needs and budgets. AI and lots of it So, AI, AI, AI - no surprises there in terms of a statement of intent, but how does Lloyds Banking Group intend to deliver on this? Nunn says: In the next phase, we'll further build out our in-house expertise through a constant commitment to colleague up-skilling alongside targeted hiring, whilst we'll take our technology and data modernization efforts to the next level. At the same time, investments in AI and specifically Agentic AI will deliver value across all divisions and functions. For example, he suggests, AI tools will be used to transform engineering productivity and automate manual processes such as fraud and complaints, with the expectation that this will drive around £2 billion of gross cost savings from 2027 to 2030. Nunn reckons there are four key characteristics to being an at scale AI leader - trust, breadth, data and capabilities - and, inevitably, he stakes a claim that Lloyds meets all of these. The organization has made "significant strides" to adopt AI at scale and be able to measure its impact, he argues: We have many examples where AI is driving significant benefits today for both customers and colleagues. It is with this in mind that I see significant revenue and cost opportunities over the coming period as we scale further. Every part of the group has a clear AI-enabled strategy that will further enhance our ability to differentiate our services, grow and deliver improved productivity. Indeed, by 2030, we expect AI-powered tools will support every customer interaction and all of our colleagues. And the ROI on this will be there, he attests: As these opportunities scale, so will all the value that we realize. We're on course to deliver more than £100 million of value from generative and Agentic AI in 2026, with substantial benefits driving our revenue growth and efficiency in Accelerate 2030. Fundamentally, we expect to remain right at the forefront of this change and are extremely well equipped to realize value, given our scale leadership and starting position. And there's lots more to come, he concludes: We're just at the early start, early days really, of using agentic AI at scale. So we've laid that out within the context of our net interest income growth of mid-single digits. We've included AI is driving that, and we've included in the £2 billion gross cost saves. If we can go faster further for our customers and for the organization, we will - and we'll deliver on that. My take No horsing around here. You certainly can't fault Lloyds Banking Group for not having a multi-year strategic plan to hand and being ready to stick to it. Earlier transformation initiatives have delivered results and provided the solid-looking foundations that will be needed to support this latest push, not least around data cleanliness.

Lloyds aims for a further £2 billion in cost savings with AI to the fore

This content has been selected, created and edited by the Finextra editorial team based upon its relevance and interest to our community. The UK bank, which serves 28 million customers and around 1 million businesses, says it on track to deliver more than £2bn of gross cost savings from its previous four-year strategy, and is now targeting a further £2bn by 2030. Between 2022 and 2026, the bank reduced data centres by more than 50% and migrated more than 60% of applications to the cloud, while slashing its branch network. During the same timeframe, the bank hired 11,000 technology and data specialists to drive digital and AI leadership and recently announced that GenAI is expected to deliver over £100 million of benefit in 2026. Lloyds now claims to be the UK's largest digital bank, with around 22 million mobile app users and around seven billion digital logons a year. The new four-year strategy leans heavily on a further uplift in online and mobile banking. Lloyds chief Charlie Nunn says the aim is to elevate the customer experience by leveraging AI, while also increasing productivity and efficiency across the bank. Says Nunn: "We are targeting around £2 billion of gross cost savings by 2030 based on extending existing levers, such as our digital transformation and tech modernisation, and leveraging new areas, in particular realising AI value to drive a productivity step-change as we deliver our strategy."