Retail banks and private wealth firms scored 40 in Fitch’s AI stress test, signaling possible one-notch downgrade risk under an adverse scenario.

Artificial intelligence poses a moderate business disruption risk to financial institutions over the next five years, with wealth managers and retail banks among the most exposed, according to a Fitch Ratings report published October 22, 2026.

Fitch assigned scores of 40 – on a scale of 0 to 100 – to retail banks, private banks and wealth management, and standalone wealth managers and advisory firms. A score of 40 signals the potential for a negative outlook and a possible one-notch downgrade for a typical issuer under an adverse scenario, Fitch said.

For wealth managers specifically, Fitch identified elevated business model disruption risk as the primary concern. AI-enabled tools could automate or reduce the cost of investment advice, portfolio construction, research support, and advisory execution, the agency said.

Fee pressure and commoditization of advice were cited as key threats, with Fitch noting that wealth management faces greater disruption than private banking, where high-touch client relationships are expected to remain intact and AI is more likely to augment than replace advisors.

Retail banks’ mass-market orientation leaves them vulnerable to AI-enabled fintechs and digital platforms competing on unsecured consumer lending, payments, deposits, and basic wealth advice, Fitch said. Loss of deposits could affect funding costs and ultimately profitability.

Mitigants across financial institutions include regulatory barriers to entry, capital requirements, proprietary data, established client franchises, and the ability to build out in-house AI capabilities, according to Fitch.

Corporate and investment banks scored 20, reflecting stronger protection from product complexity, bespoke human judgment, and high barriers to entry. All insurance sub-sectors also scored 20.

Fitch said it does not anticipate AI driving sector-wide rating actions over the next five years, with fiduciary and regulatory obligations limiting full AI substitution in advice-driven businesses.