By Nick Smith, VP Sales & General Manager APAC, Smart Communications
The future investment of AI in banking is undeniable, with projections showing that generative AI investments in APAC are expected to reach $175 billion by 2028. In 2025 alone, over 40% of AI investment is expected to be in the finance and banking industry.
However, consumer confidence in AI is not as strong as businesses’ financial commitment to the technology. While they may seem more open to embracing it in other aspects of their lives, customers remain cautious when it comes to AI in customer communications. Our recent survey found that 68% of Australian participants expressed concerns about the security of their personal data, while 67% voiced ethical worries about AI’s role in customer communication.
For AI to succeed in banking, institutions must prioritise customer trust by being transparent about its use, implementing clear guidelines, and strengthening security measures. Here’s a look at how banks are using AI, along with the critical trust issues that need addressing:
AI’s Greatest Strengths in Banking: Fraud, Market Insights, and Customer Service
AI is transforming fraud detection, a critical area for Australian banks facing nearly $2 billion in fraud-related losses in 2024. By enabling real-time monitoring, AI can swiftly identify unusual transactions and alert customers and fraud prevention teams. This rapid, data-driven approach enhances detection accuracy and helps prevent significant financial losses for both banks and their customers.
Beyond fraud prevention, AI plays an essential role in market trend analysis. AI tools empower investment managers to make more informed, data-driven decisions by processing vast data sets. Some banks even provide these insights directly to clients, offering personalised investment advice that enhances customers’ sense of control over their financial decisions.
AI also brings substantial improvements to the customer experience. AI-driven chatbots, tailored services, and responsive communication systems reduce wait times and improve service efficiency. However, customers remain somewhat wary of AI despite these advancements, particularly regarding AI-generated communications. This concern suggests a need for banks to carefully manage and communicate AI’s role in customer interactions to ensure trust and comfort.
Persistent Customer Concerns: Ethics and Security
Despite these promising applications, a large portion of customers remain sceptical. Our research shows:
- 67% of Australians are concerned about ethical issues
- 68% of Australians worry about security risks.
Customers want reassurance about GenAI’s role in banking, particularly in areas where it impacts their personal interactions with financial institutions. Many customers want strong safeguards, and over 84% prefer that human oversight is built into any AI-generated communications they receive.
Bridging the Trust Gap: Key Steps for Banks
To build trust in GenAI, banks can take specific, customer-focused actions:
Commit to Transparency:
Banks can help ease concerns by clarifying when GenAI is used in customer communications. Including disclaimers on AI-generated content, with human review signatures, can provide transparency and assure customers that humans are still actively involved in the process.
Gather Customer Feedback:
Involving customers in evaluating AI tools and processes can empower them and build confidence. Giving customers a voice when deploying AI also allows banks to fine-tune services based on honest feedback.
Bank customer AI concerns
Protect Data Privacy:
Banks can ease security concerns by detailing the types of data used to train AI models and emphasising that personal and sensitive information remains secure. Offering customers the option to opt out of AI-driven functions can also enhance their sense of control over their interactions with AI.
Demonstrate AI’s Benefits:
Showcasing AI’s positive impact—faster responses, personalised service, and accurate updates—can help shift customer perspectives. When customers see tangible benefits in their own banking experience, they are more likely to accept and embrace AI technology.
A Transformative Opportunity for Banking
AI’s potential to reshape everyday life is undeniable, rivalling the impact of the internet in the ’90s. As AI continues to dominate conversations, banks have a unique opportunity to harness this technology thoughtfully and inclusively. By addressing trust issues proactively, banks can leverage AI to improve customer experience and service, paving the way for a more innovative and secure future in banking.
