AI Reshaping Digital Banking Services

Banks are deploying AI to improve digital services, but maintaining differentiation in a competitive market is a growing challenge. With nearly all banking interactions now happening online, financial institutions are racing to enhance customer experiences while addressing concerns about security and personalisation.

As digital banking adoption continues to rise, traditional banks and digital-only challengers are integrating AI and quantum computing to streamline operations. The major banks are already using AI to optimise call centres, speed up loan approvals and improve fraud detection. Meanwhile, newer digital banks are attracting younger customers by offering competitive deposit products and seamless online experiences.

AI-powered automation is set to transform key banking functions. Some banks are already using AI-driven systems to clear payment backlogs, process loans faster, and enhance cybersecurity. Employee workflows are also changing, with AI co-pilots handling tasks that previously took days to complete. Despite these advancements, experts warn that as banks increasingly rely on similar technology, differentiation becomes more difficult.

Looking ahead, banks will need to balance automation with personalised services to retain customer loyalty. With over half of customers willing to switch banks due to poor digital experiences, institutions must focus on customisation and user-friendly AI tools. At the same time, rising cybersecurity risks highlight the need for robust protective measures to maintain trust in digital banking.

Source: Australian Financial Review, First Bank, Payments Journal