TROY, Mich.–As new technologies are being integrated into financial services, most bank customers in the U.S. are expressing distrust over artificial intelligence, according to the newest Banking and Payments Intelligence Report from J.D. Power.
“Although the annual inflation rate is close to dipping below 3% for the first time since 2020, bank customers in the United States have yet to see major improvement in their financial situations,” the company said in releasing its analysis.
According to J.D. Power, the percentage of U.S. bank customers that are financially healthy remains near the all-time low, while “new concerns are cropping up with the emergence of artificial intelligence (AI) in the financial services sector. And despite that many of these AI-driven tools could help customers, many are hesitant to trust the technology to help manage their money.”
Financial Woes Continue
J.D. Power reported its new consumer survey found customers’ financial health remains at a standstill, with 30% of respondents saying they are financially healthy, and 46% saying they fall into the vulnerable category.
Those numbers are in line with the previous four months, J.D. Power said.
“Customer sentiment regarding financial health status, stress levels and empowerment to improve one’s financial situation also remain virtually unchanged month-over-month,” the company reported. “A small silver lining: The percentage of customers that are extremely worried that the prices for common goods will continue to rise dropped to 37% from 40% in January.”
The More You Know: AI Edition
As CUToday.info has been reporting, and as J.D. Power stated, after exploding onto the scene in 2023, many industry analysts expect this to be the year when generative artificial intelligence will make a meaningful difference in consumers’ lives.
But banking customers in the U.S. are skeptical, with the survey finding:
- 28% believe AI (either generative or machine-learning/algorithmic) will make their lives better, while 17% think it will make their lives worse and 24% say they don’t know.
- 48% of customers who were very familiar with AI thought it would make their lives better vs. 6% of those who are not at all familiar with AI. “To that point, customers of the nation’s largest banks and online-only banks are more familiar with AI than customers at credit unions or local banks,” J.D. Power said.
The Hesitant Adopters
According to J.D. Power, additional proof of customers’ unease about AI can be seen in their willingness to let the adoption of this technology play out before they try.
“While many of these options are broadly available to customers, anywhere from 14% to 26% of customers (depending on the application) say they would not use AI for financial applications,” J.D. Power said. “Those include using facial recognition to withdraw money (26%), using tools that automatically change or update investment portfolios (21%), and using an AI bot to help find the best mortgage, auto loan or personal loan rates (18%).”
An Interesting Finding
J.D. Power further noted that interestingly, customers are more willing to set aside their security worries or AI fears when the tools make an immediate impact on managing their financial lives.
“Notably, the percentage of customers that answered they would never use AI tools was the lowest (10%) when it would help them avoid fraud,” J.D. Power said.
When asked how much AI in financial services put them at greater risk for fraud or security breaches:
- 64% of all respondents said “somewhat.”
- 20% thought it put them at an extreme risk
- 16% said not at all.
“Key to financial institutions encouraging AI driven tool adoption will be reassuring customers about tool security,” J.D. Power said in its analysis.
Trusting the Machines
J.D. Power said it found that when it comes to AI, customers seem perfectly content to let someone else be the guinea pig.
“But, considering the current financial landscape, they might want to be early adopters of a tool that can move money from one fund to another if AI can read or anticipate trends that might keep more of their money safe,” the company said. “It’s clear that if banks are going to get customers to buy in, they need to educate them about these tools. AI can be a gamechanger for underwriting loans, managing money, and streamlining time-consuming processes, but it will all be for naught if customers don’t trust it. The banks that can boost awareness and put their customers’ minds at ease on AI stand to make major gains.
About the Report
J.D. Power said the More Banking and Payments Intelligence Report is based on responses from 4,000 retail bank customers nationwide and was fielded in January 2023. It was authored by Jennifer White, senior director of banking and payments intelligence at J.D. Power.
For the full report, go here.
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