Australia’s corporate regulator, the Australian Securities and Investments Commission (ASIC), said on Wednesday it will launch a formal review of the banking sector’s use of artificial intelligence (AI) in dealing with customers. The move follows ASIC’s May warning that banks must act quickly to address potential cyber risks posed by frontier AI systems.

Review focus and objectives

According to a letter to the banks reviewed by Reuters, the review will examine new and proposed AI applications and assess how they could affect customers. ASIC acknowledged the benefits AI and automation can bring to financial services, but stressed the need to keep customers well protected in decision‑making and lending processes.

Industry engagement

In August, ASIC hosted nine round‑table events with about 600 participants from across Australia’s financial services sector to survey AI practices and workforce behavior. A key theme that emerged was how banks and their boards handle rising cybersecurity threats and the rapid pace of AI‑driven attacks.

Bank responses

A group of major banks—including ING, NatWest, Bank of America, Capital One and Commonwealth Bank of Australia—reported that customers are enthusiastic about the potential of AI‑enabled commerce and eager to adopt it. However, the banks also warned that AI technology is evolving faster than many industry standards and existing consumer‑protection frameworks.

Next steps

ASIC’s review will aim to balance innovation with robust safeguards, ensuring that AI deployment in banking enhances service quality without compromising customer safety. The regulator plans to publish its findings and recommendations after consulting with industry stakeholders and the public.

Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.