Will AI really make banking better for customers

In the UK, a review by the Financial Conduct Authority pointed out that AI is not new to financial services. Banks have used it for years behind the scenes in algorithmic trading, underwriting, credit decisions and fraud detection. What has changed is visibility. Publicly available generative AI tools have brought AI into everyday consumer life, with millions of people now using them to navigate financial decisions.

The UK has an important advantage here. The government and regulators have committed to keeping the country at the forefront of open banking - a position that gives it a head start in digital finance and AI-driven services.

The UK was one of the pioneers in building open banking - where customers can share their bank account data with authorised providers, instead of leaving that data locked inside one bank. Research from the Cambridge Centre for Alternative Finance describes the UK's approach as regulation-driven, helping to standardise how banks share customer-permissioned data.

A 2025 consumer report highlighted that almost one in three UK adults uses AI on a weekly basis to manage their money. Starling Bank's Spending Intelligence uses AI to find key words to help customers understand their spending habits. Lloyds Banking Group has reported rising use of AI tools for managing money. And NatWest says the generative AI version of its Cora+ assistant improved customer satisfaction, while reducing the need for a staff member to step in.

These examples matter because one of the biggest problems in retail finance is not simply lack of products, but lack of customer capacity to process complex choices. One of us (David) explained why many customers do not actively switch or search for better financial products - they often have limited time, attention and expertise. They may also find switching costly or inconvenient, compare only a small number of factors, and remain with poor-value options because alternatives feel too complex.

Continues…

For the full article by Professor David Llewellyn visit the Conversation.

ENDS