Australian regulator to review banking sector AI use and customer impacts

SYDNEY, Sept 30 (Reuters) - Australia's corporate regulator said on Wednesday it would formally review the country's banking sector's usage of AI in dealing with customers. The Australian Securities and Investments Commission (ASIC) warned in May that banks should take urgent action on tackling potential cyber risks from frontier AI systems.

A letter from ASIC sent to the banks on Wednesday, reviewed by Reuters, stated the review would focus on new and proposed use cases of AI by banks and the potential impact on customers. ASIC said it was aware of the potential benefits created by AI and automation for the banks but was keen to ensure customers would remain well protected through decision making and lending processes.

ASIC said earlier in August that it had hosted nine roundtable events with 600 participants from across Australia's financial services sector to survey AI practices and behaviour in the workforce. One of the key themes that emerged was how banks and boards deal with increased cybersecurity threats and the pace at which AI-led attacks can occur.

A group of major banks, including ING, NatWest, Bank of America, Capital One, and Commonwealth Bank of Australia, said earlier this month that customers were enthusiastic about the potential of agentic commerce and keen to enable it. However, the banks warned that AI technology was advancing faster than many industry standards and consumer protections.