The State of Digital Banking 2024: Consumers Say “It’s Complicated”

In 2023, fraud cost Americans $10B, a 14% year-over-year increase, according to the Federal Trade Commission. What’s behind the sudden surge? The rollout of cybercriminals' new weapon of choice: AI.

In response, there’s been an influx of conversations about how financial institutions stand to benefit from using the technology to improve their customer experience.

Considering both the pros and cons are being widely discussed, consumers are wondering if AI in banking is for the better or for worse. To get the answer, Glassbox asked U.S. consumers, and their response reveals it’s, well, complicated.

Mixed feelings

According to Gassbox’s “State of Digital Banking 2024” report, 60% of U.S. consumers say AI in banking is equal parts benefit and risk. However, the rollout of the technology into the industry is inevitable as more than half of financial institutions are implementing generative AI over the next 12 to 18 months, Arizent reports. So, let’s discuss the research-backed best – and worst – ways FSI organizations can approach AI execution to ensure they’re maximizing customer retention and acquisition.

AI isn’t all bad

The good news is that AI isn’t all bad. Despite some hesitation, consumers recognize AI does provide some valuable use in banking, specifically in terms of security and usability.

Of note, 59% of consumers are comfortable with AI being used to identify potential fraud, and nearly half support its use in fixing mobile app or website errors to improve usability

So, when mapping out the best AI plan, financial institutions need to ensure they start off on the right foot by developing an AI strategy that directly addresses customers’ biggest pain points, as mentioned above.

Where things get rocky

On the other hand, to move forward with the least customer resistance, financial institutions need to ensure they avoid any potential ‘red flags’ to customers.

A hint: personalization and security are key to AI acceptance, but that doesn’t mean customers want AI to automatically fill in their personal information.

While consumers recognize AI has some benefits in terms of security, 47% still identify security risks as their main concern with AI in banking. There’s a similar sentiment for personalization. While 67% of consumers appreciate personalization based on their banking history, they are LEAST comfortable with AI being used to auto populate personal information based on past engagements.

So, how do banks win?

The rollout of AI is tasking leaders in the FSI space with the impossible: find a perfect compromise between customer’s preferences and concerns, even though they contradict one another.

The solution is not simple, but to put customers at ease, financial leaders need to go back to the basics and evaluate customers’ thoughts on their current digital offerings. Then, deliver products and processes that align with the most important components to customers.

When Glassbox asked respondents what is most important to them in terms of their bank’s digital offerings, we found:

• Security is king: Over 50% of users consider security an extreme priority in digital banking, and 90% said the security of personal info is important or extremely important

• Consistency counts: 66% of consumers demand a seamless experience across all digital platforms, and 87% say reliability and consistency of the website or app is paramount

• Support matters: 79% of users emphasize the importance of quality customer support online,

Of the components mentioned above, one thing is clear: People don’t care so much about the flashy extras of their bank’s digital offering as they do about the fundamentals. So, the questions financial institutions need to ask to execute an AI plan that will keep their current customers and attract new ones are:

• How can AI strengthen the bank’s data protection processes?

• How can AI identify spots of friction in the customer journey and help resolve them?

• How can AI and human expertise work together to provide quality customer service?

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