Recent market jitters over artificial intelligence have centred on fears that entire industries could be upended, jobs destroyed, and company values slashed.
They’re all very legitimate worries. But there’s another important thread to the AI discussion that’s getting far less attention: how the rise of AI could change the way millions of people behave with their money (assuming they still have jobs, of course).
You see, AI isn’t only a cost-cutting tool for companies to ruthlessly exploit. It could also change the very markets into which big businesses sell their products, thanks to bots designed to help us make better financial decisions.
“Agentic” shoppers, as they’re known, are AI-powered bots that trawl through the prices and services offered to customers by just about any big business, such as banks, insurance companies, utilities providers, or online retailers. The idea is they look through the fine print, point you towards a better deal, or even complete a transaction on your behalf.
Now, the idea of a bot that takes care of financial decisions on your behalf may sound far-fetched. It certainly won’t be every consumer’s cup of tea.
But there are already AI-driven price comparison apps on the market, and analysts and company bosses acknowledge these will become more common and advanced over the next couple of years.
Indeed, some analysts think these bots will become popular enough to eat into the profits that big corporations tend to make from customers’ inertia, sometimes dubbed a “lazy tax”.
It’s fair to assume financial services will be prime targets for these bots, simply because banks, insurance companies and others make a lot of money from customers’ inertia.
We all know there’s probably a more competitive interest rate out there, or we could get a lower insurance premium, but it’s too complex and time-consuming to act on.
Bots could remove some of this inertia – if they were reliable enough and if people were prepared to entrust them to make financial decisions (admittedly, two big “ifs”).
The banks are a case in point. Indeed, at Commonwealth Bank’s half-year results, Jarden analyst Matt Wilson also asked chief executive Matt Comyn about this very prospect.
“If we embrace your enthusiasm for AI, then does it follow that we will all have a personal AI bot that will automatically direct our savings and transaction accounts into the highest-yielding accounts?” Wilson asked.
Comyn replied that the bank was thinking about how AI could change the competitive dynamics in banking and how it could affect CBA’s competitive advantage.
While Comyn didn’t expand on how the rise of bots might change competitive dynamics, it’s not difficult to imagine a scenario where the bots become more popular, thereby making competition in the market more fierce.
This is a discussion already happening in relation to other industries, such as insurance, and in the banking industry overseas.
In insurance, AI-powered apps mean potential customers can not only compare the price of different policies, but also all the various features in the fine print – something that’s traditionally been much harder to do.
Insurance stocks took a hit last month after the launch of an AI-powered US app that sparked industry disruption fears.
It comes after Macquarie analysts last year warned that the two main domestic insurers, Suncorp and IAG, faced a “material threat brewing” from agentic shoppers, amid growing competition for insurance business from smaller rivals such as Youi and Hollard.
“If a bot can fill out a home loan application form or deal with a customer in a call centre, it’s fair and reasonable to expect a bot to go out there and find the best rate on your money.”
Jarden analyst Matt Wilson
UBS’ Kieran Chidgey also looked at the risk, concluding that the rise of AI bots could lower the barriers to entry to other underwriters wanting to get into the market, though he didn’t think it would have a major impact.
Suncorp’s chief executive Steve Johnston acknowledged the potential change in customers’ behaviour would probably happen over the next two years, though he’s played down the threat. At the company’s recent results, Johnston said that while price comparison websites today only pick up the price, an AI-powered bot could tell them more useful information about the company’s record on handling claims.
“Today all they get is price comparison, in the future they’ll get price and quality comparison,” Johnston says, and he maintained Suncorp could do well out of the trend.
What about the banks? They routinely exploit customers’ inertia by offering more competitive interest rates to people who shop around, after all. Surely bots could change this situation?
Jarden’s Wilson believes we are headed for a future where people use AI-powered bots to find better deals on their banking, intensifying competition in the industry.
“You’ll be able to engage an app that enables you to sign up for the best rate for a particular deposit or lending product,” Wilson says.
“If a bot can fill out a home loan application form or deal with a customer in a call centre, it’s fair and reasonable to expect a bot to go out there and find the best rate on your money.”
Market fears about AI-powered acting for consumers have not focused on banks as much as insurance companies, but Wilson believes banks are obviously in the firing line too because of the way they profit from inertia.
It’s easy enough to see how a bot could be trained to find people better home loan rates – much like mortgage brokers do today – while there will also surely be bots aimed at the deposit market.
UBS analyst John Storey says one of the big advantages major banks enjoy is low-cost deposits – including transactional deposits that don’t earn much interest. AI-powered bots could change this.
“If AI comes in and you’ve got agents able to move that money into higher interest-bearing accounts, you could see an increase in funding costs for the banks,” Storey says.
“That’s something that’s being spoken about a lot in the US and Europe. The narrative has not really hit Australian banks yet.”
To be fair, these aren’t risks that are about to hit banks in the short-term, and as in any discussion about AI there are plenty of unknowns.
Would customers entrust a bot to make good decisions on money matters, even if promised to save them a lot of money?
Bendigo and Adelaide Bank’s chief Richard Fennell last month said some sort of AI-driven bot for finding competitive deals could be appealing for the most price-sensitive customers. But he argued it wouldn’t be the case for most people, and he’s betting the bank would still appeal to people through its service and brand.
The sluggish take-up of the data-sharing regime known as open banking – also touted as a game-changer – suggests many would be wary about AI-powered “agentic shoppers.”
At the same time, there are also many other ways in which banks are scrambling to use AI to their benefit: most obviously by cutting costs.
Storey says there could be cost savings for banks from AI-driven productivity improvements, and he believes AI could also disrupt mortgage brokers, who are paid commissions by banks for arranging home loans.
The banks have some of the largest technology budgets in the country, so you can be sure they’re working like mad to figure out how to use AI to their advantage.
Even so, there is a real possibility that AI-powered bots could encourage customers to do what endless personal finance columns have advised we should all do with our bank: regularly shop around for a better deal.
That would mean more competition between banks, and a bit less “inertia” for large corporations to exploit.
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Clancy Yeates is deputy business editor. He has covered banking and financial services, and was previously national business correspondent in the Canberra bureau.Connect via X or email.
