ASIC outlines a new review of banking AI and its effects on customers

ASIC, the Australian financial regulator, outlined on 30 September 2026 a new review of artificial intelligence use by Australian banks and its effects on customers. Its letter on banking priorities for 2026-2027 lists the review of new and planned uses among its new supervisory activities.

The review is expected to begin in the second quarter of the 2026-2027 financial year. ASIC plans to collaborate with APRA, the Australian prudential regulator, to limit duplication. The letter is addressed to bank boards and executives.

This banking review builds on ASIC's report 798 and the supervisory discussions that followed. The publication of 30 September sets out the banking scope and timetable for this upcoming activity.

A score can influence a credit application

An artificial intelligence model can calculate a default risk score, meaning it estimates the risk that a borrower will fail to repay their loan. This score can then inform a credit decision. ASIC's report 798 describes this mechanism, involving decision support tools and automated decisions.

Poorly understood model limitations, insufficient documentation or poorly defined responsibilities can affect access to credit. For an individual or a small business, the way the score is used can therefore influence an application for financing. This example comes from the 2024 report.

ASIC published report 798 on 29 October 2024. It analysed 624 use cases in use or under development at 23 licensees as of December 2023. The study covered several sectors, including banking, credit, insurance and financial advice.

The 23 entities studied were therefore not all banks. The sample was not representative, and the study did not test the outcomes of individual models for consumers. These figures describe a historical study, without measuring the situation in September 2026 or defining the scope of the new banking review.

Potential gains, with a review still to come

ASIC recognises potential benefits from artificial intelligence and automation for banks, reports Reuters in its news report republished by iTnews. Faster and more efficient services are among the anticipated gains.

The section devoted to artificial intelligence announces a future activity, with no new obligation or penalty. The letter presents no findings from the review and sets no date for their publication.