Digitalization and AI implementation can streamline bank operations, but new technologies can work against an institution if they create friction with customers.

Banks using AI systems “need to strike a balance between detecting fraud and inconveniencing customers,” Anton Dahbura, co-director of the Johns Hopkins Institute for Assured Autonomy and executive director of the Johns Hopkins University Information Security Institute, told FinAi News.

“It’s a real hassle when you’re trying to pay someone, it’s legitimate and your payment won’t go through.”

As FIs grow their technologies and scams become more sophisticated, consumers need to evolve. This starts with consumer education, often in the form of alerts.

However, too much communication from the bank can inconvenience or overwhelm consumers, Dahbura said.

Thirty-two percent of respondents in a survey released June 30 by business and technology consultancy Capco said they find it frustrating or inconvenient to be sent security codes. Similarly, 28% said they find security questions frustrating or inconvenient and 20% said the same of mobile or email notifications regarding account activity.

In contrast, however, 74% of respondents in an American Bankers Association survey said they find fraud alerts from their bank highly valuable. The survey report, released March 11, showed that 22% found the alerts somewhat valuable, 3% found them not too valuable and 1% found them not valuable at all.

‘Say again?’

While many consumers may not mind receiving alerts, the frustration lies in what follows, according to Deloitte’s 2026 Global Contact Center Survey of banking customers and executives in the United States, released June 4.

Customers become frustrated when they must repeat themselves. The addition of AI agents and chatbots has compounded this problem, Deloitte said in the survey report. These tools will sometimes pass an issue up the chain, forcing the consumer to repeat everything to a human, who may then pass it to a manager, who needs to be told everything, too.

After repeated negative contact center experiences, 28% of customer respondents told Deloitte they reduced spending with the bank and 31% said they stopped doing business with the institution altogether.

The tradeoff

A bank’s C-suite needs to determine the institution’s risk appetite pertaining to fraud, Gregg Henzel, managing principal of U.S. financial crime, risk, regulation and finance at Capco, told FinAi News.

“There are some [banks] that are a lot more risk averse than others, which means [they are] willing to accept more losses and fraud than other institutions,” he said. “That relates to how much customer friction [they are] willing to cause with the emails and the texts.”

Not enough technology also can drive customers away.

“I do business with one bank that’s extremely conservative, and it’s a real hassle,” Dahbura said.

“It makes me not want to work with that bank as much because they don’t let me do anything without calling them first,” he said.

“They just have so many clamps down that it’s almost like all of the modern conveniences of electronic financial transactions have regressed.”

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