The expanding role of artificial intelligence (AI) in New Zealand’s financial and insurance sectors is bringing efficiency gains, but also prompting closer regulatory scrutiny amid potential risks to stability and consumer trust.
In its May 2025 Financial Stability Report, the Reserve Bank of New Zealand (RBNZ) highlighted how the growing application of AI across financial institutions could reshape risk frameworks and operations.
The report cited advances in data modelling, fraud detection, and cyber defence as potential benefits. However, it also warned that technological complexity and dependency on external AI service providers could magnify systemic vulnerabilities.
Kerry Watt, director of financial stability assessment and strategy at RBNZ, noted the dual nature of these developments.
“There is still considerable uncertainty around how AI will shape the financial system,” he said. “While its impact could be positive, especially in enhancing resilience, it could also introduce or amplify vulnerabilities.”
The central bank underscored that regulated financial entities must assess and address AI-related exposures within their existing risk management protocols. Regulatory policy, it said, should continue evolving to reflect the shifting technology environment.
Parallel to these developments, businesses in New Zealand and Australia are investing significantly in generative AI (GenAI) platforms.
According to a study conducted by Snowflake and the Enterprise Strategy Group, firms in the region are allocating a larger share of their technology budgets to GenAI than global peers. The survey found that 32% of respondents in Australia and New Zealand are dedicating more than 25% of their tech budgets to GenAI initiatives, compared to 25% internationally.
The same study reported that organisations in the region are seeing a 44% return on investment from GenAI deployments, marginally above the global average of 41%. A strong majority – 91% of local respondents – said the technology was improving decision-making speed, compared with 84% globally.
Organisations are increasingly directing GenAI towards customer-facing functions, such as tailoring communications and enhancing engagement. However, barriers to full-scale adoption remain. The report showed that 63% of ANZ businesses encountered higher-than-anticipated staffing expenses – well above the global rate of 48% – as they expanded AI teams and onboarding efforts.
Data infrastructure was another friction point. Companies in the region reported more frequent difficulties with fragmented data systems and time-consuming preparation tasks, creating implementation delays.
In the insurance industry, the public remains cautious about AI’s influence. GlobalData’s consumer survey, which included New Zealand participants, indicated that despite recognising faster service and operational efficiency, many respondents were uneasy about data handling, transparency, and automated decision-making.
Beatriz Benito, lead insurance analyst at GlobalData, said while AI can simplify claims processing and support services, certain interactions require human oversight.
“While all in all, AI has the potential of considerably improving satisfaction rates in insurance, the need for the human touch and empathy in engagements continue to limit its full potential. Better communication surrounding AI’s capabilities and nuances will ultimately lead to improved adoption rates,” she said.
