AFIA urges balanced AI regulation to unlock A$60bn in economic growth

The Australian Finance Industry Association (AFIA) has called on the federal government to adopt a balanced and collaborative approach to regulating artificial intelligence (AI), warning that overly restrictive rules could stifle innovation and prevent the finance sector from unlocking up to A$60 billion in economic growth by 2035.

The call comes as AFIA released a new report, commissioned in partnership with King & Wood Mallesons and Sapere, highlighting the game-changing potential of Generative AI in the financial services sector. The report projects that AI adoption in finance will double over the next three years, delivering major productivity gains and significantly enhancing customer experiences.

“AI has the power to significantly enhance the Australian finance industry, driving efficiency, better experiences for customers and giving local finance firms a competitive edge globally,” said AFIA CEO Diane Tate.

“Heavy-handed or premature regulation will stifle efficiency, deter investment, put a handbrake on growth and productivity, and undermine our global competitiveness.”

The report underscores how Generative AI, unlike previous forms of Narrow AI long used in finance, can revolutionise operations through applications such as automated document processing, personalised communications, and streamlined quality assurance.

In a high adoption scenario, Generative AI could contribute $59.5 billion to Australia’s GDP by 2035. Even under a low adoption scenario, the economic benefit is estimated at $37.2 billion.

AFIA emphasized that this potential can be unlocked without wholesale regulatory reform, so long as the government avoids a one-size-fits-all approach and works alongside industry to fill specific legal or ethical gaps.

Beyond the operational benefits for businesses, Tate pointed out that AI also stands to dramatically improve the customer experience: “People increasingly expect efficiency, simplicity, and speed from their financial providers – they want less complexity and more clarity, and AI can help deliver that.”

The report also highlights how AI-driven improvements in finance could cascade into other sectors, including government, trade, business services, and manufacturing, further amplifying its economic impact.

AFIA is urging the federal government to partner with the industry to co-develop practical, adaptive governance frameworks that enable responsible AI use without stifling innovation.

“AFIA has a proven track record of successfully working with policymakers to positively shape the finance regulatory environment, and we’re ready to do the same with AI,” Tate added.