Financial services organisations are deploying AI faster than they can govern it, according to a new Actuaries Institute and UTS Human Technology Institute (HTI) report — a gap with particular relevance for mortgage lending's growing use of AI.
A survey of 27 financial services respondents found 93% were already using AI, yet fewer than half had conducted risk assessments on their internal use of it, and fewer than one in three had added AI-specific items to their risk register.
Despite this, 74% rated their current AI risk management as effective — a gap the report's co-lead author, Actuaries Institute's Victor Bajanov (pictured left), says should concern the sector.
"Organisations that choose to do nothing in this space will be exposed to new risks they are not equipped to deal with," Bajanov said.
The report singles out credit decisioning tools — used for credit scoring, affordability assessment, and loan approval recommendations — as an area of particular risk. It warns that AI models can produce systematically higher rejection rates for applicants whose employment history, postcode, or property type correlate with ethnicity, even when ethnicity itself is not a model input.
Unlike older rules-based systems, Bajanov noted that newer AI models behave unpredictably by design.
"Frontier AI systems don't follow rules and instead generate responses based on patterns learned from vast amounts of training data. This adds uncertainty to their behaviours and increases the need for effective oversight," he said.
HTI co-director Nicholas Davis (pictured center) framed the stakes in broader terms, noting that financial services "shapes how we save and spend, who receives credit or insurance, and on what terms, and what retirement looks like."
That responsibility is already playing out in regulatory action: APRA's own targeted review of large banks, insurers, and superannuation trustees in late 2025 found that "while most entities recognise that existing prudential standards apply to AI risk, few have operationalised governance in practice." That review fed directly into APRA's open letter to industry on 30 April, followed days later by ASIC's own letter on 8 May urging licensees to urgently lift cyber resilience against AI-enabled threats.
Actuaries Institute CEO Elayne Grace (pictured right) said the profession has a role to play in helping the sector navigate this shift, noting that "as experts in data-driven analysis, risk management, and long-term thinking, actuaries are well placed to support financial services organisations with decision making as they embed AI into their operations."
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