Highest Return on Investment in AI Sector for Banks: Cybersecurity Measures
In the Canadian banking sector, AI adoption is on the rise, with a significant focus on enhancing fraud detection, cybersecurity, and customer service. The Canadian Imperial Bank of Commerce (CIBC) leads the charge, partnering with institutions like the Vector Institute to deepen AI expertise and improve client experiences [1][3].
Fraud Detection and Cybersecurity
Advanced machine learning models are being employed to reduce fraud, leading to increased accuracy and a decrease in false positives. This trend mirrors that seen in major North American banks, where AI-based fraud detection can cut false positives by up to 80% [2]. Canadian banks are expected to adopt similar cutting-edge AI-driven systems to protect digital transactions and mitigate cyber threats.
Customer Service
AI-powered chatbots and intelligent virtual assistants are increasingly handling customer interactions. In Canada, about 70% of Tier 1 bank customer queries are managed by AI chatbots, and AI penetration in digital banks and credit unions has risen by 23% in 2025 [2][4]. This widespread deployment helps banks offer fast, 24/7 support, enabling simpler and more accessible banking experiences.
Broader AI Adoption Context
Although banking is a relatively frontrunner sector, overall AI adoption among Canadian enterprises is still in its early stages. Around 12% of all Canadian firms have integrated AI in production or services as of 2025, with the finance and insurance sectors showing a higher-than-average adoption intention [4]. The Canadian government is actively supporting AI ecosystem growth and safe AI innovation, underscoring the strategic importance of AI in sectors including banking [5].
Over a third of Canadian banks' IT budgets are already allocated to AI, with plans to increase this investment by 20% over the next five years [6]. 63% of Canadian banks are currently using AI in some form [7]. Suzanne Sando, Lead Analyst of Fraud Management at Javelin Strategy & Research, emphasized that AI has become an absolute necessity in fraud prevention and detection [8].
However, AI systems handling sensitive data and influencing critical decisions pose a significant cybersecurity risk for Canadian banks. More than half of Canadian banks plan to adopt a hybrid approach for AI, combining in-house and outsourced teams to scale their AI efforts [9]. The strongest returns from AI investments in Canadian banks are coming from cybersecurity efforts and fraud detection [10].
The study by GFT reveals that nearly 75% of Canadian banks are using AI for fraud detection [11]. Nearly 68% of Canadian banks report using AI to enhance customer service [12]. The study also highlights that AI presents a double-edged sword for Canadian banks, with half citing cybersecurity risk as their top challenge when considering AI adoption [13].
In summary, Canadian banks are on a path of rapid AI adoption, especially for fraud detection, cybersecurity, and customer service. This advancement is supported by research partnerships and government initiatives, though nationwide corporate AI adoption remains in early to mid stages.
| AI Application | Status in Canadian Banks | Notes | |----------------------|----------------------------------------------------------|----------------------------------------| | Fraud Detection | Increasing use of AI models reducing false positives and enhancing security | Inspired by North American AI fraud detection standards [2] | | Cybersecurity | AI applied to mitigate digital risks; security a high priority | Partnership with AI research institutes aids development [1][5] | | Customer Service | AI chatbots manage a large portion of Tier 1 queries; rising adoption in digital banks and credit unions | AI-driven automation is significant across banking [2][4] |
- The evidence points towards increased investment in AI technology by Canadian banks, with a third of their IT budgets already allocated to it and plans to boost this by 20% over the next five years.
- In addition to fraud detection and customer service, banks are also focusing on cybersecurity, with more than half of them planning to adopt a hybrid approach, utilizing both in-house and outsourced teams to enhance their AI efforts.
- The finance and insurance sectors, including the Canadian banking-and-insurance industry, demonstrate a higher-than-average intention to adopt AI, but overall AI adoption among Canadian enterprises remains in its early stages, with only about 12% having integrated AI in production or services as of 2025.
