Credit Union Times | Survey Finds AI May Discourage Consumers From Applying for Loans

By Joyce Moed

More than half of consumers would be less likely to apply for a loan if they knew artificial intelligence was being used to evaluate their application.

That’s according to a new survey from financial technology provider Abrigo, which found that consumers favor digital lending but remain hesitant about AI playing a role in lending decisions.

The survey found that 54.9% would be less likely to apply if AI evaluated their application, while 70.6% said they are somewhat or very uncomfortable with AI making the initial lending decision.

However, that hesitation didn’t extend to digital lending itself. More than half of respondents, 54.5%, said they prefer a fully or mostly digital loan application, a figure that increased to 68.5% among Gen Z and 68.8% among millennials.

For credit unions and other financial institutions, the findings pointed to the importance of maintaining personal relationships as more technology becomes part of the lending process.

“AI shouldn’t replace the relationship; it can give financial institutions more time to invest in it,” Jay Blandford, CEO at Abrigo, said. “The institutions that can explain the technology in terms their customers understand and show them how it benefits their experience can help turn uncertainty into understanding.”

Concerns about AI were also part of a broader issue involving consumers’ trust in lenders. More than three-quarters of respondents, or 76.8%, expressed at least some concern about how lenders handle their personal and financial information. More than half said they want assurance that their data will not be sold to third parties, while 49.9% said they want to know what information lenders collect and why.

Personal relationships also played a role in how consumers choose their lenders. Recommendations from friends and family were the most common way respondents found their primary lender, at 26.3%, followed by online searches at 23.1%.

But personal relationships alone aren’t enough to keep borrowers. Lower rates or fees were the leading reason consumers would consider switching lenders, cited by 57.9%, followed by more flexible repayment options at 31.6% and better customer service at 24.1%.

The findings came as many consumers are already hesitant to borrow. More than half of respondents said they had needed money at some point but decided not to apply for credit, most commonly because of high interest rates, a desire to avoid debt or concerns about their credit.

Abrigo’s Consumer Lending Survey was conducted by Propeller Insights among a nationally representative sample of 1,020 U.S. adults in June 2026. The full report can be found here.