Study: SG consumers don't think businesses are transparent on their use of AI

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Businesses are increasingly using AI to build more personalised and intelligent interactions with customers. While 96% of Singapore brands say they are transparent with their customers over how AI uses their data, only 48% of Singaporean consumers think the same.

This was the finding from customer engagement platform Twilio's fifth annual State of Customer Engagement Report, which explores how brands are implementing AI to build better relationships with their customers, and the latest consumer engagement trends. The report is based on a global survey across 18 countries, including Singapore, of more than 4,750 business-to-consumer (B2C) executives and 6,300 consumers.

Singapore businesses continue to embrace AI-powered customer engagement strategies, gathering data using every customer's click, share, follow, like, and purchase to understand their preferences and needs. These strategies have come with a number of benefits, including higher customer satisfaction scores (48% of companies), improved market segmentation and targeting (43%), and increased cross-selling and upselling opportunities (41%).

Over half (51%) of Singapore brands shared they have the data the need to understand their customers, and 64% of local businesses agree they have a comprehensive profile of their customers. Furthermore, 52% of consumers in Singapore are willing to spend more with brands that leverage AI for enhanced customer engagement compared to brands that do not.

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While AI continues to bridge the disconnect between brands and consumers, the report uncovered a wide experience gap between brands and customer engagement:

82% of Singapore businesses say they provide ‘good’ or ‘excellent’ customer engagement, yet only 62% of consumers agree.

What comprises 'good' customer engagement?

Despite making headway with AI-powered customer engagement in Singapore, businesses continue to face significant challenges.

The report found that Singaporeans (60%) ranked customer data protection alongside transparent communications, such as clear terms and conditions, return policies, and privacy as the top priority for brands to earn their trust.

While consumers (61%) would 'quit' a brand that did not use personalised engagement, 48% also stated they would trust a brand more if it disclosed how customer data is used in AI-powered interactions.

"Customers today expect personalised experiences, but also want to understand how businesses use their data to shape those experiences,” said Liz Adeniji, area vice president, APAC and Japan, at Twilio Segment.

Transparency around data usage a critical component

More than ever, businesses must keep their customers’ data safe to maintain their trust.

For Singapore businesses (47%), finding a balance between security and customer experience present the most pressing challenge this year.

One area of focus for brands is reducing friction during the account signup process while keeping customer data safe. In 2024, 41% of brands in Singapore say they are prioritising simplifying the signup and login process to improve customer engagement.

Adeniji added that privacy-first measures have to be baked into every stage of implementation when brands utilise AI.

"With the growing adoption of AI in this region, transparency around data usage is not optional, but a critical component of building customer trust and loyalty," concluded Adeniji.

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