Artificial intelligence is transforming customer experience (CX) by streamlining operations and boosting efficiency, but a new report from Verizon warns that the technology’s benefits for businesses are not always translating into better experiences for customers. The CX Annual Insights report suggests that the future of customer engagement will depend on how well AI is integrated to strengthen human connections and address key service frustrations.
The study surveyed 5,000 consumers and 500 senior executives across seven countries, revealing a clear disconnect between how brands perceive AI’s impact and how customers experience it.
Human interactions remain the preferred choice
The findings highlight that while AI can enhance speed and convenience, it cannot replace the empathy and trust built through human contact. Some 88% of consumers said they were satisfied with interactions handled mostly or entirely by human agents, compared with just 60% who felt the same about AI-driven exchanges.
One of the biggest frustrations for customers is the lack of an option to speak or chat with a live human agent when needed. Nearly half of respondents (47%) identified this as their top complaint with automated systems, a concern echoed by a similar proportion of executives.
The report also uncovered a “personalisation paradox”. Although personalisation is among the top AI use cases for brands, 30% of consumers said it had worsened their experience, compared with 26% who said it had improved. Data privacy concerns play a role, with 65% of executives stating that privacy rules restrict their ability to deliver personalised AI experiences. This comes as 54% of consumers report declining trust in companies to use their data responsibly.
“The future of CX isn’t about AI replacing humans; it’s about using AI to make human interactions better,” said Daniel Lawson, Senior Vice President, Global Solutions at Verizon Business. “Businesses that use AI to pre-empt customer needs, empower their employees, and enhance personalisation while respecting privacy will be the market leaders of tomorrow.”
How AI can support rather than replace human agents
The report points to examples where AI is enhancing service delivery without removing human involvement. One notable case is energy utility firm Exelon, which used AI and predictive analytics during the COVID-19 lockdowns to identify middle-income households at risk of falling behind on energy payments. By proactively reaching out with tailored recommendations for assistance programmes, the company improved customer satisfaction and demonstrated the value of a human-first AI strategy.
Exelon is also piloting generative AI to assist customer service representatives by providing relevant data during calls and creating summaries afterwards. This approach helps agents work more efficiently while maintaining a human connection with customers.
Striking the right balance in customer experience
The research concludes that companies are now giving equal priority to investments in both AI and human-driven CX improvements. The challenge ahead lies in ensuring that AI is used to anticipate needs, remove friction, and empower staff, rather than creating barriers between customers and the human help they often still prefer.
