Privacy, trust, time: Main barriers preventing Kiwi SME AI adoption

Wellington — 18 May, 2026 —Xero, the global small business platform, today released new research showing nearly half (45%) of small and medium-sized businesses believe AI could be the biggest opportunity since the internet, but data privacy concerns, and gaps in time and trust are slowing deeper adoption.

Bridget Snelling, Xero New Zealand Country Manager, says despite these concerns, one message is consistent: belief in AI’s potential to unlock new opportunities for business is strong.

“Most small and medium-sized businesses aren’t questioning whether AI matters. What they’re grappling with is how and where to use it safely and confidently, how to move past the early stages of adoption and unlock more meaningful value,” says Snelling.

Among those already using AI, nearly two-thirds (64%) of business owners say it has helped them save time, reporting an average time-saving equivalent to one working day. The potential productivity gains are significant, but more can be done to build confidence in how they’re utilizing AI technologies.

As for what would help, the research shows that small and medium-sized businesses want practical training (47%), access to trusted and vetted tools (46%), and real-world case studies (43%).

To help close the gap, Xero has partnered with ASB to launch a free AI bootcamp program in Aotearoa New Zealand for eligible businesses, delivered by academyEX, New Zealand's postgraduate institute built for the age of disruption.

“Our research shows Kiwi businesses are inquisitive about emerging technologies, with almost two-thirds (61%) of businesses already proactively using AI. But this is often only at a surface level. These bootcamps are about moving beyond experimentation,” says Snelling.

“Partnering with ASB means we can connect Kiwi businesses with practical learning experiences to upskill themselves. Through a 12-week online program, business owners can learn how to use AI safely and responsibly in ways that genuinely support their business goals,” says Snelling.

Ben Speedy, ASB Executive General Manager of Business Banking, says: “While there is strong intent from businesses across Aotearoa to grow, many face constraints in turning that into action, particularly when it comes to embedding AI and adopting new technology.

“Through our partnership with Xero, the AI bootcamp helps businesses to build confidence to start using AI in practical ways. As part of ASB’s broader Pathway to Productivity program, we can connect businesses with the tools, talent and expert support needed to take action, lift productivity and free up valuable time.”

Four archetypes reveal the tension around AI’s risk and return, according to the research

To dive deeper, Xero’s research uncovered four primary archetypes* to better understand how business owners are acting and feeling towards it, and where opportunities lie for each group. They include:

• Trailblazers, representing 15% of small and medium businesses: Most likely to use AI tools extensively and believe AI capabilities can truly revolutionize the way their business operates.
• Explorers, representing 44% of small and medium businesses: Most likely to use AI tools for specific tasks within their business and believe it can create meaningful benefits.
• Pragmatists, representing 15% of small and medium businesses: Most likely to have started exploring AI or plan to deploy AI capabilities within the next year, but care needs to be taken to deploy in the right manner within their businesses.
• Sceptics, representing 26% of small and medium businesses: This group don’t proactively use AI and they have no plans to, citing low trust, and concerns about security and over-reliance.

Around half of businesses believe AI technologies allow their team to focus on creative or high value projects instead of repetitive tasks (55%), and enable them to make faster decisions (45%), while almost a third (31%) say it has improved job satisfaction and work-life balance.

Across the board, Trailblazers are the most likely to agree with these benefits.

What’s more, saving time on routine tasks to focus on higher-value work is the biggest motivator for using AI in the future (34%). In fact, it’s twice as important as anything else for businesses.

However, these AI advantages are balanced by very real concerns. More than half (55%) worry that using AI for customer communications will make their brand feel less ‘human’ and ‘authentic’, and a similar amount believe businesses have an ethical responsibility to disclose when they use AI to interact with customers. This sentiment rings true for all the archetypes.

James Bergin, Executive GM of Technology Research & Advocacy at Xero, says, “What we’re seeing in this research is a wide spectrum of how business owners perceive and use AI technologies.

“The challenge – and the opportunity – is helping more small and medium-sized businesses move from being interested but hesitant, to having the confidence to drive practical, trusted use. Because standing still isn’t a neutral choice in a highly competitive global economy.

“Ultimately, many believe in the opportunity AI technology promises to unlock, but need more reassurance and education in how to realize the full potential offered by these newer capabilities.”

Small and medium businesses want guardrails, guidance and real-world support

For small and medium businesses using AI tools, many (79%) are learning through self-guided experimentation. This suggests they’re proactive, but largely self-reliant in learning and developing their skills.

Given the top reasons why small and medium businesses aren’t using AI or aren’t using it more often include data privacy and security concerns (40%), and mistrust in the quality of AI outputs (37%), the need for more AI governance and support is evident.

When asked what role the Government should play in encouraging AI utilization among small and medium businesses, the top responses were to set clear regulations and accountability standards (57%), and to enforce strong data protections and standards (55%). One in three also want Government to provide education and training resources.

“Business owners know what they need from Government to educate and safeguard them to experiment with and embrace AI tools,” says Snelling.

“We’re calling on the Government to factor this into their decision making around the future of Aotearoa New Zealand’s economy – delivering clearer and more consistent regulation around AI, stronger data protection standards, and practical education and training tailored to small and medium-sized businesses.”

Looking ahead, nearly half (46%) of businesses expect to increase their use of AI in the next 12 months, rising sharply among Explorers (58%) and Trailblazers (91%). While the pace and depth of adoption will vary, the direction of travel is clear.

“Businesses believe AI can help them – they just want to be confident they’re using it in the right way,” says Snelling.

*For a more detailed summary of the archetypes and other research findings, head to the Xero blog.

ENDS

Media Contact

Xero Aotearoa New Zealand

Kristen Barrett | +64 22 064 2924 | Kristen.Barrett@xero.com

About Xero

Xero is a global small business platform that helps customers supercharge their business by bringing together the most important small business tools, including accounting, payroll and payments — on one platform. Xero’s powerful platform helps customers automate routine tasks, get timely insights, and connects them with their data, their apps, and their accountant or bookkeeper so they can focus on what really matters. Trusted by millions of small businesses and accountants and bookkeepers globally, Xero makes life better for people in small business, their advisors, and communities around the world. For further information, please visit xero.com.

About the research

Xero commissioned this research in partnership with The Purpose Business, an independent research agency, to examine small and medium businesses’ use of and attitudes towards AI in 2026. The findings are based on discussions and a survey with a random sample of Xero’s small and medium-sized business customers in New Zealand. A total of n=1,081 Xero customers took part between 31 March and 7 April, 2026. The research was weighted to a nationally representative sample of businesses based on size (number of employees).