With emerging fraud threats and increased competition among financial institutions, new research from American Banker finds that banks and credit unions alike are doubling down on efforts to adopt more intelligent automation tools.
Intelligent automation, defined in the report as the application of technologies such as
American Banker surveyed 153 bank and credit union leaders for its
Top findings from the report
Fraud detection is the top use case for exploring intelligent automation.- Most bankers and credit union leaders are
moderately or somewhat satisfied with their organization's modern technology offerings. - Many are in agreement that
intelligent automation will be a driving force behind future innovation. Regional bankers were the biggest adopters of the technology.- Cost savings and risk management improvements were
driving factors behind intelligent automation plans .
Results from the report are highlighted below using interactive charts. Mouse over each section for more detail, and click on the chart labels to show or hide sections.
Being smart about intelligent automation
When it comes to top applications for automation, counter-fraud defenses are leading the pack.
The majority of respondents, roughly 62%, said fraud detection was either an active priority or on deck to be one in the next six to 12 months. A further 22% said it was a future opportunity to explore in the next one to three years.
Close behind was
Experts with consulting firm CCG Catalyst say that artificial intelligence's presence is due to expand across organizations in the near future.
"In the next couple of years, we can expect to see change continue to accelerate as AI is embedded into processes across institutions. Right now, we are mostly seeing internal, efficiency plays, but use of the latest forms of the technology (e.g., large language models) in areas like customer service and advisory are not far behind," said Kate Drew, partner and director of research for CCG Catalyst.
For others like James McPhillips, a Washington D.C.-based partner in law firm Clifford Chance's tech practice, the use of automation and AI in customer service creates a fine line between success and failure that banks will end up walking.
"Customer relationships and trust are at the heart of banking. If the use of AI leads to inaccurate outcomes or unfair treatment, mishandling a distressed customer's case or a complex loan restructuring [being one possible example], this could not only damage customer trust, but also bring regulatory scrutiny," McPhillips said.
Is satisfaction really guaranteed?
For the most part, bankers and credit union professionals are happy to some degree with how their organizations are using modern technology to streamline their daily operations.
Those working for the largest banks reported the greatest share of dissatisfaction at 11%.
Surprisingly, being at the forefront of innovation isn't a guarantee of satisfaction.
Large financial institutions have the resources and scale necessary for staying at the forefront of automation and AI adoption with products of their own, while smaller banks and credit unions "are increasingly embracing cloud-based, off-the-shelf AI tools," said Omar Akkor, senior director of banking market strategy and innovation at Moody's.
"With the rise of [software-as-a-service] platforms and APIs, the technology gap is narrowing, enabling smaller banks to advance automation adoption," he said.
Just how vital is intelligent automation to bankers?
Among those surveyed, intelligent automation is less of a want and more of a vital need to compete against other financial institutions in the market.
Fifty-one percent of respondents strongly agreed that intelligent automation has significant potential for improving how efficient their organizations could operate, with a further 36% somewhat agree.
More than 40% strongly agreed that intelligent automation was essential for remaining competitive, followed by 37% who somewhat agreed with the statement. Seventeen percent were neutral on that stance and four percent disagreed with it to some extent.
Satish Lalchand, principal in the analytics practice of Deloitte Transactions and Business Analytics, said that AI is often a "key part of banks' fraud prevention strategies" as "banks are building more sophisticated analysis to
There are downsides to leaning too heavily into automation, however.
"There can be dangers in over indexing on automation without periodic review and explainability. … This may include models that tend to be outdated quickly [as well as] lack of bringing in the human experience and expertise," Lalchand said.
Bigger doesn't mean quicker where automation is concerned
Many are aware of the business use cases for intelligent automation tools and the improvements they promise to bring, but few have actually gotten around to integrating these products on a broader scale.
Twenty-nine percent of national bankers said their organizations were
Despite a similar share of respondents saying they were also in the early stages of implementation, 18% of regional banks said their organizations have fully implemented enterprise-wide initiatives, with an additional 24% saying their banks were actively implementing on a lesser scale.
Community bankers and credit union professionals were the most mixed in their responses.
The heightened regulatory environment in which banks and credit unions operate plays a large part in how active they can be.
Bryan Routledge, associate professor of finance at Carnegie Mellon University's Tepper School of Business, said there's a general expectation for "banks to be on the
"Banks are on the cutting edge, but they also have really big legal teams, which I think is the big challenge of being in IT is 'here's a cool new toy and I want to prove it,'" but there are risk and compliance leaders that exercise a lot of caution which can be restrictive, Routledge said.
"Broadly speaking, banks walk that line pretty well, in the sense of being cognizant of trying to be both quick and reactionary at the same time as living up to [regulatory standards]," he said.
John Meyer, managing director at Cornerstone Advisors and leader of its business intelligence and data analytics practice, echoed the sentiment in saying "AI doesn't have a conscience, so bankers have to make sure the tech is compliant with all the relevant banking regulations."
The driving forces behind innovation
Cost savings, improvements to risk management and enhanced customer experiences are all benchmarks banks and credit unions are aiming to hit when
Cost reductions and risk management are tied for first among national bankers at 54% each, followed by 46% who said enhancing the customer experience was a driving factor in advancing automation plans. Employee satisfaction was lowest on the list with 4%.
Improving fraud detection and prevention was the top motivator for both regional and community banks, with 53% and 50% respectively. Enhancing the customer experience and boosting employee productivity were tied for the top spot among credit unions at 60%.
Automation, and by extension AI, is less of a laundry list of use cases and more of a spectrum of applications, such as business process outsourcing, robotic process automation and rules-based automation, said Ben Maxim, chief technology officer at Michigan State University Federal Credit Union and chief operating officer of its credit union service organization Reseda Group.
"AI is the culmination of this spectrum where more advanced automation facilitated by AI agents/agentic AI can augment the workforce, which will be key to financial institutions surviving the economic pressures of the future," Maxim said.
While automation continues to grow as a business use case across banks and credit unions, experts with the global research and advisory firm Forrester are warning executives of the dangers of over automation.
Daily tasks like moving money are fine for AI intervention, but high-value and emotional tasks like opening a new product should always have a human element, Alyson Clarke, a principal analyst in Forrester's digital business strategy practice.
"If you push the pendulum too far to[wards] self service, you will lose all of that trust because you become an ubiquitous organization, and it's a race to the bottom. It'll be price driven all about rates and fees, which is already a problem," Clarke said.
