Artificial intelligence is a top priority for banks, but applying the technology can be slow-going as due diligence, potential regulation and limited resources bog down the process.
Banks believe AI and machine learning are the technologies most likely to create a competitive edge in the next two years,
At American Banker's
"In this environment where capital expectations are rising, the fight for deposits is real," he said. "I think there is this reality check of, we can't do all things. But gosh, if we don't get started, we're going to be so far behind that irrelevance might be a problem, too."
Additionally, while banks are more bullish about AI than other technologies, the excitement isn't overwhelming. Per Arizent research, 20% of banks named AI or machine learning as the technology they're most excited about, and 15% listed generative AI and chatbots. Law and consulting experts have said that banks are hesitant to deploy the technology due to risk and potential federal regulation.
Christine Livingston, a managing director and leader of AI at Protiviti,
Even technology leaders at larger regional banks expressed the importance of easing into innovation. Michelle Grimm, Fifth Third's senior director of conversational AI, said at the AI summit the institution is focused on a "crawl" before it can "run" with generative AI. The bank is testing the technology on internal uses, like writing job descriptions for recruiting purposes.
"We're a bank, and risk always seems to be top of mind," Grimm said during a panel. "People want to be quick to say, 'No, we can't do that.' But we're trying to say, 'What can we do then?' How do we get people comfortable [enough] to allow us to take some of these use cases that have been bubbling up and saying … we can try this with these controls."
Eyvonne Mallett, an attorney at Loeb & Loeb,
"The challenge right now is, there's a lot of talk about AI regulation, but there hasn't really been much traction or movement," Mallett said. "So sitting in the role of the bank, I would really be thinking about those policies and regulations that are already in place, and how AI impacts them."
Financial institutions must adopt a tech mindset that aligns with – and promotes – broader enterprise goals.
Limited resources also curb banks' roads to innovation. Forty percent of respondents to American Banker's recent survey cite limited resources as the biggest challenge. Especially among smaller banks, vendors and fintech partners are key to bridging the gap to emerging technologies.
At American Banker's AI Summit last week, Thomas Novak, chief deposits and payments officer at Visions Federal Credit Union, said the institution doesn't have the bandwidth for internal development. He added that since the credit union relies on partnerships, asking questions about a fintech's data and AI models is key for diligence.
Protiviti's Livingston said in September that it's imperative that banks allot the resources to support the innovations.
"I think everyone's going to need to do it, or they're going to be out of the game," Livingston said. "You need to either identify or hire the appropriate resources to support and sustain these innovations. It is going to be part of your core infrastructure in your core tech stack. And I think it will be very hard if not impossible to compete without having AI as a core part of your enterprise architecture."
