- Key insight: Artificial intelligence tools will certainly change the way the banking industry operates, but they won't eliminate the need to build your business on a firm foundation of care for employees, customers and shareholders.
- Supporting data: American banking still runs on something like 70,000 branches and a few hundred thousand tellers.
- Forward look: Take care of your employees, and they will take care of your customers. Take care of your customers, and your shareholders will do just fine. Kick out any one of those legs, and the whole thing falls over.
For nearly three decades, my partners and I have run every company we've built on the same simple idea: a three-legged stool. Take care of your employees, and they will take care of your customers. Take care of your customers, and your shareholders will do just fine. Kick out any one of those legs, and the whole thing falls over.
Listen to the
Let's start there instead.
Before we put a single AI tool in front of a customer, we put it in front of our own people first. Underwriters. Loan officers. The folks answering the phone when a small-business owner has a question late on a Friday. Not as a pilot buried in an innovation lab somewhere, but as something every one of our 1,000 employees can actually pick up and use in their job, starting now. If a bank can't explain what its AI rollout means for the people already inside the building, it has no business explaining what it means for the customer on the other end of the line.
Here's the question sitting underneath that. How do you take the tedious part out of somebody's job and the make the work itself better, or dare I say more fun, not just faster? Nobody went into banking because they love re-keying numbers off a tax return. Hand that part to an AI agent. You haven't eliminated a job. You've deleted the worst hour of it.
Most of this industry has taken a different posture. Banking tends to treat AI the way it treats a new capital rule. Fence it in, govern it, manage it down to an acceptable risk and call that a strategy. Risk management matters. We're a regulated bank, and we take it very seriously, but risk management is a fundamental, not an entire strategy. We think about AI the way we've always thought about capital itself. You put it to work.
Set aside the technology for a second and look at the industry's balance sheet. American banking still runs on something like 70,000 branches and a few hundred thousand tellers, and nearly all of that exists to do one thing: gather cheap deposits. Non-interest-bearing deposits are the entire economic reason that physical footprint exists. At its core, a branch is just an expensive machine for getting someone to leave money in an account that pays them next to nothing. The advantage was never the building itself, it was the trust inspired by the person across the counter.
If an AI agent can open the account, answer the question, and earn the trust that used to require a teller and a lobby, why would any bank leave that money on the table insisting a person do it inside a building?
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And if that's right, the interesting question isn't how you bolt AI onto a branch network. It's what you actually do with those 70,000 branches. I don't have a tidy answer to that one. Neither does anyone else. But we made our version of that bet 18 years ago, when we decided Live Oak wouldn't have branches at all. I think the rest of the industry is about to be forced into the same math. The result is paying the customer a fair rate of return. Does anyone believe that five years from now the educated small-business owner will accept no interest on their checking account?
Let me be clear here. None of that is an argument for firing a bunch of people. I don't believe in that, and it isn't what we're building toward. The tellers and loan officers doing that work today aren't disposable just because a machine can now handle it. Every hour an AI tool saves one of our underwriters is an hour they get back for the part of the job a machine still can't do, such as listening to a business owner, knowing when this year's "no" should really be a "not yet," or making the calls a spreadsheet has no opinion about. Could we grow this bank considerably and serve more customers with roughly the same team we have today? I think we could. That's the trade I actually believe in.
Can others? That remains to be seen. I sure hope they can.
That covers what AI does for our people. The second question is what it does for our customers. In theory, every bank our size can license roughly the same underlying technology we can. The advantage is what happens when you put that technology directly into the hands of people who understand small-business lending better than almost anyone in the country. Our lenders have spent their careers working alongside folks running veterinary practices, senior care facilities and preschools, just to name a few. Then pair them with customers who are, by definition, already in the business of building something out of nothing.
Double down on that combination and you get things a generic AI rollout never will. We're going to build things our customers can't picture yet, because the friction that used to make them impossible hasn't gone away for anyone else. And once that friction goes away, you can finally deliver on something scale has always worked against: treating every customer like the only customer.
That's the bet. AI as the newest tool for holding up a simple, but essential stool. Take care of the people doing the work. They'll take care of our customers. And the shareholders, as they always have, will do just fine.
We didn't build this bank by playing defense, and we're not about to start now. AI is going to help us win. But not at the expense of the humans who make this place special.
