The pandemic has accelerated changes at major banks, with Chase Bank and Wells Fargo Bank already having branches that are more like lounges than banks. But Wall Street banks aren't the only ones where AI is disrupting the way they do business.
Smaller independent branches are following suit, experts and executives say, and will use their smaller size and agility to their advantage. Local bank branches with traditional counters and long lines will be transformed into customer-centric financial service centers powered by AI, aiming to outcompete major banks with the services AI can provide to customers.
“As a small bank, our only value proposition is service. Nothing is proprietary anymore,” said Executive Director of First Foundation Bank, headquartered in Irvine, Calif., with 43 branches in five states. said Christopher Naguibi, Vice President and CEO. With assets of just over $10 billion, Mr. Nagibi helped grow First Foundation from his single branch in 2007 to the size it is today.
Nagibi envisions community bank branches with fewer employees and more AI. Employees will be free to help customers achieve their financial goals without having to struggle to answer basic questions about recent transactions or account information.
“The teller counter, as we're seeing today, will eventually be phased out,” he says.
Nagibi is not alone among bank CEOs considering the future of AI in their interactions with financial stakeholders and customers.
Jamie Dimon, the veteran chairman and CEO of JPMorgan Chase & Co., has written about artificial intelligence in his annual shareholder letter dating back to 2017. But his latest letter, released Monday, was notable for more than just its predictions about AI. He is as transformative as the printing press, the steam engine, electricity, computing and the Internet, but how that technology could impact the jobs of his more than 310,000 employees at the bank. He also thinks about that.
“Over time, we expect the use of AI to enhance virtually every job and potentially impact the composition of the workforce,” Dimon wrote. “Certain jobs and roles may be eliminated, but others may be created.”
Much of JPMorgan's AI ambitions are happening behind the scenes rather than at the front desk, with more than 2,000 AI and machine learning employees and data scientists currently working on 400 applications including fraud detection, marketing and risk management. Dimon said. The bank is also exploring the use of generative AI in software engineering, customer service, and ways to improve employee productivity.
For smaller banks, AI can free up bank resources from answering routine questions, making customer interaction a key application.
“This will be at the forefront of how we approach our ministry,” Naguibi said. “You can ask the AI, 'Hey, did this happen? Did this check clear? How many payments did you make to this person?'” You'll get answers directly from the AI. ”
Special access technology allows customers to pay bills on a touchscreen 24/7, send midnight wires, and see transactions updated in real time. “Effectively, small bank branches will become a wall of screens,” he says.
Security at renovated branches improves as banknotes become less plentiful and locked away in machines. AI will also significantly improve branch security, making numerous cameras, biometrics used for access, and PIN codes a thing of the past. Also useful for more extreme scenarios. “If someone has a weapon, the AI can automatically recognize that it's a weapon, sense it and prevent problems,” Nagibi said.
Jackie Burquill, chief administrative officer of BAC Community Bank, a commercial and consumer bank with more than $800 million in deposits and eight branches in Stockton, Calif., said the implementation of generative AI is already well underway. He said he was transforming small banks. “AI is getting smarter every day,” she says.
But while Corner Bank will become an AI-enabled financial services center, Verkuil said generative AI will bring the same services to phones, far beyond the capabilities of current apps. BAC is using an app called Smart Alac (an acronym for All Access Connection) developed by San Francisco-based Agent IQ, which allows his BAC banker to answer customer questions and act as an assigned point of contact. Matching will be performed with “This allows community and regional banks to offer self-service AI and get a relationship-based banking experience for all their customers,” said Slaven Bilac, CEO of Agent IQ, an AI-powered customer support platform. have a primary point of contact.”
The AI extracts all the questions customers ask into Smart Alac and provides a report to Verkuyl, allowing Verkuyl to further tailor the experience. “We get so many questions about debit cards that we created an entire menu for customers to do it themselves,” she said.
“Chase and Wells Fargo's advantage over BAC is the amount of data they have. We can provide the benefits of AI without a large amount of know-how from the BAC team,” Bilak said.
Not everyone in the industry is convinced.
Ken Tumin, senior analyst at LendingTree, said effective transformation will depend on how banks manage large amounts of data and share it with AI. Banks must provide AI with access to enough data to be effective, from account disclosures to FAQs. “Unless banks commit to generating and maintaining high-quality, comprehensive data, leveraging AI for customer service will leave customers more frustrated than satisfied,” he said.
The Independent Community Bankers Association, a trade group for small banks, believes that AI cannot outweigh the human element in relationships. AI will be a key element, but it will never be able to provide the local knowledge and relationships essential to helping first-time home buyers get mortgages, or helping small businesses and farms finance their operations. There is no comparison,” said the ICBA assistant vice president. Regulatory Advisor Mickey Marshall;
But bankers like Nagibi believe that AI will allow small banks to become more involved in their communities, in effect becoming more human.
“Right now, it's hard to get branch managers to go out into the community and do business. We're not a big, important bank. People aren't going to come to us. You have to build relationships,” Nagibi said. “If you have generative AI in place, you should be able to win business as a branch manager.”
Nagibi believes that multiple connections, centered on humans and technology, act as “touch points” for consumers, and that “the more touch points banks create in consumers' financial lives, the more we “We'll be able to be deeply involved. As a community bank, that's an important role to play.” Edge is like that. ”
“Community banking needs to change. All my customers have my mobile number,” he added. “People don't want things that are untouchable or out of reach. It's the potential of AI to make local bankers more accessible.”
