Editor’s note: This column was included in the Sept. 12 version of The Pulse, a weekly BankBeat newsletter sent to subscribers.
As a greater number of banks embrace the potential of artificial intelligence to prevent fraud and ensure a smoother customer experience, a majority still lack written policies to guide the use of the emerging technology.
According to a recent survey of executives from banks with fewer than $100 billion in assets, 61 percent have not developed written policies to guide the use of AI in their institutions, including acceptable risks, uses and ethics. Leadership at two-thirds of the banks had discussed allocating budget or resources to AI over the past 18 months.
While it’s encouraging that a majority of banks are open to adopting AI, they must first develop written policies, secure the buy-in of employees and customers, and establish a strong relationship with a tech vendor.
Bank leaders who delay setting written policies for AI run the risk of employees not having a guide to using the nascent technology. This could cause mistakes leading to data breaches, lawsuits and long-term reputational damage. AI systems can also pose bias and discrimination challenges from biased training data and flawed algorithms.
One example of a bank undertaking proper due diligence to implement AI is Wausau, Wis.-based IncredibleBank. Eight years ago, leaders decided that if they were going to survive in the tech-heavy world of the future, they were going to have to have a more robust relationship with fintech Jack Henry. In the coming years, the bank secured the support of key customers to be a leader in emerging technology and offered to be a beta tester for Jack Henry’s technology offerings.
The approximately $2 billion IncredibleBank has since partnered with JackHenry and Google to unveil an AI-powered mobile chatbot. The chatbot was expected to be available for IncredibleBank’s customer base of 42,000 households and 37,000 mobile users. CEO Todd Nagel said AI will be able to handle 70 percent of IncredibleBank’s approximately 1,300 monthly customer service chats. The bank has a written user agreement that covers AI use on its website.
Banks looking to unlock the benefits of AI must exercise due diligence to lay the groundwork for future success and to leave slower adopters behind.
