Artificial intelligence – machine algorithms that are designed to make decisions using real-time data – is making a splash across multiple industries, including, of course, banking. Among other uses, AI can help verify customers’ identity and help set up their accounts, and it can offer to help them select products. AI can also automate many routine tasks, including account balance inquiries and password resets, freeing up customer service representatives and others so they can focus on higher-value issues. Some financial institutions have already embraced AI, while others are studying it. But bankers generally agree that AI is the next big thing in their field.
Peapack-Gladstone Bank is “Focused on customer service, so we’re using generative AI to enhance our customers’ experience, without replacing the human-based service they appreciate,” said Chief Technology Officer John Kowal. “For example, our AI applications can suggest places where a customer can start to find answers to a question, although they also have the option to later switch to a live person. And when hearing-impaired customers interact with Peapack-Gladstone Bank associates (on a TTY telephonic device), our AI applications can generate captions.”
Internally, the bank uses AI for such mission-critical tasks as helping to ensure compliance with anti-money laundering regulations, identifying sensitive documents, and monitoring computer activity for threats, Kowal said. “We also deploy it for relatively simple tasks, like screening out background noise during a remote video meeting, and higher-level ones, like developing a searchable corporate knowledge base that will let employees easily scour documents by asking questions.”
The bank is also working on using AI “to generate transcripts of meetings, highlight key parts of them and generate summaries, which will help participants drill down to the most important sections,” he added. “These and other AI-enabled applications will help us to streamline operations and work even more efficiently.”
AI will not “take away jobs or eliminate the human touch in customer interactions,” said Kowal. “But financial institutions that use it in a thoughtful, effective way will generally come out on top. Eventually, it will be a matter of survival of the fittest — organizations that adopt AI will win.”
In 2018, Bank of America “was one of the first in the nation to use AI, with its virtual assistant Erica,” according to a BofA spokesperson. “Erica recently surpassed 1.5 billion client interactions, helping over 37 million clients manage their finances since launching in 2018. So far in 2023, clients have engaged with Erica more than 333 million times – 56 million times per month – up 35% year over year. Last year, clients spent more than 3 million hours interacting with Erica, up 31% year over year.”
Bank of America is also deploying AI for training purposes. “Our VR [virtual reality]/AI training is being used by thousands of teammates across the United States, including New Jersey, in our financial centers, call centers and other offices,” the spokesperson added. The training technology allows employees to practice a range of routine-to-complex tasks and simulate client interactions through a virtual environment.
“At Bank of America, our commitment to being a great place to work for our teammates fuels our focus on innovation,” said John Jordan, head of The Academy at Bank of America, in an announcement. “VR is highly effective at helping teammates build and retain new skills and it is one of many ways we are using technology to support internal mobility and provide best-in-class learning opportunities.”
Through a series of learning modules, BofA financial center employees will have the opportunity to use 20 different VR simulations and practice a wide range of skills including strengthening and deepening relationships with clients and “navigating difficult conversations, and listening and responding with empathy,” according to the bank. “Through embedded real-time analytics, Bank of America managers can also identify skill gaps and provide targeted follow-up coaching and personalized guidance to employees to further improve performance.”
Other financial institutions are also leveraging AI. At Valley Bank, Chief Transformation Officer Russ Barrett sees artificial intelligence as an advance that is “exciting, yet likely to be disruptive. As such, we are incorporating it in our operations when appropriate, but at the same time we are taking a cautious and careful approach.”
The bank is “obsessed about maintaining and strengthening our relationships with customers and our communities,” he added, “so we are using AI in ways that will reinforce that trust, as opposed to simply selling products and encouraging transactions. Toward that end, we are evaluating advanced techniques to protect customer accounts from fraud or restricting suspicious transactions as a way to further enhance the risk management approach Valley takes in safeguarding our customers from bad actors.”
At this point, “we are exploring more than we are implementing,” he added. “I believe the early use cases will be more emphasized on improving our internal processes, such as leveraging machine intelligence to expand our coverage radius on cybersecurity threats. Topics like this involve high volumes of data points, including hundreds of thousands of interactions between the bank, our customers, and third parties, so AI is well suited to analyze, interpret, and act on these high volumes of data to drive better performance.”
AI’s “natural language” capabilities will soon help Valley employees in researching information and summarizing documents, said Barrett. “We process so much information, so AI can assist employees to quickly get the right information at the right time, rather than spending much of their time trying to search for it.”
He added that, “As with all emerging technologies, we have a responsibility to put our customers are the center of our innovation, and we expect AI to be an area which can ultimately help our customers and enhance our ability to serve them”
Institutions like Kearny Bank have dipped their proverbial toe into the waters of AI, according to CEO Craig Montanaro. “We have some AI embedded in anti-money laundering applications,” he said. “But at this point we’re not using AI on a standalone basis, although we are using it in a chatbot that helps Kearny Bank customers get answers to certain questions.”
Montanaro and his team believe AI will eventually “offer a lot of opportunities, including for training, data analytics like loan decisions and, overall, helping us to better understand client needs and behaviors, so we can further enhance our services, products and tools. By eliminating manual processes, AI will help our professionals to focus even more on our customers.”
Others are taking a wait-and-see approach. “We are keeping up with advances in AI, but at this point we are not using AI in our operations,” said Magyar Bank CEO John Fitzgerald “We’re going to see how AI plays out in the banking space, and we will take action when it is appropriate to do so.”
Similarly, “It is worth a look, and AI may be able to further enhance our operations,” said Columbia Bank CEO Thomas Kemly. “We are beginning to evaluate the concept, but we believe it is way too early to jump on AI.”
Adds First Bank Chief Executive Officer Patrick Ryan, “When new technology like AI emerges, we keep an eye on it, but we will wait for the bugs to shake out — then we’ll invest in the areas that we see as valid.” The bank is taking a similar approach to FedNow, an instant payment infrastructure developed by the Federal Reserve that will allow businesses and individuals to send and receive instant payments in real time. The service, which began to roll out in July, is being deployed in phases.
FedNow is the future of banking, according to Ryan. “But issues like risk management and fraud must still be addressed,” he warned. “We will probably get involved with FedNow later this year or next year, in the second or third phase of the roll out. But we will carefully consider risk management and fraud issues.”