AI's next big step for banking is data processing: First Internet Bank CEO discusses

When the internet first began to make waves in the late 90s and early 2000s, it slowly began to take over every market, but few understood what its real impact would be like. As a result, many businesses, banks included were slow to adopt online tools. Now, we are entering the era of AI, and just like before, there is a great deal of uncertainty of what this will mean for employees and banks alike.

Banks have to tackle many questions surrounding AI. Should they delve into the most innovative features? Should they wait and see how the industry and the legal landscape develops? Should they pick and choose certain key elements, while ignoring others? And how will AI impact the banking experience?

First Internet Bank CEO David Becker believes that banks should take a "forward looking approach" with AI, especially in the area of data processing. This bank has been at the forefront of digital banking, since it began in 1999 as the first online only bank, and Becker wants the bank to continue to adopt innovative digital solutions such as AI, while still maintaining a pragmatic approach.

To learn more about how First Internet Bank is using AI and how banks should be using AI, ATM Marketplace spoke with Becker in an email interview.

Q. Can you give me some background on First Internet Bank?

A. I started First Internet Bank partly because of my frustration with traditional banks. As a software entrepreneur, these banks didn't understand my business – therefore, I couldn't borrow from them – and when I had time to handle my finances, the bank was closed. We opened First internet bank's virtual doors in 1999 to address these exact concerns that other entrepreneurs had expressed, and today, we've exceeded $5 billion in assets with customers in all 50 states. First Internet Bank initially served as a retail bank, but we've expanded to commercial services, specialty financing and small business lending, and we continue to look at new lines of business. Four years into Small Business Administration (SBA) lending, specifically, we've grown to become one of the Top 10 SBA 7(a) loan originators in the US. We built First Internet Bank's success – and transformed the banking industry – by staying true to our entrepreneurial roots, which continues to be a guiding principle for the bank today.

Q. How are you using AI?

A. As with many banks, our current usage is limited due to a focus on the security of customer data above all else. We're taking a pragmatic approach to evaluating AI tools and seeking partnerships that significantly enhance our offerings and improve the bank's efficiencies in critical areas.

Q.What areas do you see banks using AI the most?

A. A primary area is administrative tasks, such as customer service, account alerts or fraud detection. We'll naturally see slower adoption as banks evaluate the risk of potentially exposing sensitive customer data with these tools. Currently, banks require in-house compliance teams or heavily regulated partners to keep that data safe. While current usage is limited, adoption will increase drastically in the next year or two.

Q.Where should they be using AI?

A. While simple tasks are the safe bets for now, banks need to start taking a forward-thinking approach to how AI advancements can help take their operations to the next level. Banks should connect with partners to find these potential opportunities and evaluate their pros and cons. In particular, finding tools that can elevate data processing beyond simple automations to help impact higher-level decision-making will be essential.

Q. What do you see as the biggest areas in AI that will transform banking in the long run?

A. The next phase of AI adoption will be in harnessing its data-processing power. For years, bankers have been forced to pore over endless spreadsheets and toggle with equations to track the data most essential to their needs. Sooner than you may think, AI tools will help crunch those numbers in mere seconds, allowing bankers to leverage their data more efficiently in complicated processes such as loan underwriting, personal finance recommendations or regulatory reporting.

Q. What are ways banks can save money while using AI?

A. To a certain extent, the value of AI will hinge less on saving money and more on increasing profits or growing portfolios. As AI positively influences financial decision-making, bankers can make more informed decisions. A larger portfolio, in turn, will reduce overall risk and improve the bank's long-term health moving forward.

Q. Do you see AI as replacing employees in banking?

A.AI is unlikely to replace employees. The initial fear was that AI would reduce staff in customer-facing roles due to the rise of chatbots. While those bots automate simple requests, more complicated questions will always require human interaction, and the bank's role in relationship-building with local business owners cannot be overstated.

The value of AI will show through the efficiencies and speed it provides to upper- and middle-management employees. By crunching data far faster than humans, AI will help employees extract and analyze critical information and make informed decisions much more quickly.