Can AI help banks get a leg up?

This is part one of a series looking at how smaller banks can use AI.

Banking finds itself in an odd place this year. In March, the banking world was rocked by the biggest collapses in recent history when Silicon Valley Bank and Signature Bank both fell apart due to a variety of factors including inflation, risky investments and a massive run by depositors which left both banks in the hole and prompted the Federal Deposit Insurance Corp. to step in. In May, First Republic Bank followed suit and was acquired by JPMorgan Chase.

As a result of this, Congress has taken a closer look at banking CEO pay and has introduced bills that would claw back pay from CEOs of failed banks, despite much protest from former CEOs of Signature Bank and SVB.

At the same time of this chaos, big banks seem to be doing business as usual, as all of them passed the Federal Reserve's annual stress test with flying colors.

However, regional and smaller banks are still feeling the stress from all this chaos, especially as customers are uncertain about the security of their banks and their deposits.

"Regional banks are facing challenging macroeconomic conditions in the wake of the bank failures earlier this year, and the evolving rate climate has bankers focused on managing their balance sheets," Lindsay Soergel, chief product and customer experience officer at Kasisto, a conversational AI solutions provider for banking, said in an email interview. "And so, maintaining positive relationships with customers and finding the right innovative solutions to meet their needs are primary objectives for many regional banks."

The impact on regional banks

How can reginal banks deal with all this uncertainty? Soergel believes that embracing innovative AI solutions can help them get a leg up, in particular an AI powered agent that can help meet customers' needs.

"We see a digital assistant or an AI-powered agent very much as any other bank employee; the AI team members work in tandem with their human counterparts to manage inbound requests and deliver exemplary customer service," Soergel said. "An intelligent digital assistant needs to be onboarded and managed much like any other employee, and it will consistently and accurately represent the company's brand. This level of human and AI collaboration helps to ensure customers are receiving similar experiences regardless of whether they're engaging with a digital banker or an employee."

AI isn't just useful for regional banks at the front-end, it can also assist with back-end operations such as loan or insurance applications, which can save time. Jean-Pierre Lacroix, president and founder of Shikatani Lacroix Design, a design agency, said banks can use AI to "reduce the steps in the decision-making process while reducing risk."

This can also take the form of "sending reminders on payments and account balances" to customers, Lacroix said.

Customers don't just want these solutions, in many cases they expect them, so regional banks must deliver some form of AI to keep pace.

"Customers expect advanced solutions from their banks, and a comprehensive AI platform stands to quickly become a vital piece of this puzzle," Soergel said. "We see an opportunity for true integration between AI bankers and the human team, creating a seamless experience for customers whether they're interacting digitally, in-person or through the contact center."

However, banks may struggle to implement these solutions, especially if they don't have a dedicated team that can work with AI. In order to deal with this problem, Soergel recommends that banks find a good partner that can walk them through all the various solutions.

"Finding the right partner is a key to successfully introducing AI to customers and employees. An experienced, financially savvy partner who understands the nuances of banking and the unique needs of the customer base can save time in the onboarding process and put human team members at ease with this technology," Soergel said. "Beyond that, each financial institution has specific needs and a unique brand to consider; a partner that can offer customized solutions helps to further the adoption of AI, both internally and externally."