Independent Banker - May 2024 - 18

PORTFOLIO
that 30% is a large problem that banks
would love to solve. "
One area where AI can help is
extracting data from the wealth of
fi les in use at a bank-everything from
PDFs to Word to Excel-and then
publishing that data inside a loan
origination system.
More importantly, though, AI can
solve age-old dilemmas that have
stubbornly resisted solutions, says
Michaud. Think of the effi ciency
experts of yesteryear, counting steps
and mapping out better processes for
employees. HuLoop has a data-driven
diagnostic tool that can measure
employees' keystrokes, mouse clicks
and the frequency of use of particular
apps. The tool, he explains, " captures
all the disparate ways work is being
done within a business function. "
HuLoop interprets the data it has
collected, searching for repetitive
activities that might be automated
or areas where additional training
could add value. Its tools not only
off er prescriptive recommendations;
they also give numerical estimates for
productivity gains and the associated
cost savings.
Shifting the culture
Charles Potts, ICBA chief innovation
offi cer, points out that automation
and even AI have been part of banking
since the early 1990s.
" Just think of fraud detection
and credit scoring tools, " he says,
pointing out that both rely heavily on
predictive AI.
For Potts, though, community
bankers need to present emerging
tech tools with care. " Employees who
may fear for their jobs are not always
going to expose where redundant,
labor-intensive tasks that are rife for
automating may be, " he says.
He also emphasizes that to
reimagine loan originations or
account processing, employees must
Knowing the risks of AI in the back office
Using AI and automation in the back off ice may seem safer than
unleashing it on customers, but caveats exist. Here are some risks
every banker should understand:
f Security. Before employing any new technology, ICBA's
regulatory counsel Mickey Marshall reminds bankers to ask:
" Am I sure this software is secure? " Barb MacLean, Coastal
Community Bank SVP, head of technology operations and
implementation, agrees. " The biggest risks we think about
are data privacy and security, " she says. She notes that the
back off ice is a repository for both personal and corporate
information, all of which must be carefully safeguarded.
f Incomplete (or misleading) results. Marshall believes that AI
tools may someday be an enormous boon for summarizing
lengthy banking rules and regulations. Today, though, he's
finding these tools far inferior to human reviewers, because the
synopses tend to " leave out some pretty salient details. " ICBA
chief innovation off icer Charles Potts cites a related problem,
what's known in the programming world as " garbage in, garbage
out. " He emphasizes that bankers need to know what results
they're hoping to achieve, because poor set-up will yield
disappointing results.
f Vaporware. This is software or functionality that a company
may advertise but that is not yet available to purchase-and is
sometimes abandoned. " Salespeople are putting 'AI' in all their
pitches, so beware of vaporware, " says Gilles Ubaghs, strategic
advisor, commercial banking & payments, for Datos Insights. He
warns bankers to remember that " not all generative AI is created
equal, " and " there's a bit of a gold rush out there right now. " As
always, due diligence is critical.
believe the exercise is " not about
replacing existing staff . It's about
freeing up employees to do more
important, more valuable things. "
Demonstrating to employees
that AI can make their jobs more
fulfi lling is an imperative for MacLean
at Coastal Community Bank. Her
goal is " to free employees from toil,
so they feel directly aligned to the
purpose of serving whatever customer
constituency they're serving. "
With AI and automation poised to
transform how bank employees work,
there's a strong case to be made for
the back offi ce as the true frontline for
digital transformation.
" From a community bank
standpoint, our diff erentiator is the
human interaction, " says Castilla.
" So, when I think about AI and how
it can best serve my institution, it's in
the back offi ce-and the possibilities
are endless. "
Elizabeth Judd is a writer in Maryland.
18 // ICBA Independent Banker // May 2024
Independent Banker - May 2024

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