Independent Banker - November 2019 - 52

an important role, " Pandit says. " These
solutions enable fi nancial institutions to
adopt new technology like AI, machine
learning, [robotic process automation]
and others to automate and add value to
their business processes, data security
and management, customer analytics,
wealth management insights and several
other areas. "
David O'Connell, a senior analyst
with Boston-based Aite Group, contends
that AI is somewhat more available for
fi nancial institutions of all sizes, since so
many fi ntechs, such as the core providers
and smaller players, off er options
to community bank customers. " AI
applications are being robustly off ered
by vendors, " O'Connell says. " Being able
to do it, not on-premise, lowering the
barriers to entry ... smaller banks will be
able to use those capabilities as easily as a
$30 billion bank. " In fact, he says smaller
banks are using this technology in
process automation and fraud detection.
And then there are the potential cost
savings that machine learning and AI may
off er banks. A report from Capgemini's
Digital Transformation Institute predicts
the fi nancial sector could add $512 billion
to its global revenues by 2020 and
increase costs savings by 10% to 25%
thanks to intelligent automation.
" In 2017, fi nancial fi rms quietly
introduced a range of practical machines
that think, " the PwC report says. " Some
banks added AI surveillance tools to
thwart fi nancial crime, while others
deployed machine learning for tax
planning. Wealth managers can now
off er automated investing advice across
multiple channels, and many insurers
now use automated underwriting tools in
their daily decision-making. "
A recent report from Business
Insider Intelligence that reviewed
important AI applications across banks
found that front- and middle-offi ce
AI applications off er the greatest cost
52 Q ICBA Independent Banker Q November 2019
savings opportunities. It also found that
banks are leveraging AI on the front end
to improve customer authentication,
enhance chatbots and voice assistants,
and provide personalized insights and
recommendations to customers.
" AI is also being implemented by
banks within middle-offi ce functions to
detect and prevent payments fraud and
to improve processes for [AML] and
know-your-customer (KYC) regulatory
checks, " the report disclosed. " The
winning strategies employed by banks
that are undergoing an AI-enabled
transformation reveal how to best capture
the opportunity. "
Collaboration, collaboration,
collaboration
AI and machine learning are areas where
banks and fi ntechs are working together
to create customer-focused products
that simplify existing processes and save
time, money and resources, Pandit says.
Hexanika has communicated with several
small fi nancial institutions, and the
technology developer even built its own
AI-driven custom development platform
to support community banks in their AI
implementation eff orts.
Butterfi eld believes that banks like First
National Bank of Omaha " are becoming
easier to work with " as AI technology
developers continue to emerge. While
many bankers were previously fi xated
on compliance, Butterfi eld says more
banks are taking a " belt and suspenders
approach " to their eff orts, working with
core providers and emerging fi ntechs to
create better applications.
" Everyone talks about regulations. 'We
can't do this because of this or that,' " he
says. " We act like every idea has to be
taken to scale, when really we need to
adopt a culture of experimentation. "
After recently authoring a report on the
use of AI in lending, O'Connell sees AI
as bringing " more wisdom to the process
Independent Banker - November 2019

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