AI Report Digital - Flipbook - Page 12
prioritize new potential use cases and applications, along
needs to be able to articulate what exactly it is trying to
with tracking existing initiatives that should be scaled up and
achieve,” wrote Kate Drew, director of research, in a January
expanded. A scoring method should incorporate the bank’s
2022 report.
risk tolerance, compliance considerations, revenue growth
potential, operational efficiency and other areas, wrote
Cognixia’s Andrus in September 2023. In Evident’s October
2023 report, the firm also recommended including any relevant ethical and regulatory considerations.
For instance, Bud Financial stresses its flexibility and efficiency as a partner for financial institutions that want to use
its products to learn more about customers through their
transactions. After inputting their transaction data into the
software, a generative AI feature assists credit analysts by
Small wins make AI feasible for smaller institutions, but they
answering queries about the data; it can also analyze transac-
also create a manageable learning environment while foster-
tions to better understand the financial strength of customers.
ing an AI ecosystem, in which employees become familiar
Since launching in 2018, CEO Ed Maslaveckas has seen how
with the technology and capabilities and generate future use
financial leaders’ feelings toward AI and machine learning
cases. The stronger an ecosystem is, the more likely the orga-
have shifted from skeptical and apprehensive to excited.
nization will be to implement AI technology quickly without
too much disruption, says Mousavizadeh. And the more AI
“I think the first challenge is … being able to automate a lot
penetrates an institution, the more impact it will have on the
of workflows,” he says. “That’s the biggest cost save, the big-
bottom line.
gest opportunity for organizations right now.”
Barrett says the “explainability” of an AI solution is a
major focus of its vendor due diligence — so much so that
Working With Partners
Of course, most banks will not undertake these efforts alone.
Perhaps unsurprisingly, AI technologies have rapidly evolved
from bespoke and built in-house to increasingly available
from vendors. Mousavizadeh at Evident says there are “so
many tools available now, there’s no need to build” an application at most banks.
“You can buy these capabilities,” she says. “A growing number of vendors sell great solutions for banks now, which was
not the case four or five years ago.”
Valley would not pursue a solution that produced results
that executives couldn’t explain. The bank’s due diligence
process includes its model risk validation, project governance,
third-party governance and the AI policies created by Valley’s
cross-functional group. He says these policies, and the groups
in charge of them, create layers of oversight but also clear
pathways for internal use cases and implementation.
“I think it’s really important to have a dedicated policy
framework around [AI], notably because of the amount of
evolution that’s going to happen in the space,” Barrett says.
“Having something that recognizes the potentially disruptive
The bulk of the use cases that Valley’s group has identified
nature of the technology, and what it could also mean for the
will have the bank working with vendors. Barrett says most of
customer — customer privacy and customer information —
the engineering and data science work underpinning the tech-
having a dedicated framework around reviewing that is really
nology would be a difficult endeavor for all but the biggest
what we should all be doing as bankers.”
banks, so partnering with a vendor is extremely attractive.
One important step First Internet is taking as it explores
Vendors that use AI in their solutions or offer AI-specific
use cases and conducts due diligence is “locking down” the
tools may have a sense that community banks and credit
bank’s data using a data or security wrapper, Becker says.
unions are cautious — but curious — about the technology.
The bank hired a firm at the end of the third quarter of 2023
Research from the consulting firm CCG Catalyst found that
to install the wrapper, which is a mechanism designed to
vendors can offer on-demand pricing, more targeted solutions
prevent leakages of confidential information using security
or additional training and assistance. “The bank, though,
protocols. His concern is that employees could input bank
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