Generative AI in Banking
Article Contributor:
Jonathan Dolphin
President at 21st Century Bank
Artificial Intelligence
Generative AI is one of the key, defining stories of the past two years. Personally, I’ve been captivated. The advances in AI this past year are astonishing. Generative AI was introduced, making AI accessible to the masses.
- Chatbots went viral.
- ChatGPT, and the subsequent turmoil over its ownership, was on the tip of everyone’s tongue.
- Concern began as schools and other organizations sought to block the tool’s usage.
- Multimodal AI was released, allowing machine learning models to process multimedia, such as text, images, and videos.
- Companies raced to be at the forefront of AI.
Generative artificial intelligence (Generative AI) is a type of AI that uses algorithms and machine learning models to create new content such as text, images, videos, audio, or code based on patterns learned from large datasets. Unlike traditional AI that predicts or classifies data, generative AI produces original content that resembles its training data, often in response to user-created prompts.
Generative AI is an incredibly powerful resource, and amid the excitement of its release, conversations have started taking place between businesses and government officials to address privacy and security concerns.
I’m excited by our customers’ curiosity – many of you have reached out with questions. Because of this significant interest, I decided to document the discussions taking place at 21st Century Bank regarding the role it’ll play for us and our customers in the upcoming years.
Generative AI’s Role In Banking
This era is dominated by rapid technological advancements and the proliferation of Artificial Intelligence (AI).
While it has already revolutionized how we manage our money – from investments to banking – we’ve been able to witness AI’s early strengths and weaknesses.
Many banks are exploring or offering AI-generated customer service and communication. We get it – this automation can be a helpful way for people to obtain information accurately and quickly. That said, we’ve also witnessed its downsides. While generative AI is worth investigating, I recommend you first educate yourself on its capabilities and limitations. That way, you’ll use it successfully and safely.
The strengths of generative AI are immense. For bank operations, this includes:
Analytics + Tasks Automation
Generative AI has brought banks, like ours, significant gains. The more manual, repetitive tasks we can automate, the more time our team members will have for personalized, strategic customer service. This is important to us.
Risk Management
AI has the potential to support risk management processes, offering improved risk transparency, automated reporting, data collection, and more. This means our team members have the opportunity to make more comprehensive, efficient, decisions that further protect our customers' information and money.
The benefits are different, yet equally as impactful for customers:
Improved Rewards Systems
Generative AI supports banks and credit card companies as they offer reward systems to their customers. We always encourage customers to take advantage of these rewards associated with your financial accounts - it's a great benefit that can provide you with goods and services at reasonable or reduced rates.
Convenient Credit Card Management
AI is working in both visible and invisible ways to make it even easier to manage your money. Credit card companies and certain banks offer exclusively AI-based chat support, actions, and convenient account creation or closure.
Keep in mind, the companies that rely heavily on AI for service may mean you don't get the chance to talk with a person if you encounter a problem. And when you set up accounts or secure financing with these digital-focused platforms, you may encounter excessively high interest rates.
To us, successful usage of AI relies on a blended approach – leveraging AI for some things, and in-person connection for others. Our reasons include:
Local Community Understanding
Community banks like ours have deep-rooted connections within our local communities. We understand the dynamics of our local economy, market trends, and the specific needs of businesses and individuals who live and work here.
Trust and Relationships
Interacting with familiar faces – such as our dedicated Business Banking Team members – fosters trust, transparency and accountability. This partnership leads to support and mutual understanding.
Support In Navigating Financial Situations
Finances get tough sometimes – it’s part of life. Whether you’re making decisions related to banking products, estate planning, or debt restructuring, there is nothing that can replace the level of empathetic support we get from working with real people over bots.
Adaptability and Flexibility
For years, we’ve been a Small Business Administration (SBA) leader in Minnesota – it’s because, as a community bank, we’re able to offer flexibility and adaptability at every point in the process.
Community Engagement and Social Impact
As part of our commitment to the Twin Cities, we dedicate thousands of dollars and volunteer hours each year to support our community. Local banking, rather than online AI-based models, means more money stays in your local community.
How You Can Leverage AI
For those already leaning into the potential of generative AI, I applaud you. It’s challenging to comprehend these new technologies, and the earlier you develop the foundation of understanding, the better chance you have of the tools providing a powerful impact on your life.
As next steps:
If you want to continue research on your own, I recommend exploring the resources McKinsey & Company have compiled. They’re the nation’s largest and oldest multinational consulting firm and have a wealth of resources on this topic.
For those who prefer conversation, I urge you to reach out and learn how AI can positively impact your finances and banking. For the past 105+ years, we’ve served as tailored advisors for both current and potential customers. It’s a role we are honored to fill for our community, whether you have an account with us or not. That means we welcome questions and will do our best to serve you.
We’re locally-owned for a reason – we care about the people here in the Minneapolis-St. Paul metropolitan area and throughout the state. To start a conversation, please feel free to send me a message here on LinkedIn, submit a message on our website or call us at 763-767-21ST.
I look forward to hearing from you! Jon Dolphin, President, 21st Century Bank