First Internet Bank CEO David Becker believes banks should take a “forward-looking approach” to artificial intelligence, especially in the area of data processing.
When the internet first made waves in the late 1990s and early 2000s, it slowly began to take over every market, but few understood what its true impact was. As a result, many businesses, including banks, have been slow to adopt online tools. Now, we are entering the age of artificial intelligence, and as before, there is significant uncertainty about what this will mean for employees and banks.
Banks must address many issues surrounding artificial intelligence. Should they delve into the most innovative features? Should they wait and see how the industry and legal environment develop? Should they cherry-pick certain key elements and ignore others? How will artificial intelligence impact the banking experience?
First Internet Bank CEO David Becker believes banks should take a “forward-looking approach” to artificial intelligence, especially in the area of data processing. The bank has been at the forefront of digital banking since its founding in 1999 as the first purely online bank, and Becker hopes the bank will continue to embrace innovative digital solutions such as artificial intelligence while still remaining pragmatic.
To learn more about how First Internet Bank is using AI and how banks should be using it, ATM Marketplace spoke with Becker in an email interview.
ask. Can you give me a little background on First Online Banking?
A. Part of the reason I started First Online Banking was because I was disillusioned with traditional banks. As a software entrepreneur, these banks didn’t understand my business – therefore, I couldn’t borrow from them – and by the time I had time to handle my finances, the banks were closed. We opened First Internet Bank’s virtual doors in 1999 to address these specific concerns expressed by other entrepreneurs, and today we have more than $5 billion in customer assets in all 50 states. First Internet Bank started as a retail bank, but we have expanded into business services, specialty financing and small business lending, and we continue to look for new areas of business. Specifically, in four years of doing Small Business Administration (SBA) loans, we have grown to become one of the top ten SBA 7(a) loan originators in the United States. We built the success of the first internet bank and transformed the banking industry by staying true to our entrepreneurial roots, which remains the guiding principle of the bank today.
ask. How do you use artificial intelligence?
A. Like many banks, our current usage is limited because our first concern is the security of our customer data. We are taking a pragmatic approach to evaluating AI tools and seeking partners to significantly enhance our offerings and make the bank more efficient in key areas.
ask.In which areas do you think banks are using AI the most?
A. The main areas are administrative tasks such as customer service, account alerts or fraud detection. We will naturally see slower adoption as banks assess the risk of potentially exposing sensitive customer data using these tools. Currently, banks require in-house compliance teams or highly regulated partners to keep data safe. While current usage is limited, adoption will increase significantly over the next year or two.
ask.Where should they use AI?
A. While simple tasks are currently the safe bet, banks need to start taking a forward-looking approach in thinking about how advances in AI can help take their operations to the next level. Banks should reach out to partners to identify these potential opportunities and assess their pros and cons. In particular, it will be critical to find tools that can elevate data processing beyond simple automation to help influence higher-level decisions.
ask. What are the biggest areas where you think AI will change the banking industry in the long term?
A. The next stage of AI adoption will be leveraging its data processing capabilities. For years, bankers were forced to pore over countless spreadsheets and use equations to track the data most important to their needs. AI tools will crunch these numbers faster than you think, in just seconds, allowing bankers to leverage their data more effectively in complex processes such as loan underwriting, personal finance advice, or regulatory reporting.
ask. In what ways can banks save money while using artificial intelligence?
A. At some point, the value of AI will become less about saving money and more about increased profits or portfolio growth. As AI positively impacts financial decision-making, bankers can make smarter decisions. In turn, a larger portfolio will reduce overall risk and improve the bank’s future long-term health.
ask. Do you think artificial intelligence will replace employees in the banking industry?
A.Artificial intelligence is unlikely to replace workers. The initial concern was that AI would reduce the number of customer-facing staff due to the rise of chatbots. While these bots can automate simple requests, more complex questions will always require human interaction, and the role of banks in building relationships with local business owners cannot be overstated.
The value of AI will be demonstrated through the efficiency and speed it provides to middle and senior managers. By processing data faster than humans, AI will help employees extract and analyze critical information and make informed decisions faster.
Bradley Cooper is the editor of ATM Marketplace and was previously the editor of Digital Signage Today. His background is in information technology, advertising, and writing.