AI is both an exciting new tool that can be used positively in multiple areas of financial services and an unknown, unproven technology that has bankers understandably cautious. Some financial institutions are experimenting with generative AI tools to see where it can safely add strategic value. Other FIs are shutting off all access to advanced AI tools due to concerns about AIs ability to accurately understand a query’s intent and not hallucinate. Another legitimate concern to consider is whether use of advanced AI tools will cause certain financial institution jobs to eventually be replaced. A recent article in The Financial Brand touched on this very issue. According to a study by consulting firm EY, 52% of entry level positions at banks would be affected by the use of generative AI. More generally, across all industries, 75% of workers are concerned about AI making certain jobs obsolete, with 65% stating that their job could be eliminated. And yet, there hasn’t been any significant changes in financial institution employment tied to the use of AI tools. Perhaps the issue could be that the majority of community bank customers are older than 55, and these customers are more likely to favor an in-person experience. But times, they are a changing. More younger employees are being hired into banking jobs, and all FIs must recognize that attracting and keeping younger customers is a must for its long-term survival. Which means that the intelligent and strategic use of new tools like generative AI might be imperative. A different survey from research firm Y-Pulse found that 41% of millennials feel excited about AI. It is no secret that younger generations might feel more positively about emerging technologies. In fact, it is more likely that FIs will find the need to hire additional staff to be focused on the use of generative AI than jobs lost due to implementation of AI. Even across other non-financial services enterprises, AI is more likely used to augment the job of a human, not replace it. According to Agustin Rabini of Gartner, AI will likely replace cumbersome tasks, as opposed to employees. “AI doesn’t replace jobs, AI replaces tasks,” Rubini says. “The jobs that typically a junior person does, they have more tasks. Eighty percent of your tasks can be automated. Even for customer service jobs, which are predicted to see the most impact from technology.” So, if Rubini is correct, doesn’t that align with the concern that entry level jobs will eventually be replaced by AI?? Many financial institutions are finding it hard to fill the entry-level jobs that might be at risk. Moreover, those employees that might see their job replaced will likely be offered an alternative position that allows the FI to be more focused on revenue creation or increasing the customer experience, two areas that might be beyond the scope of generative AI for some time. So, what does this all mean for community banks? It is my belief that your financial institution should: Allow for generative AI tools to be vetted to allow experimentation with the types of tasks and outcomes where generative AI could augment current processes. Create the IT environment and governance boundaries where exploration of AI can be performed in a safe and controlled manner. Be open to new ideas about how and where generative AI could be deployed. Remember that generative AI is not one thing. There are different iterations of AI that may be more appropriate for a specific task. An example would be using a Small Language Model AI tool to provide employees with assistance understanding and following all internal rules and regulations. Recognize that if senior management is not generally disposed to be open to emerging technologies, that FI leadership understands that generative AI cannot be ignored and to move aside any biases and allow for the controlled investigation of AI. Financial institutions have always incorporated new technologies into the service they provide, and generative AI will be no different. Bankers who focus on the strategic nature of acquiring and keeping younger customers would be wise to ensure that the controlled use of generative AI should be full explored. What is your institution doing regarding exploration of AI? Reach out to me at dpeterson@bankers-bank.com and let’s start a conversation on how AI can augment the delivery of financial services. Resources https://thefinancialbrand.com/news/data-analytics-banking/artificial-intelligence-banking/when-will-ai-come-for-banking-jobs-177763/ The views expressed in this blog are for informational purposes. All information shared should be independently evaluated as to its applicability or efficacy. FNBB does not endorse, recommend or promote any specific service or company that may be named or implied in any blog post.