The landscape of banking, from smaller community banks to larger banking institutions, has continued to expand its horizons with the help of technological advancements. In Arkansas, community banks and financial technology services are all working to adopt technology trends such as artificial intelligence, which is driving younger generations to more efficient platforms and creating more deposits.
AI INTEGRATION OUTLOOK
AI seems to be the biggest topic in fintech these days, since it has been introduced in all corners of life. Uday Akkaraju, CEO and chairman at Bond.AI in Little Rock, said AI has not yet fully touched banking the way it has in other industries, meaning the adoption rate in banking is fairly immature.
James Paul
Everyone has been looking into AI to determine its effectiveness. We work with our partners and internally to understand its use more,” added James Paul, senior brand experience director at Smiley Technologies in Little Rock. “When it comes to things such as AI, we want to fully understand it before we push it to our partners.”
Uday Akkaraju
That sentiment is shared by several banks of varying sizes, and according to Ann Madea, executive vice president and chief information officer, Simmons Bank is taking a methodical approach to AI.
“We’re never going to be the ones jumping and moving forward faster than anyone else or leading in emerging technologies, but we’re going to take a look and study what the market is doing. We’re going to see what other banks are doing, and we’re going to be a good, solid follower,” Madea said. “What we’re doing now is really ensuring first that we have the governance, the controls and the risks identified and put in place before we continue to expand to AI.”
There is a lot of excitement about the ways in which AI could impact the banking industry, but there is much to be explored at this time. Akkaraju said that banking started adopting AI in 2020 and 2021, starting with chatbots such as Capital One’s Eno and Bank of America’s Erica.
“Adoption of AI started out pretty high, and then it started slowly showing a downward trend. While chatbots are great, there were a lot of questions that were not [being answered], questions relevant to the consumer,” Akkaraju said.
He said the biggest reason banks are starting to adopt AI is for risk-assessment purposes. Bond.AI’s Autopilot, which automates all three dimensions of any institution — deposits, loans and marketing — works to boost secure growth.
“I think eventually every business will have an autopilot, and we’ve introduced the first autopilot in banking. It’s not really for the front consumer at this point, but it’s more for automating the basic and foundational necessities of a bank,” Akkaraju said.
He said Autopilot takes all of the bank’s data, analyzes the data, and then makes sure banks are able to balance and grow their deposits by showing them loans and helping automate their marketing efforts. He added that everything comes down to the customers’ desires.
Larger banks have been integrating and adopting AI at quicker rates than smaller banks are currently able to. Akkaraju said institutions such as JPMorgan Chase & Co. started adopting and integrating AI earlier on, allowing them to stay ahead of the curve and address consumer needs through a digital channel.
“Whoever, in the age of AI, is able to adapt fast and provide the consumer what they want the fastest and in the shortest possible time is going to have an edge,” Akkaraju said. “What we are doing is using AI for personalization, so we are helping banks, with Autopilot, personalize whatever the consumer needs. This is allowing banks to realize what the consumer needs, even before the consumer realizes it.”
Akkaraju said Bond.AI is more focused on smaller banking institutions than larger ones. That is partially due to the high interest rates in today’s economy and the Federal Reserve not lowering the rates as much as many hoped for, leaving smaller banks needing more deposits as the banks continue to spend money.
As operational costs rise, smaller banks struggle more, and data reflects community banks and credit unions having liquidity issues. With those issues, smaller banks may not have the budget to spend on technology integration. With that in mind, Akkaraju said Bond.AI has, in a way, begun to give its product away (to be paid back over a two- to three-year period) because he knows the banks will actually benefit from the technology.
“Smaller banks are the fabric of the United States, and community banks are the real backbone and pillar of the communities around the country,” Akkaraju said, adding that Arkansas is in a unique situation because the banking ecosystem is quite stable. “There is a good appetite in Arkansas with banks and credit unions. The largest bank and credit union in the state are both spending a good amount of money on digital transformation and artificial intelligence.”
That is not only the case for the largest financial institutions but also for the smallest banks in the Natural State, he said.
Empathy Engine is the AI behind the Autopilot platform and is named for its purpose of understanding the needs of the end consumer.
“When a bank signs up with us, they give us the consumer data and transaction data of each and every customer. What the Empathy Engine does is analyze that data and then spits out the needs of these customers,” Akkaraju said. “In finding out the needs of the consumers based on the data, all these banks can then take action.”
Akkaraju added that while Bond.AI has targeted financial institutions inside and outside of the state, the company is now gearing its services toward employers in Arkansas only. About 28 employers have signed up for the company’s services, including the city of Little Rock, Arkansas Heart Hospital and more.
TECHNOLOGICAL INTEGRATION TRENDS
While AI may remain one of the biggest technological advancements across many industries, banking is also seeing other technological integration trends for both customers and the banks themselves.
In general, banks are known for being community-minded and mission-driven and have the common goal of growing deposits overall. The process of achieving that goal varies from bank to bank because all banking institutions operate differently.
A bank dedicated to exploring technological advancements, Simmons Bank launched its Next Generation Bank initiative in 2018 as a multiyear $100 million technology investment.
Alex Carriles, EVP and chief digital officer, said the institution already had online banking and mobile banking, but the Next Generation Bank initiative was to push forward to greater digital capabilities and modernization of the bank. At the end of 2019, Simmons Bank launched its new mobile and online banking solution, which became well adopted in 2020.
Alex Carriles
“If there was any silver lining whatsoever to the [COVID-19] pandemic, it was in the digital space. There was a big push to bring the customers into the digital space as they couldn’t go to a branch. We saw trends like mobile deposits more than double in a couple of years,” Carriles said.
The launch of a new digital account-opening process gave Simmons Bank customers the ability to open new accounts in a fully digital fashion.
“It was an end-to-end digital process, and it also had a great response. It’s an extremely clean process,” Carilles said, adding that customers have rated it 9.2 out of 10 for ease of use.
Simmons Bank’s mobile app offers streamlined digital processes such as opening accounts, applying for credit cards and several other services. For example, many banks offer traditional funding processes, which typically require new customers to transfer funds from a different bank at the time of opening. Carilles said Simmons Bank allows customers to skip the funding process, giving customers several days to fund their accounts while providing them with all the options.
The app also allows new and existing customers to open new accounts by entering a phone number, email address and Social Security number instead of filling out a lengthy form.
“An existing customer is able to open an account in under one minute,” Carilles said.
All other information can be read automatically from a driver’s license, Carilles said. Credit score and credit history viewing has also been simplified through the app’s “show me my score” button.
“Not only do we give customers that information, but we let them play with different scenarios so they can really improve their financial lives,” Carilles said.
Joe Gould, senior vice president and information technology manager, said Citizens Bank has focused on gaining efficiencies by using technology over the last few years.
Joe Gould
“We’ve invested resources in moving from a legacy data center to more modern, resilient infrastructure. This allows us to maximize availability and depth of products for our customers,” Gould said.
Technology has helped Citizens Bank live its mission of “people first” by allowing the bank the ability to better serve its customers.
Technology allows us to serve our customer base 24/7 when the bank is open or not, and while this is wonderful, it’s just a tool in our tool belt,” Gould said. “Our people are our greatest assets in helping us achieve our mission.”
Smiley Technologies, a software support corporation, partners with banks to provide end-to-end support for the ever-changing financial technology industry. Intentional in its partnerships, Smiley Technologies serves 40 community development financial institutions and minority depository institutions through its emergency capital investment program and has 11 core partners.
According to the U.S. Department of Treasury, the ECIP has dispersed $8.75 billion to CDFIs and MDIs. Recipients of the program are required to have proper data collection and reporting to the Treasury. Smiley Technologies assists those recipients by providing an automated reporting platform, Paul said.
Smiley Technologies’ greatest role is being a true partner to banks by helping them determine what technology is legitimate and beneficial in addressing specific needs.
Smiley Technologies always wants to be doing what’s right for the bank,” Paul said. “We want people in the process, and we are in pursuit of conversation. Our job is to work next to the bank in relation to its mission.”
A common theme in banking technology integration has been institutions marketing to and attracting younger customers. Paul said emphasis has been placed on the importance of financial well-being and, with banks being more keen on financial literacy, shifting the focus to teaching younger individuals how to bank.
“The younger generations are very tech savvy. We want to reach this audience with products that are easy to use and incorporate that modern look and feel,” Gould said. “Since we are competing with a growing fintech segment for accounts, it is important to make sure our products either offer the same technology as the neobanks or we can interface with them so our customers are satisfied.”
As is true in many industries, relationships lay the foundation for success in banking, and technology has made relationship-building easier in many cases.
“From what I’ve seen, banks are built on relationships and are built to grow their community. In general, when banks are strong, communities are also strong,” Paul said. “As far as technology as a whole in banking, banks need to be well connected. Providing a modern and accessible digital app is a great way for banks to connect with customers.”
According to Gould, technology is one of the key components of customer experience at Citizens Bank, and it allows the bank to offer more user-friendly and customized services to customers while enhancing security and privacy.
“Our customers need to have the ability to do most of their banking from their smartphones or computers. Our web-banking and treasury-management platforms allow them to do just that,” Gould said.
Ann Madea
Madea said Simmons Bank is able to continue to provide a great customer experience at its branches and through mobile devices by thinking about what digitization looks like and how it can be improved.
“It’s always about enabling a really personalized customer experience, as well as ensuring that we have better fraud protection and detection,” Madea said. “We have chat bots to assist our customers outside of normal business hours, and then we look at the usage of data and analytics, and that’s where the major transformation is going to be.”
Talent combined with AI and machine learning will help Simmons Bank continue to operate efficiently and provide a positive customer experience, Madea said. Through the workforce strategy program, Simmons Bank focuses on its people, organization and technology, and several programs operate under each of those areas, as well.
At Citizens Bank, Gould said, staff members do not look at fintech as a solution to all problems; rather, they look at problems individually and ask if there is a fintech solution to the problem at hand.
“We also have support to be innovative in solving problems from our board of directors and management. You can’t fix all problems with technology, but pairing technology with our unique customer service mindset opens a world of possibilities,” Gould said.
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