These are exciting times for community banks. Artificial intelligence (AI) can now level the playing field between you and the banking behemoths with tens of thousands of employees. You may be asking how you can leverage AI for growth and not become one of the almost 2,000 U.S. banks that were merged away in the last decade. As the graph above highlights and Jamie Dimon, chairman and CEO of JP Morgan, said best: “AI is a race you do not want to lose.” Shifting to an AI-centric strategy will define the winners and losers, not just in banking, but across every sector in the next few years.

Step 1: AI for Team Efficiency

In the interest of efficiency, I am not going to spend a lot of time on AI. You see it everywhere. You can earn back every dollar you spend on AI and more with efficiency gains for your current staff. Transcribing meetings, writing emails and even writing marketing materials with AI are already happening at your bank — whether you know it or not. Embrace these efficiency gains as something you can do quickly and easily with AI. One piece of advice is to avoid singular AI “apps.” If all the AI app does is one thing, look somewhere else for an AI platform that will do many things. My second piece of advice is to avoid SaaS and do this securely inside your firewall with your own private AI.

Step 2: AI to Find and Attract New Bank Clients 

The main reason you are not gathering new clients and assets is that they have barely heard from you and thus do not know how you can help them. How do you get your message out there to the right potential clients? Advertising is expensive, especially if it is to people who will never be your customers. Gathering new clients is difficult and often an afterthought in a busy day’s work. You can automate a lot of the process with AI, target the right audience and increase your inbound calls.

• “Influence the influencers.” Use AI to figure out where your potential clients are seeking advice. Engage them.
• Identify potential local customers using AI to examine social media and your existing methods. Who are the local business owners? Who owns property in your town? How do you reach first-time home buyers?
• Craft targeted marketing campaigns using AI for your different business lines — mortgage lending, commercial lending and deposits. 
• AI chatbots and lead-generation tools on your website can capture and qualify new leads 24/7.
• Personalize marketing campaigns based on digital behavior, financial needs and location.

Step 3: Elevating Client Experiences Through AI 

The next generation of banking clients may not want to stop by your branch so often. They want to bank on their phone. This tendency is an advantage and a disadvantage for community banks, depending on how you are positioned for this shift. In order to service those clients — and more and more of them in years to come — you need a digital strategy, a mobile-first digital strategy that relies on AI.

• Expand your business beyond your location — become a digital bank.
• AI chatbots and virtual assistants can resolve common issues 24/7.
• Sentiment analysis on customer interactions can flag frustration before it escalates.
• A digital knowledge center for your human call center team can dramatically increase their accuracy and productivity.
• Offer digital financial wellness tools powered by AI to deepen trust and engagement.

Step 4: Start and Expand Your Wealth Management Business with AI

I really like seeing the same tellers every week at the bank. Nevertheless, I don’t really mind which teller I end up with. The same is not true for my financial advisor and the wealth management business. I want a consistent experience, the same person, and I want someone who really knows what they are doing — my retirement is in their hands. With the right people, process and software, a community bank can go from nothing in wealth management to hundreds of millions of dollars in a decade. That is a game changer for a community bank. There are over 300,000 financial advisors in the U.S., and you only need a few to dramatically grow — if you use AI correctly.

• Use AI to identify depositors or borrowers who are financially ready for investment conversations. Target the largest generational wealth transfer in U.S. history as baby boomers pass on their wealth.
• Using AI for efficiency can potentially double the number of households that one advisor can handle: automated pre-meeting summaries, client updates, meeting transcripts, follow-ups and next best actions. 
• Leverage AI and use client communication platforms that are smartphone-based to lock in clients and streamline secure customer interactions.
• Use AI to screen for problems and opportunities across client portfolios — see around corners so your financial advisors do not need to.

Step 5: Strategy Is AI and AI Is Strategy

What was bank strategy just a few years ago? Control costs? Try to gather assets? Acquire or be acquired? Soon, strategy is AI and AI is strategy. AI can control costs, gather assets and perhaps make your bank the acquirer instead of the acquired …

• AI can control costs in myriad ways.
• As previously mentioned, AI can help gather assets more efficiently.
• AI can not only be part of your strategy, but it can also help guide your strategy. It’s that good now.
• You need a 24/7 strategy and AI is the answer: cybersecurity, customer service and fraud monitoring.

Safety and Security First

Before I talk about implementation, I will talk about safety and security first. Management, the board of your bank, and especially the risk and compliance committee will want to make sure anything you do with AI will not put the bank at risk, from a regulatory, reputational or stakeholder standpoint. To do this right, you need four pillars: governance, risk, compliance and cybersecurity. The term I have coined goes beyond AI trust and safety: AI GRCC.

• Governance determines what core and other data the AI can use, what AI is and is not allowed to do, what AI models can be used, and who at your bank can do what with AI. Actively choose these items; do not let them happen to you. No governance means AI can read the CEO’s emails. That would not be good.
• Risk management focuses controlling both the novel risks of AI, like the AI providing wrong answers or spouting toxic language, as well as existing risk management tools applied to AI — encrypting everything in motion and at rest, as well as sensitive data before it goes to AI, like personal or personal health information.
• Compliance will go from easy to hard over the next few years as the regulators catch up with the technology. Right now, it is imperative to align with existing compliance rules for AI and learn how “model risk management” applies. I strongly suggest following the NIST AI Risk Management Framework as well. That guideline is currently acting as a “safe harbor” from upcoming AI rules in certain states, such as Colorado.
• Cybersecurity is going to get tougher with the adoption of AI — by the bad guys. You will need to fight AI with AI, or you will lose the battle. While many banks are already screening emails with AI tools for malicious intent, the newer, more complex task is spotting attacks on AI itself, to prevent manipulation of the AI or data exfiltration.

Implementation

Of course, everything previously stated is nice, but without a team of AI experts like the largest banks have at their disposal, this sounds difficult. Buying a few AI “apps” or using SaaS tools probably only covers a couple of the bases. I recommend private cloud deployment of private AI and tools, surrounded by the AI GRCC layer just described. Buy it, don’t build it. 

Customization

Every bank is different. If you think you can take a copilot built for any company in the world out of the box and have it solve your problems, it will not. While an AI GRCC layer and a number of bank-specific AI tools are a great starting point, you will almost certainly need help and customization across a number of areas:

• Data needs to be connected to your AI: core data, your CRM, other APIs and databases.
• Agents, or custom AI tools, need to be created that align with what your bank’s processes need.
• Workflows combined with agentic AI will change the world — doing the repetitive work that AI is great at, and humans find boring.

Mark Twain said, “The secret of getting ahead is getting started.” Start your AI journey soon. It is easy to be paralyzed with “where do we start” or “we need to fix ______ first.” Don’t be. You can start using AI anytime, no matter the shape of your technology stack. In my opinion, it is more important to bring your people along than to get your IT ready.

Of course, I could be wrong. Maybe AI is a fad (like the internet was).