NEW YORK — Banks are looking into AI use cases within their operations, but many are proceeding with caution as they keep customer experience, data collection and, especially, regulation in mind.
Financial institutions discussed AI within the industry at the recent Fintech Nexus event in New York. They said:
Provident Bank: Banks can use AI to gain a better understanding of what clients want from an app, said Scott Hurlbert, digital channels director at Provident. For example, if a client asks for a branch location, AI can probe what’s behind that question and what solution the client seeks from a branch.
“The ability to communicate in a conversational way is what this difference is between speaking with someone and using an app to do it, and finding where that works is really the secret sauce.”
Discover Financial Services: AI comes in many forms, and Discover Financial Services is focused on machine learning, a subset of AI, said Arjun Ravi Kannan, director of data science research.
“One of the key aspects of using new technologies, such as machine learning models, is focus on explainability and fairness, and that was one of the reasons Discover invested heavily in the space of having transparent and fair use of ML.”
PNC Bank: Banks need to recognize the opportunity and risk associated with introducing new technology such as generative AI, said Michael Degnan, head of enterprise innovation at PNC. From a regulatory standpoint, a bank needs to open, operate and close successfully every day. “That’s what our regulator friends and partners look [at] and make sure we keep our eye on.”
Regulators watch for whether introduction of technology opens a bank to risk, he said. However, new technology such as generative AI can’t be ignored.
“We’ll figure out what to do with it, and I think a partnership model will probably be one of the ways that we explore using new technology and the fintech ecosystem,” he said.
Citizens Financial Group: When looking to vendors for solutions, it’s imperative to pre-evaluate how regulators would look at that fintech, said Brendan Coughlin, vice chairman and head of consumer banking at Citizens Financial Group. Fintechs haven’t “gone through the wringer in terms of the OCC [Office of the Comptroller of the Currency] or CFPB [Consumer Financial Protection Bureau.”
For example, there is a lot of excitement around AI, “but [if] you haven’t really fully thought it through or tested it, … you can’t convince me yet,” he said. “Those are the things that I worry about it; and if I’m going to partner with a fintech, I want to make sure those are adequately answered.”
