In the late 1990s, the internet was rapidly commercializing and becoming a fixture in households. As a fintech entrepreneur, I saw an excellent opportunity. I launched First Internet Bank in 1999 to address the needs of forward-thinking consumers who were beginning to demand greater access and convenience from financial services.

After 25+ years of growing and learning, I am proud of the role that First Internet Bank played in transforming the banking industry by staying true to our entrepreneurial roots and avidly accepting change. As we look ahead, I am confident that artificial intelligence will be the next transformative force in banking.

The McKinsey Global Institute estimates that AI’s impact could add $200-$340 billion annually in value to the banking industry, primarily from increased productivity. This enormous growth would dwarf the internet’s transformative impact on our industry.

However, the adoption of AI in banking has been slow. Of the 338 U.S. banks traded on the major U.S. exchanges, only about 8% had begun leveraging AI technologies through the third quarter of 2023. As the leader of a community-sized bank, I appreciate the challenges: the need for high-quality organized data, regulatory considerations, employee training and risk and security concerns.

Not since the internet took off in the late 1990s have I been this excited by the power of technology to reshape our daily lives, including the way we bank. I hope all institutions are at least considering first steps to take advantage of increased efficiencies, while prioritizing customer security and confidence through the adoption of AI. (If you attended Mega 2024 and heard the same content I did, you are well on your way!)

Streamlining Data Security

Wars are being waged against banks by bad actors in the form of cybersecurity attacks, identity theft and other fraud. Employees need to sleep and take vacations – but AI is always on. Through automation and machine learning, AI can analyze large amounts of information and identify potential threats more effectively, narrowing the scope of alerts that require manual intervention. Even better, AI’s continuous learning will adapt to changes in the environment. That will better enable us to keep up with – and stay ahead of – potential fraudulent activities.

Improving Customer Service

Consumers want fast, personalized service delivered on their schedule. With AI-powered chatbots and virtual assistants, we can provide 24/7 support, answering queries and assisting with basic transactions. As a bank that has always sought to reach our customers wherever and whenever they want to do their banking, this flexibility is a game changer. By automating simple requests, chatbots will improve response times, help deliver personalized content and enhance their experience.

Supercharging the Value of Data

AI’s ability to unlock data’s hidden potential is critical. For years, bankers have spent hours poring over endless spreadsheets to make informed decisions. Soon, AI tools will help crunch those numbers in seconds, allowing bankers to leverage data more efficiently.

Take loan underwriting, where AI can ingest a financial statement and calculate ratios needed for credit analysis in moments. Layer atop that AI’s ability to incorporate predictive analytics utilizing historical data to assess potential borrower risks, and you have a fast, compelling start to a credit memo.

AI advocates should be prepared for the natural human response from their employees: Are you replacing me with a robot? It is important to explain to our teams that AI isn’t coming for their jobs; it’s coming to their jobs. More complicated questions, alerts and challenges will still require human interaction. Over the course of my career, I have observed that people enjoy greater job satisfaction when freed from performing repetitive tasks, allowing them to focus on higher-value, more rewarding work. The combination of experienced professionals, backed by AI-driven assistance, will be pivotal for any bank seeking to maintain an edge.

At First Internet Bank, we take pride in our role as digital banking pioneers. And the future holds even greater possibilities. Our industry faces a pivotal moment, with the potential benefits of AI simply too profound to ignore. AI will revolutionize how banks operate and serve their customers. Early movers who strategically integrate these technologies will gain a competitive edge.

The future of banking belongs to institutions bold enough to embrace the AI revolution and shape it to their advantage.