The Time is Now: Why Banks Must Embrace AI Today

A recent BankThink piece by Anand Pandya titled "No, Seriously. Your Bank Really Isn't Ready to Implement AI" underscores the realities and challenges that banks face today. Other experts share a different sentiment, including Edwin Estrada, nCino’s AI Principal Product Manager.

By leveraging AI, regional and community banks can exceed expectations, gaining a competitive edge in the rapidly evolving financial services industry.

With the history of being slow adopters, the financial services industry might seem the least likely to pioneer the incorporation of AI tools into their operations. Estrada offered a different perspective: “I believe our current environment presents a unique opportunity for our sector to take the lead in AI integration.”

Regulators are increasingly focusing on AI, creating an impetus for financial institutions to develop a robust and proactive approach to AI implementation. Far from being a stumbling block, this increasing regulatory attention offers a chance for the banking industry to demonstrate proactive responsibility, strategic thinking, and tech-savviness with a glass-box and human-in-the-loop approach.

By documenting the use of AI within their banking systems, financial institutions can offer regulators firsthand experience that helps draw the map on overcoming privacy challenges, bolstering ethical practices and utilizing AI to help meet compliance and risk management standards.

Advancements in AI and its applications in banking are happening at an impressive pace. It’s time for financial institutions to join the innovation. By harnessing these new technologies, banks can keep up with — and even exceed — customer expectations, with the creation of highly personalized experiences and immediately realized process efficiencies. What’s more, streamlined processes and accuracy of real-time information can attract those who have been hesitant to use traditional financial institutions.

AI in banking is more than just an operational enhancement or a way to save costs; it is a pathway towards better customer engagement. It creates a future where bankers and customers receive responses instantaneously without having to search dozens of files for an answer.

This future is attainable and available right now. However, it requires a shift in mindset and action from banks. Rather than viewing AI with skepticism, financial institutions should recognize it as the revolutionary tool that it is when designed to be used in safe, human-in-the-loop use cases.

In a recent survey conducted by nCino of 125 banking executives, 89% said that their institution is in the initial stages of AI strategy development and investigation, 46% are formulating their AI strategy, and 43% are currently investigating AI solutions.

The question isn’t when; it’s how and where. The use cases for AI are clear as the ROI shows that proper due diligence, effective integration into existing systems, and good change management practices are fueling the fire and proving it can be done. A commitment to privacy and security design principles with transparent AI services and human-in-the-loop concepts will help usher this technology transformation in, bolstering confidence not just with regulators but with end users and financial institution employees.

The adoption of AI in financial services is not merely another addition to the tech stack; it’s business process reengineering and a modern way of banking. The nCino survey also found that 56% of respondents see improved efficiency as the biggest potential for AI use within their institution, with enhanced customer experiences coming in second place with 18%. This moment in time is primed for financial institutions to lead the revolution of innovation and establish themselves as pioneering players in the tech industry.

The question circulating the financial industry is whether banks are truly ready for AI. “I argue that the true question is how quickly they can embrace and implement this crucial technology,” Estrada said. “The answer to that, in my humble opinion, is: today.”

About nCino

nCino (NASDAQ: NCNO) is the worldwide leader in cloud banking. Through its single software-as-a-service (SaaS) platform, nCino helps financial institutions serving corporate and commercial, small business, consumer, and mortgage customers modernize and more effectively onboard clients, make loans, manage the loan lifecycle, and open accounts. Transforming how financial institutions operate through innovation, reputation and speed, nCino is partnered with more than 1,800 financial services providers globally. For more information, visit www.ncino.com.