Independent Banker - July 2023 - 22

PORTFOLIO INNOVATION STATION
The myth, lure and reality of AI
By Charles Potts, ICBA
hen it comes to artificial
intelligence (AI), as the
great Wizard of Oz once said, " Pay
no attention to the man behind
the curtain. "
There's been a lot of hype about
AI and its offshoots like ChatGPT,
and while it's an exciting technology,
it's not new. The first patents on
AI algorithms came out more than
30 years ago, and they have been
baked into many of the solutions
community banks are already using
for back-office operations, risk and
fraud monitoring, and much more.
For instance, Paycheck Protection
Program (PPP) solutions were
fueled by versions of AI. Credit
reporting details are unearthed
by AI technology. Fraud anomaly
flagging runs algorithms, the
basis of AI, to detect out-ofcharacter
transactions.
W
So, what's with today's heightened
attention on the technology? The
answer is simple: AI has become
more advanced, but in a costeffective
manner, making it available
to the masses. Businesses and
consumers alike have newfound
access, and that breeds broader
awareness and interest.
Fortunately, this level of attention
brings with it new potential.
Consider current ThinkTECH
Accelerator participant Micronotes,
a cloud-based marketing automation
solution that addresses loan,
deposit and retention opportunities
using data. The solution connects
banking and credit information to
the customer, helping ensure the
right product is getting provisioned
in the right way. It's an internal
use of AI that culls banks' data to
identify target solutions for their
customers. And that's just one use of
the technology.
AI's future focus
What AI really does is create a path for
community banks to be more futurefocused.
Banks are asking how they can
do more with less, and now is the time
to focus on innovation to answer that
question. In today's landscape, banks
need to identify what they can be doing
to prepare for the next economic cycle,
when market conditions swing back,
and they can return to a more proactive
lending stance.
By keeping a keen eye towards
the future, banks can explore the
technological investments they can
make now, so that when it's time to
turn up the volume, they can do so
without adding headcount.
Today, they can be focusing on
back-office and operational efficiencies
that replace redundant tasks and set
up new potential for the future. And
AI has a firm hand in that evolution; it
serves as the intersection of technology
and future needs and capabilities.
So, as you read this month's lending
issue, do it with an eye toward if and
how AI can offer a foundation for
your next steps, keeping in mind that
it is not a silver bullet to be feared or
exalted. AI is simply a technology to
be leveraged in support of strategy,
because, after all, it is just a version of
the man behind the curtain.
Charles Potts (charles.potts@icba.org)
is ICBA executive vice president and
chief innovation officer
22 // ICBA Independent Banker // July 2023
Illustration by The img/Adobe
Independent Banker - July 2023

Table of Contents for the Digital Edition of Independent Banker - July 2023
