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Artificial Intelligence Is Taking Over Banking. but What Are Its Limitations — and Is the Industry Prepared for a Future Without Those Limitations?

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Artificial Intelligence Is Taking Over Banking. but What Are Its Limitations — and Is the Industry Prepared for a Future Without Those Limitations? April 2021 | americanbanker.com Artificial intelligence is taking over banking. But what are its limitations — and is the industry prepared for a future without those limitations? BEST FINTECHS TO WORK FOR 2021 P. 20 HOW THE PANDEMIC CHANGED BANK MARKETING P. 26 0C1_ABM0421.indd 1 3/24/21 10:59 AM It’s time to hear their voices Access Denied is a revolutionary podcast featuring more than two dozen professionals providing a comprehensive examination of institutional barriers and outright racism across many sectors of fi nancial services. Sign up and listen: fi nancial-planning.com/access-denied ABM_0421.indd 2 3/24/2021 12:55:51 PM 0C4_ABM0121.indd 1 1/13/21 6:09 PM Photo: Gettyimages Photo: Table of Contents Deposits & Withdrawals: Should banks look beyond FICO? p. 4 Credit reports and credit scores are central to the way consumer credit is determined. But do those scores accurately reflect a borrower’s ability to repay? Photo: Bloomberg News Bloomberg Photo: The ghosts of AI present and future Teller’s Window: p. 10 Connection interrupted p. 6 Artificial intelligence is transforming the U.S. bank- ing industry, influencing verythinge from customer The pandemic forced many banks to rethink their on- service to credit underwriting. But what areas are out boarding and marketing strategies to serve and retain of AI’s reach, and what risks are there in adopting AI customers. A survey by Arizent finds that omes banks aggressively — or not aggressively enough? are making the change more proactively than others. Bank Marketing: Changing channels p. 26 Banks have had to switch their marketing strategy rapidly during the pandemic, eschewing TV and bill- boards and turning to online spots and virtual events. Book Review: The night they drove Best Fintechs to Work For 2021 old Morgan down p. 20 p. 31 This year’s list of the Best Fintechs to Work For shows In “JPMorgan’s Fall and Revival,” former JPMorgan it’s little stuff that makes some workplaces stand out economist Nicholas P. Sargen examines how the — and it’s not Ping-Pong or free kombucha. storied institution navigated the choppy waters of the late 20th century deftly, but not deftly enough to avoid being bought by Chase Manhattan in 2000. americanbanker.com April 2021 American Banker 1 001_ABM0421 1 3/24/2021 1:58:48 PM Purpose-driven leadership in 2021 Diverse voices. Dynamic ideas. Leaders addresses the issues that matter most when they matter most. Experts and innovators deliver hyper-relevant perspectives and insights on crucial topics when the industry needs them. Session highlights from 2020: Wells Fargo: How to Reinvent A Culture Mary Mack CEO of Consumer Banking and Small Business Lending Wells Fargo The Critical Decisions Now Facing All CEOs Bruce Van Saun Chairman and CEO Citizens Financial Join the conversation at americanbanker.com/leaders 023_LeadersABM_0421.indd Ad_0121.indd 2 1 3/24/20211/13/21 12:55:52 6:42 PM FROM THE EDITOR Volume 131, No. 3 | americanbanker.com Established 1836 One State Street Plaza, 27th fl oor, New York, NY 10004 By John Heltman Phone 212-803-8200 rtifi cial intelligence has been a consistent Editor in Chief of American Banker Magazine John Heltman 917-456-6240 Senior Designer Nick Perkins theme in science fi ction for decades. In works Contributors Laura Alix, Penny Crosman, Miriam Cross, from Isaac Asimov’s “I, Robot” to William Jim Dobbs, Kate Berry, Allissa Kline, Hannah Lang, Gibson’s “Neuromancer” — which is to say A Editor in Chief Alan Kline 571-403-3846 nothing of fi lms like “2001: A Space Odyssey,” “The Ter- Managing Editor Dean Anason 770-621-9935 minator” and “The Matrix” — humans have thought a lot Executive Editor Bonnie McGeer 212-803-8430 about what the more fantastic implications of increasing- Technology Editor Penny Crosman 212-803-8673 Washington Bureau Chief Joe Adler 571-403-3832 ly lifelike technology might be. BankThink Editor Rachel Witkowski 571-403-3857 There haven’t been any science fi ction novels about Community Banking Editor Paul Davis 336-852-9496 sentient robot bankers, but perhaps that’s because Contributing Editor Daniel Wolfe 212-803-8397 Digital Managing Editor Christopher Wood 212-803-8437 it isn’t really science fi ction at all. Banks haven’t been Copy Editor Neil Cassidy 212-803-8440 at the forefront of developing AI — certainly not to the degree that the largest technology fi rms have — but they Reporters/Producers Laura Alix 860-836-5431 Hannah Lang 571-403-3855 have been avid consumers of the technology, partnering Kate Berry 562-434-5432 Brendan Pedersen 571-403-3878 with or in some cases acquiring AI tech companies Miriam Cross 571-403-3834 Jon Prior 214-629-5894 to enhance their services and streamline internal Jim Dobbs 605-310-7780 John Reosti 571-403-3864 Neil Haggerty 571-403-3837 Gary Siegel 212-803-1560 processes, often with encouraging results. Allissa Kline 716-243-2679 Kevin Wack 626-486-2341 But as Penny Crosman explains in this month’s Executive Director, Brand Studio Michael Chu 212-803-8313 cover story, banks are also wary of AI — either because ADVERTISING of regulatory concerns, cultural reluctance to adopt new VP, Media Sales Brad Bava 212-803-8829 technology or fears that the technology hasn’t reached Midwest/Southwest Shelly Schmeling 312-932-9392 the point where it can bring them a satisfactory return on West Sara Culley 831-438-8408 Midatlantic/Southeast David Cleworth 843-640-3713 the investment. Senior Marketing Manager Jamie Billington 212-803-6099 Regardless of banks’ misgivings, artifi cial intelligence Group Director Custom Marketing Solutions is continuing to develop rapidly, and if banks don’t adopt Virginia Wiese 704-987-3224 Customer Service/Subscriptions [email protected] 212-803-8500 it to bring more e cient service to customers, someone else will. Fintechs are in many cases pioneering the use Licensing and Reuse of Content: Contact our o cial partner, Wright’s Media, for more information about available usages, license and reprint fees, and award of AI in order to provide those services to banks, but in seal artwork at [email protected] or (877) 652-5295. Please note that other cases they are pioneering AI to draw customers Wright’s Media is the only authorized company that we’ve partnered with for Arizent materials. away from traditional brick-and-mortar banks. For the time being, there are many things that AI can do, but there are many more things that AI cannot do. It can’t make decisions particularly well, at least not without a person checking the results. AI isn’t especially CHIEF EXECUTIVE OFFICER Gemma Postlethwaite good at reading human emotions or responding to them, CHIEF FINANCIAL OFFICER Debra Mason which can be a challenge in handling customer service CHIEF STRATEGY OFFICER Je Mancini issues. And AI will never be a person, able to relate to CHIEF CONTENT OFFICER David Evans human customers and provide the personal touch that CHIEF PEOPLE OFFICER Lee Gavin people tend to want out of a bank. American Banker (ISSN 2162-3198) Vol. 131 No. 3, is published 9 times per year; January/ February, March, April, May, June, July/August, September, October and November/Decem- At least for now. Google maps and Alexa didn’t ber by Arizent, One State Street Plaza, 27th Floor New York, NY 10004. Subscription price: $149 per year in the U.S.; $229 per year for all other countries. Periodical postage paid at seem possible 20 years ago, but today they’re a part of New York, NY and additional U.S. mailing o ces. POSTMASTER: send all address changes to American Banker, One State Street Plaza, New York, NY 10004. For subscriptions, renew- als, address changes and delivery service issues contact our Customer Service department everyday life. As artifi cial intelligence becomes more and at (212) 803-8500 or email: [email protected]. Send editorial inquires and manuscripts to American Banker, One State Street Plaza, 27th Floor, New York, NY 10004. This publica- more sophisticated, banks — and policymakers — need tion is designed to provide accurate and authoritative information regarding the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering to keep an eye to what jobs should remain the exclusive fi nancial, legal, accounting, tax or other professional service. American Banker is a registered trademark used herein under license. ©2021 Arizent and American Banker. All rights reserved. province of humans and which can go to the cloud. AB www.americanbanker.com. americanbanker.com April 2021 American Banker 3 003_ABM0421_001 3 3/24/2021 2:13:24 PM D&W | 4 TELLER | 6 REPLAY | 8 GHOSTS OF AI | 10 BEST FINTECHS | 20 BANK MARKETING | 26 BOOK REVIEW | 31 Deposits & Withdrawals How should banks think about alternative Credit reports and scores by a handful of companies are the centerpiece of consumer credit data? credit. Should banks start incorporating alternative data into their credit models? Priya D. Bajoria Steve Reiss Sally Taylor Senior Vice President, Associate Managing Director, Vice President and General Manager, Financial Services Publicis Sapient B2B Scores, FICO he coronavirus pandemic has disrupted through credit risk management models periodically. hen the FICO score was introduced into phone payment data in traditional credit scores and an already overly complicated and legacy Meanwhile, the credit score data may be subject to consumer credit markets more than 30 reports for many years. But unfortunately, very little of this banking system. But it has also spotlighted months of lags, even while some consumers may be trying years ago, it represented a sea change for data is reported to the credit bureaus.
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