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Part I: The Rise and Challenges of AI in Community Banking

Digital Marketing

Part I: The Rise and Challenges of AI in Community Banking

Eric Cook by Eric Cook

Chief Digital Strategist

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Full biography

Eric considers himself a “recovering banker” of 15 years, who for the past eleven years has focused his efforts as a digital strategist, helping his clients (mostly community banks) better understand and leverage the power of the Internet as a strategic business tool. An award-winning web designer with WSI, the world’s largest digital agency network, Eric is a two-time contributing author to the best-selling book Digital Minds – 12 Things Every Business Needs to Know About Digital Marketing. Consistently rated in the top five digital marketing books on Amazon, the book is in its second edition and available in three languages.

A sought-after, nationally-recognized speaker in the financial services industry, Eric is a member of the National Speakers Association and loves sharing his knowledge to help educate and inspire others. He is the co-creator of a weekly webinar show called Free Webinar Wednesdays, founder of the Banker Education Series webinar series, and serves as a faculty member at several banking schools around the country where he teaches bankers about digital strategy, online marketing and social media. He is a WSI Certified LinkedIn Professional and holds undergraduate degrees in business administration and psychology. While working full-time as a community banker, Eric earned his MBA and completed the three-year Graduate School of Banking program in Madison, WI in 2003.

Professionally, Eric helps his clients in all areas of digital marketing, which includes mobile-responsive web development, search engine marketing and optimization, social media strategies, e-mail communication, and “big-picture” digital strategic planning. He’s the co-founder of DigitalRCP.com, a service created to help businesses understand their risk when it comes to operating in today’s digital world. When he’s not helping his clients succeed online, he can typically be found on one of his many bicycles training for his next mountain bike/triathlon race or spending time with his wife and two (very spoiled) golden retrievers.

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Summary:

You know I love the opportunity to chat about anything that has to do with banking, digital marketing, and what challenges need to be overcome by my friends in the community banking space. When recently presented with the opportunity to speak with one of the industry’s leading conference organizers about these very topics, I jumped at the chance. What was supposed to be a quick 20-minute “can I ask you some questions” turned into a 45+ minute conversation. No shock that I had a lot to say (I know, you’re not surprised about that, are you)!

Despite everything that went into the conversation, I ended up focusing on three key challenges and sharing my thoughts over a three-part blog series. Today's first post explores the rise of AI in community banking and the challenges, opportunities, and risks that artificial intelligence brings to community banks (and the bankers who run them).

The Rising Influence and Impact of AI

AI is transforming how banks operate and serve their customers. The rising leverage of AI in banking can be seen on websites in the form of chatbots, in the ability to achieve rapid data collection and analysis for fraud detection, and in leveraging vast amounts of data to enhance customer service. Customers today expect a personalized experience (because it’s happening in so many other industries), and AI technology equips banks to provide personalization.

AI technology is becoming commonplace for businesses of all types across a variety of industries. Big banks like Wells Fargo, Chase, and Bank of America can quickly adopt and adapt AI technology. But while smaller community banks don’t share the same budget as their bigger competitors to do it as they do at scale, evolving tools like ChatGPT, Claude 2, and Microsoft’s soon-to-be-released Copilot are all positioned to help community banks get there economically. The reality is that AI is here to stay, and smaller community banks need to understand the growing impact AI has in the financial industry. This technology will only continue to get better, and less expensive, making it a possibility for even the smallest community banks. 

The key question facing community banks, however, is how to approach AI's rising influence and impact.

It is vital for community banks to:

Gain an Understanding of AI

AI can enhance customer service, detect unusual activity, and analyze data. By embracing AI, these banks can effectively adapt to evolving customer expectations and maintain relevance in the banking industry. Personally, I’ve gained a ton of insight about AI thanks to podcasts like The Marketing AI Show (produced by the Marketing Artificial Intelligence Institute), as well as reading recent posts from my friend James Robert Lay from the Digital Growth Institute.

Measure the Risk of AI

Banks of all sizes need to evaluate the risks associated with implementing AI technology. Assessing factors like data privacy, cybersecurity, and the impact on customer confidence is crucial. Effective risk management strategies are vital to ensure that the advantages of AI (like enhanced efficiency and customer service) outweigh any downsides or vulnerabilities.

Participate in AI Training

Company-wide AI training is vital for growth and sustainability in today's financial environment. Data influences every aspect of banking, so harnessing AI's power in community banking depends on effective AI training. Seek to find reputable sources of information (like the ones mentioned above) or identify someone inside the organization who is willing to take on the role of AI Champion. That individual can focus on learning and sharing information with others to help ensure your organization is not left behind. 

There are over 100 courses related to “artificial intelligence” inside of LinkedIn Learning. Udemy, another online learning option, produces over 4,200 results for “artificial intelligence” when searching for the term, with many of the courses available for less than $30 (and you get lifetime access), and you can take courses via your browser or their free mobile app. 

We’re even leading a cohort group learning together over at The LinkedBanker (our mastermind and mentoring program exclusively for banking-industry professionals), taking the Piloting Marketing AI course with the Marketing AI Institute (if you’re interested, get in touch). Suffice to say, there are a LOT of training opportunities out there to pick from. 

Embrace AI

If you’re looking for inspiration on how organizations of all sizes have embraced AI, Harvard Business Review has produced a great collection of ways to adopt AI technology and remain competitive by providing better service to customers. By implementing AI, you are better positioned to improve customer support, streamline operations, and make data-informed decisions, helping meet your customers' evolving needs. Embracing AI is crucial for its long-term sustainability and continued relevance in the industry.

An AI Challenge: Jobs are Changing with AI

Potential Job Elimination

One of the concerning aspects of AI for employees involves the threat of job elimination. Sure, some data-focused, repetitive, or predictive jobs in the banking industry may not exist a year from now. But for the committed employee, there’s an opportunity to learn how they can be a part of the future of banking through using AI tools and increasing productivity. While standing in the same spot is no longer a possibility on this AI treadmill, I firmly believe those who decide to move forward and expand their capabilities will find opportunities open up.

Train and Empower Existing Employees

Sometimes, there’s a rush to hire employees already experienced with these new technologies. Sure, you may get staff that is up to speed on the new technologies, but you may be missing out on some of that valuable industry knowledge. By training and empowering existing employees to maximize their use of AI, you may find a better option for your long-term success. Plus, one of the key benefits of using AI is it can handle the routine, repetitive, and mundane tasks that allow for the “human banker” to do what they do best - interact and take care of customers. 

When presenting employees with these new opportunities, management often hears a "that's not what you hired me for" mindset. A deeper understanding of the benefits and where AI is headed will assist in the shift in perspective that’s necessary to guide employees into understanding AI and how to use it to further their careers.

Importance of AI for Community Banking

AI's impact on banking and the marketing function is going to be a critical combination for community banks to survive and present themselves as a viable consumer option. Community banking adds something valuable to the communities they serve that big banks seem to miss. If technology like AI provides community bankers to be “more present” to do what they do best, I see that as a huge win.

ChatGPT DownloadStay tuned for my second challenge that bank marketers face – accessing, understanding, and effectively using data. But in the meantime, if you’re interested in talking about your AI strategy (or maybe the lack of one), let’s connect. Contact us today for more information about how WSI can help your community bank embrace AI technology and remain relevant and competitive in this evolving technology landscape!

You may also be interested in downloading our ChatGPT eBook series, with THREE editions published now!

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