Regional and community banks are investing in AI for new business opportunities, revenue growth and efficiency gains.  

“Financial institutions are quite bullish when it comes to AI,” Allison Cerra, chief marketing officer at fintech Alkami, told Bank Automation News. “They’re looking at this as kind of a broader catch-all of business opportunities, not necessarily more singularly focused on growing revenue.”

Some 96% of regional and community FIs say that AI can play a critical role in improving overall operations of their organization, according to Artificial Intelligence in Banking: Top Use Cases Revealed, a report issued by Alkami last month. 

Alkami surveyed 150 U.S.-based regional financial institutions between Dec. 21, 2023, and Jan. 26, 2024, and found: 

• 78% of respondents said that AI can open new business opportunities; 

• 77% said that AI can help employees save time; 

• 59% said that AI can reduce costs; and 

• 56% said that AI can help grow revenue. 

Larger FIs are better positioned to use AI for improved business operations because they have more capital and better digital banking platforms, Cerra said, adding that smaller institutions might look to vendors to develop AI capabilities. 

Smaller FIs need to start by thinking about what outcomes they are trying to achieve with AI and what infrastructure changes will be required, Cerra said. 

The majority of regional FIs “are in their learning curve on AI. They grade themselves very nascently on that learning curve,” Cerra said. “The No. 1 concern by FIs in this study is making data available to the wrong people.” 

Nearly 44% of FIs said that they are concerned about sharing sensitive data with external entities, which is a hurdle in development of AI, the report stated. 

AI use cases

Despite concerns and hurdles, regional financial institutions are finding use cases for AI, Cerra said. 

According to the report, FIs aim to deploy AI for: 

• 35% for customer service; 

• 28% for marketing; 

• 31% for data insight; and 

• 25% for security and anti-fraud efforts. 

Regional financial institutions like Citizens, Frost Bank and Valley Bank are deploying the technology for these uses: 

• Citizens is using AI to provide its customers with chatbots, to fight fraud and for coding assistance; 

• Frost Bank is providing AI tech to its customer representatives to boost efficiency; 

• Valley Bank is using it for customer outreach, anti-fraud efforts and document processing.

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