The financial industry‘s growing embrace of artificial intelligence is reshaping banking experiences for consumers and transforming internal operations for institutions. As digital banking becomes the norm with 92% of Americans avoiding physical branches, financial organizations are leveraging AI to streamline identity verification, enhance customer experiences, and power traditional financial modeling. This evolution marks a critical inflection point as the industry determines whether emerging AI technologies will incrementally improve existing systems or fundamentally transform the financial landscape.
How AI is changing banking today: Credit unions and financial institutions are implementing AI to streamline customer authentication and enhance the banking experience.
- MSU Federal Credit Union already uses AI to recommend optimal payment methods for members’ favorite stores and plans to expand capabilities further.
- The credit union aims to replace traditional identity verification methods with biometric face scans, eliminating the need for physical branch visits for large wire transfers or document signatures.
- Benjamin Maxim, MSUFCU’s chief digital strategy officer, notes this would be “way more efficient and effective than asking 20 questions about your account.”
The big picture: AI has been integral to financial services for decades, with applications evolving from basic automation to sophisticated predictive technologies.
- Banks have used automated credit scoring and fraud detection systems since the mid-1980s, followed by machine learning adoption in the early 2000s and AI-powered FinTech in the 2010s.
- Lauren Clement, VP of emerging technology at Prudential Financial, explains: “AI has been used for a very long time, particularly when it comes to financial modeling, risk modeling, underwriting, that kind of stuff.”
- These longstanding AI applications laid the groundwork for today’s more advanced implementations across the financial sector.
The industry at a crossroads: Financial institutions face a pivotal question about how emerging AI technologies will reshape their business models.
- The sector must decide whether generative AI and large language models will simply enhance existing processes incrementally or fundamentally transform financial services.
- Current AI tools at companies like Prudential enable financial advisers to conduct enhanced searches with greater speed and detail while maintaining human oversight.
- Human advisers still serve as the “main deciders” on which AI-generated search results to implement in customer interactions.
Key challenges: Despite significant advancement potential, the financial industry faces three major hurdles to broader AI implementation.
- Legacy systems often contain siloed older documents that create barriers to AI tools requiring clean, accessible data.
- Regulatory frameworks remain unclear and inconsistent across different jurisdictions.
- Industry leaders struggle to effectively explain their AI implementations and establish reliability metrics for these systems.
Where we go from here: Experts predict AI will eventually become so embedded in financial services that it will no longer be discussed as a separate technology.
- Maxim compares AI’s future to smartphones, suggesting that within “five to 10 years, AI is going to be that” ubiquitous and seamlessly integrated into daily financial operations.
- This normalization would mark the maturation of AI from a novel technology into an essential, invisible infrastructure component of modern banking.
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