By Todd P. Michaud
Bankers have become fascinated with AI, and that fascination only intensified since late 2022 as tools like ChatGPT have become both powerful and widespread. Bankers are interested in utilizing safe, secure AI tools that increase efficiency in the broadest sense. This is for good reason. In an environment of growing economic instability, it makes sense that bankers investigate and perhaps invest in solutions that allow them to operate more efficiently. AI-powered work intelligence combines robotic process automation with more advanced AI to overhaul financial processes in ways that are intuitive for bankers to use while circumventing the typical bottlenecks that accompany legacy systems. However, this narrow mindset focusing solely on efficiency risks makes it possible for bankers to miss AI’s broader potential, especially its power to transform the customer experience and regain lost ground with younger generations.
Community banks have steadily lost younger customers to national banks, neobanks, credit unions and fintechs. These competitors have mastered the digital-first features that millennials and Gen Z expect – instant account access, SMS updates and seamless online loan applications. These features that make the customer experience easier are ironically often very difficult to implement, and community banks have found themselves lagging behind their competition. But AI changes that equation.
With the right AI automation strategy, community banks can do more than play catch-up – they can supercharge specific processes that matter most to younger customers. As such, this represents a once-in-a-generation opportunity for community financial institutions to reclaim millennial and Gen Z customers. With smart implementation, bankers can utilize AI automation to streamline key customer-facing processes without adding staff or sacrificing the personal touch that sets them apart.
Younger customers prefer a digital-first strategy, and one stark example of the difference that digital transformation makes is in lending. Large banks, neobanks, credit unions, and fintechs have made huge advances in lending technology, making it easy for borrowers to complete their application online from their computer or mobile device. Meanwhile, many community banks lack such capabilities and require borrowers to complete their application in person at a brick-and-mortar branch. With AI automation, community banks can have the best of both worlds by retaining their physical branch and all its inherent benefits while offering intuitive loan processing without increasing headcount. From onboarding to processing and underwriting, AI automation can accelerate and move borrowers through the lending process while staying within the bank’s risk profile.
Similarly, community financial institutions have failed to match their competitors’ ability to communicate with their youngest customers, particularly via SMS. These and other customer-service processes are ripe for automation, as generative AI makes it possible to deliver real-time, conversational SMS updates that are both accurate and compliant. When paired with access to the customers’ account and/or loan information, AI-enabled tools can answer common questions, provide instant account access to their account or loan application information, and improve responsiveness without additional strain on staff.
The list of ways AI automation strengthens these processes goes on, but there is more to consider when evaluating AI tools. Perhaps most crucially, bankers must consider how their employees will interact with the technology on a day-to-day basis. Too often, banks deploy a solution that does not gel with how the work is done on the ground level, so all the effort in the implementation process goes to waste. Ideally, AI-powered automation should be thoughtfully designed to keep humans in the loop – allowing staff to adjust workflows, troubleshoot exceptions and use their judgment -- empowering them to operate more effectively without interfering with their work.
The promise of AI automation for community banks extends far beyond cost-cutting and efficiency gains—it offers a critical path to relevance and resilience in a shifting financial landscape. As customer expectations evolve and digital-first experiences become the norm, community financial institutions must move beyond simply keeping pace. Instead, they must proactively use AI to redefine how they serve the next generation of banking customers. The tools now exist to streamline operations and transform the customer experience, modernize communications, and re-imagine legacy processes from end to end. However, success depends on thoughtful implementation by prioritizing powerful and practical tools, enabling staff to remain empowered and customers to feel seen. For banks willing to invest in the right AI solutions, the opportunity is not just to catch up but to lead. Banks that implement practical, human-centered AI tools now won’t just keep up – they’ll pull ahead.
About the Author
Todd P. Michaud is President and Chief Executive Officer of HuLoop Automation, directing the firm’s strategy and overseeing its execution. He is an accomplished, results-oriented, and high-energy technology executive with a sustained track record for driving breakout growth and building enduring, software businesses.