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AI as a game changer: Leapfrog to banking excellence

Ravi Nemalikanti
February 20, 2025
Read Time: 0 min

This article covers these key topics: 

Taking your institution directly to best in class with the right AI strategy 

An AI strategy will unlock the greatest value for banks and credit unions when the strategy aims for bold, audacious goals rather than incremental efficiency gains.

The true value of AI goes beyond efficiency

If generative AI technology alone is projected to unlock between $200 billion and $340 billion in value annually for the banking sector, then why are nearly half of financial institutions still on the fence about adopting AI-integrated tools?

bar graph showing poll question results on AI use at financial institutionsThat’s what a recent Abrigo poll of webinar attendees found. Another 24% reported no plans to implement AI-integrated solutions, and only 30% said they’re using such tools.

One reason financial institutions are reluctant to “buy in” to AI-integrated tools is that many see its central value as making the workforce more efficient -- doing more work in the same amount of time. If AI merely makes people more efficient, its true potential is missed. Efficiency alone doesn’t set a financial institution apart. Instead, an AI strategy that focuses on making staff more effective can create competitive advantages to allow some banks and credit unions to punch above their weight.

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Efficiency vs. effectiveness: Why it matters

Efficient staff and processes have tremendous value, of course.  Efficiency measures how effectively a process utilizes its resources to achieve desired outcomes. Financial institutions that focus on being effective, on the other hand, will use AI to eliminate processes entirely and find fundamentally better ways to achieve strategic goals.

Take loan approval, for instance. AI can extract information from tax returns and pull credit checks to speed up underwriting, which is good. Better? AI can eliminate certain processes altogether while maintaining compliance and consistency to provide a better experience for customers and staff.

Autonomous agents can retrieve data from an existing customer profile, pull credit, and generate scores for the customer’s cash flow and business risk. AI can then automatically generate the draft narrative for the credit memo or standard report. It can even automate approval of certain loans that meet institution-specified criteria, allowing loan approval that meets regulatory requirements and institutional policies.

The new process is smarter, not just faster. It serves customers better and leaves bandwidth for staff to tackle more complex issues.

Using AI to challenge the status quo will add value in ways that simple speed improvements cannot. Only an AI strategy that targets fundamentally transforming processes will help banks capture the technology’s full benefits.

How can financial institutions start to develop such a strategy? Start by completely rethinking workflows.

Workflows: Transforming processes with AI

An AI strategy focused on being effective will scrutinize each workflow. Banks will step back and ask, “Do we even need this process? Is there a better way to achieve our objective?” 

Consider a customer seeking a mortgage for an investment property. Traditionally, this involves multiple departments, numerous touchpoints, and significant manual work. AI can allow you to change this experience altogether.

A focus on using AI to be more effective could mean using an autonomous assistant to interact with the prospective borrower who describes their need on the website.

The AI assistant obtains permission to access the customer’s credit information and provides an estimate of the potential loan amount and qualifying interest rate range. It then offers to initiate an online application, outlining the required documents and information. Customers can apply immediately, but the institution has the option for a manual review to finalize the loan amount and rate. The streamlined process frees up the underwriting team to focus on more complex applications.

How to rethink workflows

Here are a few steps that will help financial institutions make this transformation happen:

  1. Map out existing workflows: Document every step involved in current workflows. Identify all roles, actions, and systems used in each process.
  2. Identify value-adding steps: Review each step and determine if it truly adds value or exists because “that’s how it’s always been done.”
  3. Pilot AI-driven changes: Use customer feedback to identify and implement AI in parts of the workflow where redundant tasks, such as data gathering or preliminary assessments, can be replaced. Pilot programs will help identify challenges and measure the effectiveness of these changes iteratively. Galvanize support around early wins produced in the pilot process and use this momentum to implement the new workflow more broadly.
  4. Integrate AI with human oversight: For areas traditionally requiring human expertise, AI can handle the initial stages and flag exceptions for review. This approach makes the overall process more effective without sacrificing quality control.

This is the key difference between efficiency and effectiveness—one approach improves old processes; the other fundamentally redefines them. AI affords banks the chance to focus on what can make the biggest difference in achieving their goals. It creates a more effective experience for customers and staff and a more impactful outcome for the institution.

Additional elements for a successful AI strategy

While improving effectiveness is at the core of an AI strategy, additional foundational elements deserve more detail than this article can cover:

    1. Data quality and readiness
      Without data quality, AI initiatives will fall short. Financial institutions need to ensure their data is clean, well-organized, and accessible. This involves integrating data from various sources, ensuring it is up to date, and eliminating inconsistencies. These are best practices for any financial institution regardless of AI initiatives, and the right technology partner can help the institution prioritize.
    2. Organizational culture and change management
      Implementing AI is a cultural transformation. C-level leaders must be curious and open-minded to the idea that the processes that brought success in the past may not work for the future. They must be willing to challenge the status quo. Successful AI adoption requires training employees, encouraging experimentation, and promoting a culture where failure is seen as a learning opportunity.
    3. Security and compliance
      Clearly, AI initiatives must align with existing security and compliance requirements. Financial institutions must incorporate compliance from the outset to ensure data privacy and safety. Regular audits, security assessments, and adherence to regulatory frameworks will minimize risks and maintain customer trust.

Redefining success with AI

Financial institutions seeking to leverage the best of AI must shift their focus from improving efficiency to driving effectiveness. They can do this by challenging outdated processes, fostering a culture of adaptability, and prioritizing innovation at every level. The benefit is realizing the full potential of AI: enhanced decision-making and new standards for operational success.

Learn how Abrigo has approached integrating AI. This whitepaper will give you insights to help your institution unlock its potential.

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About the Author

Ravi Nemalikanti

Chief Product and Technology Officer
Ravi Nemalikanti is Abrigo’s Chief Product and Technology Officer and is responsible for leading technology strategy and determining product and development priorities to drive innovation and increase the company’s competitive advantage. Ravi is the Winner of the 2024 Haas Technology Leadership Awardee for North America by Carlyle, an award given

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About Abrigo

Abrigo enables U.S. financial institutions to support their communities through technology that fights financial crime, grows loans and deposits, and optimizes risk. Abrigo's platform centralizes the institution's data, creates a digital user experience, ensures compliance, and delivers efficiency for scale and profitable growth.

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