Local bank branches are also pursuing ambitious AI plans.

• AI is seen as the next technology battle for small banks to keep up with the giants like Wells Fargo and Chase, as financial technology has already evened the playing field.
• "One community bank CEO predicts that the traditional teller line will eventually disappear and be replaced by a "wall of screens" in the future branch."
• In his annual letter to shareholders, JPMorgan CEO Jamie Dimon stated that AI will significantly impact the roles of bank employees, affecting more than 300,000 workers.

The pandemic has accelerated changes at big banks, with Chase and Wells Fargo leading the way in transforming their branches into lounges. However, it's not just large banks that are being disrupted by AI.

The small, independent bank branch will become an AI-powered financial services center, providing superior customer service and outpacing the big banks.

Christopher Naghibi, executive vice president and CEO of First Foundation Bank, stated that as a small bank, their only value proposition is service. He emphasized that nothing is proprietary anymore. First Foundation Bank, based in Irvine, California, has grown from a single branch in 2007 to 43 branches in five states, with just over $10 billion in assets.

Naghibi imagines community bank branches with fewer staff and more AI technology. This would allow employees to focus on assisting customers in achieving their financial objectives rather than being bogged down by answering routine inquiries about recent transactions and account details.

"Eventually, the teller line as we know it will cease to exist," he stated.

Bank CEOs, including Naghibi, are considering the use of AI for financial work and customer interactions.

Jamie Dimon, the longtime chairman and CEO of , has written about the potential of artificial intelligence in his annual shareholder letters since 2017. However, his latest letter, released on Monday, stood out due to his predictions about the transformational impact of AI, which he compared to the printing press, steam engine, electricity, computing, and the internet. Additionally, he discussed how he believes the technology could affect the jobs of the bank's over 310,000 employees.

"As Dimon wrote, our use of AI has the potential to augment every job and impact our workforce composition. While it may reduce certain job categories or roles, it may also create new ones."

JPMorgan has more than 2,000 AI and machine learning employees and data scientists working on 400 applications, including fraud detection, marketing, and risk controls. The bank is also exploring the use of generative AI in software engineering, customer service, and ways to boost employee productivity, Dimon said.

Routine questions can be handled by AI, allowing banks to focus on customer interaction as their critical application.

"AI will be the primary focus in our service engagement, as Naghibi stated. By asking AI questions such as "Did this happen? Did this check clear? How many payments have I made to this person?", you will receive immediate responses directly from AI."

A small bank's branch will become a wall of screens, allowing customers to go in 24/7, pay bills by touchscreens, send wires at midnight, and see transactions updated in real-time, according to the bank's CEO.

As paper money becomes scarce and more securely stored in machines, security at transformed branches will improve. The AI will enhance security with numerous cameras, biometric access, and PIN codes being obsolete. Additionally, AI technology will aid in extreme scenarios, such as detecting weapons and preventing issues. "If someone has a weapon, AI can instantly recognize it, detect it, and prevent any problems," Naghibi stated.

Jackie Verkuyl, the chief administrative officer of BAC Community Bank in Stockton, California, with over $800 million deposits, has stated that the implementation of generative AI is already underway and is transforming the small bank. "The AI is becoming increasingly intelligent each day," she said.

The corner bank will become an AI-infused financial services center, but Verkuyl says generative AI will bring the same services to phones, far beyond the capability of current apps. BAC uses an app called Smart Alac, developed by San Francisco-based Agent IQ, which answers customer questions and matches them with a BAC banker who becomes their assigned point of contact. This allows community and regional banks to provide self-service AI and have a relationship-based banking experience; every customer has a primary point of contact.

"We receive numerous inquiries about debit cards, so we created a self-service menu for customers to access," Verkuyl stated.

Bilac stated that Chase and Wells Fargo's advantage over BAC lies in the amount of data they possess. We can offer AI benefits without requiring extensive knowledge from BAC's team.

Not everyone in the industry is convinced.

According to Ken Tumin, a senior analyst at LendingTree, banks must grant AI access to extensive data to achieve effective transformation. This includes account disclosures and frequently asked questions. If banks fail to generate and maintain high-quality, comprehensive data, the use of AI in customer service may result in more customer dissatisfaction than satisfaction, as Tumin stated.

The Independent Community Banking Association believes that AI cannot replace the human element in banking relationships. Although AI will play a significant role, it cannot match the local knowledge and personal relationships that are essential for helping first-time homebuyers obtain mortgages or small businesses and farms finance their operations, according to Mickey Marshall, assistant vice president and regulatory counsel at ICBA.

Small banks can become more involved in their communities and appear more human with the help of AI, according to bankers like Naghibi.

"Currently, it is challenging to motivate branch managers to engage in community outreach and acquire new business. As a small bank, we lack the appeal to attract customers. To succeed, you must actively build relationships." Naghibi emphasized. "With generative AI in place, branch managers should prioritize community outreach and relationship-building to acquire new business."

Community banks have an advantage in engaging with consumers because they have multiple human and tech-centered touchpoints in their financial lives. The more touchpoints a bank has, the more involved they can be in their customers' lives.

""AI promises to make local bankers more accessible, as every client of mine has my mobile number," he stated."