AI talk in banking often starts with risk: What’s the exposure if a vendor (or a fourth party behind them) is using AI in ways you can’t see? This ProSight Q&A with Brett Pharr, CEO of the nationally chartered bank Pathward, doesn’t dodge that question—but it also pushes the conversation forward. Pharr’s core point: if risk and compliance teams want to be less reactive and more proactive, AI can help—so long as it’s vetted, governed, and checked.
Think of AI as capacity for the “scope of the job.” At Pathward, risk and compliance are “asking for AI” because the bank’s model relies heavily on third-party delivery of banking services—a structure Pharr says brings “layers of opportunity” along with added risk considerations, and it requires “this very robust risk and compliance framework on top of it.”
Use AI to speed the work—and keep humans on exceptions. Pharr points to compliance review of customer-facing content as a practical use case: “Our customer-facing content, sites, applications, etc., all must meet certain compliance requirements and a robust compliance review.” The challenge is sheer volume—“how many pages does that involve, how many words, and how fast can changes be made?” His preferred approach is a hybrid: use AI and manual work together so the routine load is handled efficiently and “the experts, the humans, focus on the exceptions.”
Treat “check the tool” as the rule. Pharr is blunt that using AI isn’t enough on its own. His guidance is straightforward: “The trick right now is to use the tool, but to understand how the tool is working and check the tool.” He expects “widespread model risk management around all this,” plus “more proving out for certain applications.”
Don’t skip the data foundation. Asked whether AI can unify departments, Pharr points first to data: “Data is so important to this whole growth story,” which is why Pathward “began investing heavily in data and data platforms.”
A practical gut-check for leaders who are hesitant. Pharr’s bottom line isn’t hype—it’s necessity: “For me, the business has shifted so much I don’t really have a choice.” His challenge to peers: “How much has your operation expanded? How can you get more efficient …? And how can you leverage AI as a risk and compliance tool … [and] vet it appropriately?”
