AI demands a healthy connection between bank business units and in-house tech

As the hype around artificial intelligence (AI) and other next-generation technology intensifies, even the most risk-averse banks and credit unions are now determined to quickly take advantage of these emerging capabilities.  

But when financial institutions (FIs) move quickly to modernize, C-Suite leaders, board members and business units need to work closely with their in-house tech experts to understand how software and digital evolution can help the FI achieve its overarching goals. And they should institute a culture that allows for experimentation and failure, one where products come to market quickly and are adjusted constantly based on user feedback. 

That’s how the strongest connections evolve and ultimately, last. 

In today’s economic environment, banks and credit unions don’t have the luxury of wasting money on any more failed IT projects. And unlike in the past, they can’t wait years to see a return on their investments.  

Instead, financial providers increasingly want quick, modular updates to their technology environments that provide immediate value while still pushing the institutions forward on their overall IT strategy. But it’s not just about deploying new applications and hoping for the best. These aren’t just “digital transformations.” They are actually business transformations that are supported and driven by technology transformations. By combining the right IT changes with the right cultural changes, banks and credit unions can start reaping the benefits of continuous innovation much faster while executing on their business strategy. 

An internal partnership 

Remember, the IT department is no longer just an order-taker. In the era of data-driven insights and AI, they are now the nerve center for the entire organization. And any barriers between IT and other parts of the business must be eliminated. 

Employees need a clear idea of the outcomes they should be working toward—whether that’s increased product sales, greater efficiency, or improved employee/customer satisfaction—and how the new systems can help them get there. 

Otherwise, there could be considerable backlash to any new workflows.  

Measure in sprints  

Customer service in banking has never been more important. Most FIs are offering similar products, so competition comes down to how well an institution serves its clients.  

Customers are demanding personalized experiences from their FIs. At the same time, customer and member preferences are changing faster than ever. Banks and credit unions must build the necessary IT infrastructure to support those tailored interactions and adopt a culture of continuous improvement, one that enables them to quickly pivot when expectations change.  

Modernization projects, including AI use, must also move fast, with small updates happening in days or weeks, rather than months. Shorter timelines mean that companies can more easily track the success of their investments.  

And end dates no longer exist. Instead, the technology must constantly evolve along with changing market trends and customer preferences so that institutions can continue to deliver the meaningful experiences that members demand.  

Think like a tech company  

Ultimately, traditional banks and credit unions must start acting like technology companies because that’s who they are now competing against.  

Fintech rivals were born out of Silicon Valley and embody the same cultural mindsets that helped create today’s leading software and AI giants. FIs must adopt those same principles.  

It’s now all about speed. Banks and credit unions must embrace a “test-and-learn” mentality. Then, by working with objective third parties outside of the institution—such as a consulting firm—leaders may be able to easily pinpoint the technology projects that are proving valuable, and leave behind those that aren’t.  

A “siloed” mindset no longer works, and neither business nor IT alone can run the show. It’s time that banks and credit unions eliminate the separation between IT and the broader business for the betterment of the entire organization and, ultimately, its customer base. 

The only way to ensure a successful and continued modernization effort is by bringing the two sides together under a common goal or strategy, and then letting the culture of test-and-learn take over. Just like any good relationship. 

Rich Kiel is Managing Director and Head of Enterprise Sales for the North American region at BackBase.