In Focus:: The Bank Technology Roadmap Playbook

JUNE 2021
AI In Focus: The Bank Technology Roadmap Playbook examines

how FIs are using advanced computational systems, including AI,
to improve lending and credit services as well as other aspects
of their operations. The Playbook is based on a survey of 100
executives at a broad range of FIs.
In Focus:
THE BANK TECHNOLOGY ROADMAP
PLAYBOOK
AI
In Focus: Table Of Contents
02 16
THE BANK TECHNOLOGY ROADMAP
Deep Dive: Approaching
04 24 30
Introduction AI obstacles head-on
ACKNOWLEDGMENT
AI In Focus: The Bank Technology
Roadmap Playbook is a collaboration
with Brighterion, and PYMNTS is
grateful for the company’s support Case Study: Truist on
and insight. PYMNTS.com retains full how AI Helps banks
editorial control over the following better know and serve
findings, methodology and data
analysis.
Key Findings their customers Conclusion/Methodology
2 | AI In Focus: The Bank Technology Roadmap Playbook Introduction | 3
Introduction
Banks have historically viewed their them are prioritizing technology to make These are among the top findings that
investments in technology as part of a transactions faster and more accurate. emerge from PYMNTS’ latest research
long-term strategic process. The events series, AI In Focus, which is based on a
These trends raise an important ques- What is real AI?
of the past year have called into question survey of 100 FI executives and tracks
tion, however: Which technologies can
the merits of steady, gradual approaches the adoption of AI and other advanced
best support the capabilities FIs believe There is a lot of hype around what
to modernization, however. The pandemic computing systems in banking. In this
are most essential today? Organizations
has greatly accelerated the pace of dig- edition, The Bank Technology Roadmap, AI is and does. Our research uses a
run the risk of information overload
ital adoption across all sectors of the we examine how banks are integrating specific definition of the technology.
without systems that can intelligently
economy, and this has made data — and new technologies, including AI, and how
process and leverage insights from large AI involves the use of machines to
how financial institutions (FIs) manage they are putting them to use, placing a
volumes of data in real time. These cir- mimic the human brain’s cognitive
and leverage it — essential not just to special focus on credit risk operations.
cumstances help explain why banks
long-term strategy but also to meeting learning functions. This technology
are becoming increasingly focused on In this Playbook, we lay out the key find-
immediate market demands. continually learns from this pro-
artificial intelligence (AI), which has ings from our research, examine some of
More than three-quarters of FIs say proven especially valuable in process- the perceived barriers around AI adop- cess to make decisions and has the
responding to existing customers’ needs ing real-time data and acting on it. More tion and offer firsthand perspectives ability to personalize, the ability to
is a reason they are investing in technol- than three-quarters of FIs have either from banks that have gone through the adapt to new information and the
ogy today — far surpassing the share that already invested in AI-based systems (21 process of onboarding AI solutions and
ability to self-learn.
cite ongoing digital transformation. The percent) or plan to do so over the next 12 other insights.
other main motives FIs have for invest- months (57 percent).
ing in technology also reflect a sense of
urgency: Approximately 90 percent of
© 2021 PYMNTS.com All Rights Reserved

4 | AI In Focus: The Bank Technology Roadmap Playbook Introduction | 5
Key Findings

6 | AI In Focus: The Bank Technology Roadmap Playbook Key Findings | 7
FIs view technology — FIGURE 1:
not increasing the size FIs’ innovation strategies

of their workforce or 1A: Share of FIs that plan to take select 1B: Innovation strategies, by institutional size
training — as the primary approaches to improving their credit risk
management SURVEY INSIGHTS
way to address the pain 63.2%
Technology
0000000063
points they face in credit 64.0%

Technology 86.4%
65.5%
0000000086
management.
0000000064 0000000066
46.7% 0000000047
A majority of FIs — 64 percent — plan Partnerships Partnerships

to invest in technology to improve their 45.0% 36.8%
In the long run,
0000000045 0000000037
45.5% 0000000046
credit risk management over the next six 41.4% 0000000041
53.3%
months, which is more than five times
AI improves our
0000000053
Acquisitions
15.0%
the share that plan to do so by focus-
0000000015
Acquisitions
ing on human resources, such as hiring, 68.4%
4.5%
0000000068
0000000005
decision-making
retraining and reorganization. Just 12 per- Focus on employees in the organization
capabilities and
0.0%
12.0% 0000000012
3.3%
cent of FIs are taking this latter approach.
0000000003
Partnerships — working with third par-

We will not do anything
5.3%
Focus on employees in the organization enhances the
ties — is also an important part of banks’ 1.0%
0000000005
22.7%
customer experience,
0 0 0 0 01
0000000023
strategies to improve credit manage- 13.8% 0000000014
6.7%
ment: 45 percent of FIs plan to take this
0000000007
approach over the next six months. We will not do anything

ultimately leading
Technology and partnerships are not Acquiring other firms to bolster credit
0.0%
0.0% to better customer
0.0%
mutually exclusive strategies, of course,
and they often go hand-in-hand when
management appears to be a viable
strategy only for the largest of banks: 68
3.3% 0000000003
retention.
More than $100B
implementing sophisticated technolo- percent of FIs with more than $100 bil- $25B-$100B
lion in assets plan to pursue this route $5B-$25B
gies like AI. Leading vendors do not just $1B-$5B
sell off-the-shelf products, after all, while less than 5 percent of banks with — Bank executive respondent
but rather serve as partners in ensur- less than $100 billion in assets intend to
ing smooth integration of the technology do the same.
and offering continuous support.

The reason FIs are so technology-centric FIGURE 2:

in their strategies for improving credit Credit management pain
management speaks to the specific pain points
points they face in this area. Inefficient
2A: Share of FIs citing select challenges as
data management is the most cited important and most important
challenge by a considerable margin:
Inefficient data management Managing collections
70 percent of FIs consider this a chal-
38.0% 0000000038
2.0% 0000000002
lenge and 38 percent consider it to be 32.0% 0000000032

23.0% 0000000023
the most important challenge they face Challenges with regulatory compliance Diminishing success using traditional
Solutions lie in gaining

in their credit operations. This suggests related to credit management collection methods
25.0% 0000000025
1.0% 0 0 0 0 01
that, for all the impacts the pandemic 32.0% 0000000032

18.0% 0000000018
has generated — such as borrowers’

adverse financial circumstances — the Increased late payments
Effectively managing increases in credit
applications
more visibility and
18.0% 0.0%
insights from their
0000000018
greatest difficulty FIs face in this area 41.0% 0000000041

22.0% 0000000022
is ongoing and systemic. Many FIs lack

Most important challenge
efficient means of capturing, processing
and acting on the myriad sources of data
7.0%
Higher charge-offs
0000000007
Rest existing data, not
33.0% 0000000033
that credit departments deal with on a

daily basis.
Accurately scoring crdit risk for existing
customers
in adding staff or
6.0%
reorganizing.
0000000006
39.0%
Other credit pain points include regula-
0000000039
tory compliance, which 57 percent view Conducting or learning from credit

reviews
as a challenge and 25 percent view as the 3.0% 0000000003
most important challenge, and increased 27.0% 0000000027
late payers, which 59 percent cite as a

challenge and 18 percent view as most
important. All of these pain points help
explain why FIs view technology as the
primary means to improving credit oper-
ations: Solutions lie in gaining more
visibility and insights from their existing
data, not in adding staff or reorganizing.

FIGURE 2 (continued):
Credit management pain

points
2B: Credit management pain points, by
institution size
Inefficient data management Managing collections

15.8% 0000000016 47.4% 0000000047
59.1% 0000000059 31.8% 0000000032
89.7% 0000000090 13.8% 0000000014
93.3% 0000000093 16.7% 0000000017
Challenges with regulatory compliance Diminishing success using traditional

related to credit management collections methods
63.2% 0000000063 0.0%
50.0% 0000000050 9.1% 0000000009
58.6% 0000000059 17.2% 0000000017
56.7% 0000000057 40.0% 0000000040
Effectively managing increases in credit

Increased late payers applications
31.6% 0000000032 31.6% 0000000032
63.6% 0000000064 27.3% 0000000027
58.6% 0000000059 27.6% 0000000028
73.3% 0000000073 6.7% 0000000007
Higher charge-offs More than $100B

47.4% 0000000047 $25B-$100B
45.5% 0000000046 $5B-$25B
34.5% 0000000035 $1B-$5B
36.7% 0000000037
Accurately scoring credit risk for existing

customers
21.1% 0000000021
45.5% 0000000046
55.2% 0000000055
50.0% 0000000050
Conducting or learning from credit

reviews
36.8% 0000000037
13.6% 0000000014
17.2% 0000000017
50.0% 0000000050

Banks are investing in TABLE 1:
technology for three main Motivations behind

reasons: speed, accuracy innovation strategies
and meeting existing Share of FIs citing select reasons for pursuing
Average Technology Partnerships Acquisitions Employees
four approaches to improving credit management
customers’ needs.
Banks today seem to be approaching
their investments in technology with Size of sample 136 64 45 15 12
greater urgency than they have in the
not-too-distant past. This almost cer- Responding to existing customers’ needs 66.9% 76.6% 62.2% 33.3% 75.0%
tainly reflects the scale and scope of
Increasing financial transactions’ speed 50.7% 90.6% 20.0% 6.7% 8.3%
the digital shift across nearly all aspects
of commerce and the recognition that Increasing financial transactions’ accuracy 50.7% 89.1% 24.4% 0.0% 8.3%
real-time and automated capabilities
require the right technologies to support Responding to potential customers’ needs 50.0% 35.9% 62.2% 73.3% 50.0%
them. FIs consider technology the most
direct route to transactions that are both Addressing ongoing digital transformation 47.8% 34.4% 84.4% 26.7% 8.3%
faster and more accurate: 91 percent of
Responding to competitive threats 39.7% 34.4% 53.3% 53.3% 0.0%
FIs cite the former as a reason for invest-
ing in technology and 89 percent cite the
Addressing changing security and risk management issues 35.3% 32.8% 37.8% 6.7% 75.0%
latter.
Being more profitable 35.3% 6.3% 51.1% 93.3% 58.3%
An even stronger indicator that technol-
ogy is an immediate priority for banks
Reducing manual intervention in workflows 33.1% 60.9% 8.9% 0.0% 16.7%
is that 77 percent say they are investing
in it to respond to existing customers’ Differentiation from competitors 30.1% 18.8% 37.8% 40.0% 50.0%
needs. Only 34 percent view addressing
ongoing digital transformation as the pri- Increasing financial transactions’ transparency 19.9% 14.1% 26.7% 6.7% 41.7%
mary motive. Today’s FIs are more likely
to view technology as necessary to meet Improving reputation 16.2% 18.8% 20.0% 6.7% 0.0%
current market demands rather than as
Being able to enter new markets 12.5% 0.0% 4.4% 100.0% 0.0%
part of a long-term process of digital
transformation.

AI is central to FIs’ plans FIGURE 3:
to improve credit risk Plans to invest in AI

management, especially 3A: Share of FIs that have invested in or plan 3B: Plans to invest in AI, by institutional size
for mid-sized banks: to invest in AI

We have already invested in AI systems
for credit risk management
Nearly 90 percent of We have already invested in AI systems
for credit risk management 89.5% 0000000090
them plan to invest in AI 21.0% 0000000021 9.1%

3.4%
0000000009
0000000003
SURVEY INSIGHTS
over the next 12 months 3.3% 0000000003
for this purpose. 24.0%

In the next six months
0000000024 In the next six months
10.5%
Our research has shown that institution
0000000011
40.9% 0000000041
size is a key factor when it comes to AI 34.5% 0000000035
In six to 12 months 10.0% 0000000010
implementation. Large FIs (those with 33.0% 0000000033
$100 billion in assets or more) have, with-

0.0%
In six to 12 months AI also reduces
out question, been the early adopters of
the need for
In one to three years 45.5% 0000000046
AI — and for understandable reasons. 15.0% 0000000015

44.8% 0000000045
33.3%
manual efforts and

0000000033
They have larger IT budgets, staff sizes

and more customers, intensifying the In three or more years from now In one to three years
improves accuracy,
6.0% 0000000006
0.0%
need for the automated and real-time 4.5% 0000000005
capabilities that AI can support. Our 13.8%

thus saving time
0000000014
We will not invest in these systems 33.3% 0000000033
latest research indicates that AI inter- 1.0% 0 0 0 0 01
est and adoption is spreading beyond

large banks, however. A large majority of 0.0%
In three or more years from now
and money.
0.0%
mid-sized banks plan to invest in AI to 3.4% 0000000003
16.7% 0000000017
improve credit management operations

over the next 12 months: 86 percent of We will not invest in these systems
0.0%
banks with assets between $25 billion 0.0%
and $100 billion plan to invest in the sys- 0.0% — Bank executive respondent
3.3% 0000000003
tems, including 41 percent that intend to

do so within the next six months. More than $100B
$25B-$100B
$5B-$25B
$1B-$5B

Deep Dive:
A P P R O A C H I N G A I O B S TA C L E S
HE AD-ON

18 | AI In Focus: The Bank Technology Roadmap Playbook Deep Dive: Approaching AI obstacles head-on | 19
AI could be seen as reaching a tipping Institutional size is a salient factor when FIGURE 4:
point in terms of recognition among FIs. it comes to AI’s perceived regulatory hur- Perceived impediments to
Research shows a dramatic increase in dles. Large banks — those with assets AI adoption
both use and interest in the technology. over $100 billion — are more than twice
4A: Share citing select challenges as 4B: Perceived impediments to AI adoption in
Seventy-eight percent of FIs plan to invest as likely to cite regulations as a prioritized important and most important to adopting AI the next three years, by institution size
in AI systems over the next 12 months or difficulty as smaller ones: 47 percent of systems in the next three years
have already implemented them. these banks consider regulatory issues Regulatory problems
Regulatory problems 47.4% 0000000047
the greatest challenge while just 19 per- 30.0% 45.5% 0000000046
Whether FIs make good on these plans

0000000030
42.0% 24.1%
cent of those with less than $25 billion in
0000000024
0000000042
13.3% 0000000013
is another question. Certain hindrances

assets think the same. Complexity of AI leading to a lack of
have continued to stall AI adoption, and Complexity of AI leading to a lack of understanding of the benefits and
understanding of the benefits and limitations
one is familiar: an inherent complexity Concerns around the regulatory implica- limitations
36.8% 0000000037
that can lead to not understanding such tions of AI technology are understandable 31.0% 0000000031
27.3% 0000000027
28.0% 0000000028
31.0%
tools’ benefits. Another perceived barrier for banks, which have important legal
0000000031
30.0% 0000000030
has emerged in our latest research into and fiduciary requirements to uphold.
Much higher data management costs Much higher data management costs
AI and credit risk: regulatory problems Lending and credit are heavily regulated 24.0% 0000000024
15.8% 0000000016
associated with automated systems. and subject to rules concerning fairness 35.0% 0000000035
13.6% 0000000014
20.7% 0000000021
These concerns are not trifling, of course, and nondiscrimination, among other 40.0% 0000000040
but they also may not pose the barriers matters. Difficulties hiring or retaining key staff
that some FIs perceive. 9.0% 0000000009 Difficulties hiring or retaining key staff
13.0% 0000000013
0.0%
9.1% 0000000009
Our research shows that 72 percent of 10.3% 0000000010
13.3% 0000000013
FIs consider regulatory issues a chal- Customers concerns about data privacy
6.0%
lenge in implementing AI solutions and
0000000006
9.0% 0000000009 Customer concerns about data privacy

30 percent consider them the greatest 0.0%
4.5% 0000000005
challenge. This is followed by complexity 13.8% 0000000014
Most important challenge 3.3% 0000000003
obscuring benefits, which is cited by 59 Rest

percent as a challenge and 31 percent as More than $100B
$25B-$100B
the greatest one. $5B-$25B
$1B-$5B

Regulators’ actions regarding AI in bank- TABLE 2:
ing suggest that they are more inclined Perceived limitations of Business
toward cooperation than confrontation, computational systems rules
manage- Case-
Deep
learning
however. One possibility is that regula- Data ment based and neural AI Fuzzy
Share of FIs citing select limitations of select
tors would prefer to see AI-enhanced computational systems
Average mining systems reasoning networks systems logic
financial services in the hands of trusted
institutions like banks rather than in those
of third parties less subject to oversight.1 Too long to implement 55.5% 55.1% 53.4% 57.6% 57.1% 56.3% 60.0%
United States regulators recently solic-
Too complicated to change when new threats are 44.9% 30.3% 50.7% 45.5% 76.2% 68.8% 33.3%
ited comments on AI in banking, noting
identified
that, with appropriate guidelines, AI
Must integrate with multiple providers to achieve 42.1% 42.7% 42.5% 51.5% 38.1% 37.5% 26.7%
“has the potential to augment business a complete solution
decision-making and enhance services
Limited to data sets solution providers offer 32.8% 59.6% 15.1% 27.3% 19.0% 0.0% 26.7%
available to consumers and businesses.”2
A more accurate reading of the regula- Does not work in real time 17.8% 24.7% 24.7% 9.1% 0.0% 0.0% 6.7%
tory climate around AI and banking is one
of opportunity rather than risk. Some Not transparent enough to satisfy regulators 17.8% 12.4% 23.3% 24.2% 14.3% 25.0% 6.7%
of the regulatory concerns expressed
Historic data is biased, resulting in inaccurate 17.4% 24.7% 12.3% 33.3% 4.8% 0.0% 0.0%
around AI, that it is in effect like a “black projections
box,” appear be overblown and point not
Have been unable to quantify the return on 13.8% 7.9% 5.5% 30.3% 33.3% 12.5% 26.7%
to inherent problems with the technol- investment of the current system
ogy but rather in the guidance — or lack
Unable to monitor behaviors of individual card/ 9.7% 5.6% 21.9% 6.1% 0.0% 0.0% 6.7%
thereof — technology vendors provide. account holders
Existing systems and processes work just as well 9.7% 4.5% 12.3% 6.1% 14.3% 6.3% 33.3%
Unable to adapt to fraudsters’ changing 8.9% 4.5% 16.4% 9.1% 0.0% 0.0% 20.0%
behaviors/tactics
1. Schoeps, J. Regulating AI in the banking space: A call to action. 2019 https://

Requires manual intervention to “train” system on 7.3% 3.4% 11.0% 6.1% 4.8% 12.5% 13.3%
www2.deloitte.com/us/en/pages/financial-services/articles/regulating-ai-in-th new data
e-banking-space.html. Accessed April 2021.
Could not decide internally where to focus AI pilot 7.3% 1.1% 4.1% 15.2% 23.8% 6.3% 20.0%
2. Schroeder, P. U.S. banking regulators seek input on how firms rely
on artificial intelligence. 2021. https://www.reuters.com/article/us-us
a-fed-artificialintelligence/u-s-banking-regulators-seek-input-on-how-firms-r
ely-on-artificial-intelligence-idUSKBN2BL2J4. Accessed April 2021. Did not find limitations 8.1% 9.0% 9.6% 6.1% 4.8% 12.5% 0.0%

A similar pattern prevails when it comes reduce — if not avoid entirely — any dis- TABLE 3:
to some of the shortcomings that FIs that ruption to on-premise systems. Average number of system
currently use AI cited. The most cited pain limitations
Some of the reservations bank executives
points are that the systems are too com-
express when it comes to AI, such as Business Deep
plicated to adjust when new threats are rules learning
complexity and implementation speed, Data management Case-based and neural AI
identified and that the systems take too
often surface when FIs are asked about mining systems reasoning networks systems Fuzzy logic
long to implement, cited by 69 percent (N = 89) (N = 73) (N = 33) (N = 21) (N = 16) (N = 15)
investing in innovative technologies, and
and 56 percent of AI users, respectively.
they may speak more to the culture of an
This latter concern is understandable for
organization than the technology itself.3 2.9 3.0 3.3 2.9 2.4 2.8
banks, considering that they can ill afford
system downtime. Digging deeper into our data reveals an
interesting pattern. Those FIs that have
These challenges would appear to speak
already implemented AI are less likely to
far more to particular solutions on the
cite limitations with the technology over-
market rather than to the technology
all than are users of other systems. AI
itself, however. After all, responsiveness
users cite just over two limitations on
to threats is one of the hallmarks of AI
average while other system users cite
when it is employed correctly.
three or more.
This underscores the importance of
These findings square with the larger
working with the right providers — and
themes in our research. The value of AI
asking the right questions. Bank pro-
seems to speak for itself among those
fessionals should not need advanced
organizations that have adopted the sys-
degrees in computer science to under-
tem and are putting it to use in a growing
stand the basic principles of how AI
array of applications. Barriers and limita-
works, and technology partners should
tions to adopting AI seem to loom larger
be able to demystify them. Providers
in the imagination than in reality.
should also be able to provide concrete
timelines for implementing solutions in
ways that require minimal or no down-
time. Cloud technologies and distributed
hosting have the potential to greatly
3. Innovation Readiness Index. PYMNTS.com. 2019. https://www.pymnts.com/
wp-content/uploads/2019/03/Innovation-Readiness-March-2019.pdf. Accessed
February 2021.

Case Study:
TRUIST ON HOW AI HELP S BANKS BE T TER K NOW
A ND S E R V E T HE IR C U STOME R S

26 | AI In Focus: The Bank Technology Roadmap Playbook Case Study | 27
Truist’s use of AI demonstrates how

the technology distinguishes itself from
One of the more salient findings to
earlier generations of computational sys-
emerge from our research on AI is the
tems. AI can be closely integrated with
degree to which the banking sector is
real-time human functions like customer
utilizing it for wide-ranging purposes.
service, and because of its self-learning
These various applications tend to share
nature, its interactions become more
a starting point, however: leveraging AI to
robust and insightful the longer it is in
get to know and understand customers
service.
in more accurate and meaningful ways.
“Future use cases include next-best
Truist, a U.S. regional bank formed from
action and conversation along with pre-
the merger of BB&T and SunTrust, has a
emptive client awareness to inform digital
firsthand perspective on this. The bank
and human engagement,” Caplinger said.
is currently using AI to enhance the
“Leveraging AI allows for greater client
customer experience and gain greater
self-service, increased satisfaction and
insights into account holders’ financial
more client needs met regardless of
circumstances and needs. It believes
where they are on their financial journey.”
these capabilities will have wider appli-
cations in the future, including ones Integrating AI is not as simple as throwing
involving credit and lending. a switch, of course. Organizations have to
carefully consider where and how they
“We use AI to drive chat bot interactions,
want to deploy the technology without
to provide personalized real-time client
disrupting day-to-day operations. AI is
insights based on savings and spending
not a one-size-fits-all solution. Truist
habits and to determine client senti-
has pursued a multiprogned AI strategy
ment,” Diana Caplinger, Truist’s executive
that relies on both in-house expertise
vice president for customer relationship
and outside partners.
management, intelligent automation and
personalization, told PYMNTS.

28 | AI In Focus: The Bank Technology Roadmap Playbook Case Study | 29
“Truist has taken a case-by-case undesirable aspects of human behavior.

approach to determine how best to AI represents the opportunity for a para-
implement the technology,” Caplinger digm shift — if applications are designed
said. “Some of our AI implementations and implemented wisely.
are using vendor solutions while others
“Other banks have mistakenly used AI to
are built by our various data and analyt-
replicate bad behavior because they did
ics teams. This approach allows teams to
not evaluate how to use this technology
test and learn along the way while they
to function differently,” Caplinger said.
have the flexibility they need to respond Banks need to account
to internal and external factors.” Truist believes AI’s ability to personalize
for the potential
interactions could have utility in other
Truist’s experience speaks to one of the
areas, including credit and lending. risk, [the] impact to
unique challenges banks may face in
implementing AI into their operations “This technology will be very useful to the upstream and
given the mix of legacy and modern sys- drive accuracy and efficiency while sim- downstream applications
tems with which many FIs work as well plifying the client experience. The client
as the complex regulatory and security journey can be tailored, particularly if the
and examine existing
environments in which they operate. client is an existing client, so the online processes to ensure
“Banks need to account for the poten-
or offline interaction is based upon the
client’s preference and requirements,”
the AI implementation
tial risk, [the] impact to the upstream
and downstream applications and exam-
Caplinger said. “Marrying operational will deliver against
ine existing processes to ensure the
subject matter expertise with the power
expectations.
of AI will ensure the bank is set up for
AI implementation will deliver against
future success.”
expectations,” Caplinger said. “In addition,
clearly defining the problem statement Truist’s experience seems to demonstrate Diana Caplinger
and the expected value upfront will help that, for all of the high-tech sophis- — executive vice president for customer
banks avoid costly deployments with tication that goes into AI, its growth in relationship management at Truist
minimal benefit.” banking rests in a business fundamental:
companies getting to know their cus-
One of the potential pitfalls in employ-
tomers better.
ing AI is that, in learning from past and
current data sets, it will perpetuate

Conclusion
Many banks have come to realize that of data while meeting compliance and Minimal time and disruption Cooperation
their existing computing systems are security requirements. Is the provider able to offer firm time- Does the vendor see itself as a partner
out of step in a digital-first world that lines for integrating its solutions? in implementing its solutions, and can it
AI is a genuinely complex technology,
requires real-time data management provide ongoing support?
and this underscores the importance Accuracy
and transaction capabilities. The need
to invest in technology has come to the
of working with trusted partners that
Does the provider's product offer accu- Methodology
can offer sound guidance — especially
fore for FIs, outweighing strategies that rate insights at scale? AI In Focus: The Bank Technology
given the hype around the technology.
may have served them well in earlier Roadmap Playbook is based on a sur-
Some technology vendors may be more Multifunctionality
eras, such as hiring and reorganization. vey of 100 financial executives who work
interested in gaining market share than
Can AI tools be applied in multiple areas at banks with at least $1 billion in total
These shifts in strategy are being driven actually ensuring that AI solutions do
of operations, including for credit risk assets and who hold leadership respon-
from one side by the wealth of data FIs what they claim and are implemented
management? sibilities in at least one of the following
now have at their disposal and, on the effectively. Following are some of the
areas: credit risk management, financial
other, by the power and capabilities tech- key considerations that banks should use Transparency
planning and analysis, risk management
nological solutions now offer, particularly while assessing technology providers. Is the provider able to show what AI
and fraud detection/analysis. The survey
AI. FIs need technologies capable of tools are doing and explain their basic
was conducted from Jan. 28 to Feb. 17.
unlocking and leveraging large volumes operation?
about In Focus:
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which companies in payments share relevant
information about the initiatives that shape
the future of this dynamic sector and make THE BANK TECHNOLOGY ROADMAP
news. Our data and analytics team includes PLAYBOOK
economists, data scientists and industry
analysts who work with companies to measure
and quantify the innovation that is at the
cutting edge of this new world.
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JUNE 2021

AI In Focus: The Bank Technology Roadmap Playbook examines

Deep Dive: Approaching

© 2021 PYMNTS.com All Rights Reserved

© 2021 PYMNTS.com All Rights Reserved

FIs view technology — FIGURE 1:

not increasing the size FIs’ innovation strategies

points they face in credit 64.0%

A majority of FIs — 64 percent — plan Partnerships Partnerships

credit risk management over the next six 41.4% 0000000041

Partnerships — working with third par-

strategies to improve credit manage- 13.8% 0000000014

approach over the next six months. We will not do anything

© 2021 PYMNTS.com All Rights Reserved

The reason FIs are so technology-centric FIGURE 2:

lenge and 38 percent consider it to be 32.0% 0000000032

Solutions lie in gaining

that, for all the impacts the pandemic 32.0% 0000000032

has generated — such as borrowers’

greatest difficulty FIs face in this area 41.0% 0000000041

is ongoing and systemic. Many FIs lack

that credit departments deal with on a

tory compliance, which 57 percent view Conducting or learning from credit

most important challenge, and increased 27.0% 0000000027

late payers, which 59 percent cite as a

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Credit management pain

Inefficient data management Managing collections

59.1% 0000000059 31.8% 0000000032

89.7% 0000000090 13.8% 0000000014

93.3% 0000000093 16.7% 0000000017

Challenges with regulatory compliance Diminishing success using traditional

58.6% 0000000059 17.2% 0000000017

56.7% 0000000057 40.0% 0000000040

Effectively managing increases in credit

63.6% 0000000064 27.3% 0000000027

58.6% 0000000059 27.6% 0000000028

73.3% 0000000073 6.7% 0000000007

Higher charge-offs More than $100B

Accurately scoring credit risk for existing

Conducting or learning from credit

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Banks are investing in TABLE 1:

technology for three main Motivations behind

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AI is central to FIs’ plans FIGURE 3:

to improve credit risk Plans to invest in AI

for mid-sized banks: to invest in AI

them plan to invest in AI 21.0% 0000000021 9.1%

for this purpose. 24.0%

size is a key factor when it comes to AI 34.5% 0000000035

In six to 12 months 10.0% 0000000010

implementation. Large FIs (those with 33.0% 0000000033

$100 billion in assets or more) have, with-

AI — and for understandable reasons. 15.0% 0000000015

manual efforts and

They have larger IT budgets, staff sizes

capabilities that AI can support. Our 13.8%

We will not invest in these systems 33.3% 0000000033

latest research indicates that AI inter- 1.0% 0 0 0 0 01

est and adoption is spreading beyond

improve credit management operations

tems, including 41 percent that intend to