Seize the Moment: Why AI Adoption in Banking Can’t Wait

AI is no longer optional; it’s essential for survival in the fast-changing financial landscape.

The banking sector, like other areas of the financial services ecosystem, is undergoing rapid digital transformation. Generative AI and agentic AI are accelerating change, reshaping everything from customer experience to operational efficiency. Yet, despite AI’s potential, many financial institutions hesitate to act — and that hesitation can bring significant risks.

This critical moment was the focus of one of our sessions at our recent Posh Conversations 2024 event, where we discussed the urgency of adopting AI and how to overcome the barriers preventing some institutions from moving forward. Our panel hosted a number of industry experts, including:

• Barbara Yastine, Former Chair, CEO & President of Ally Bank; Alkami Technology Board Member
• Rodney Hood, Former Chairman, National Credit Union Administration (NCUA)
• Bill Snider, Chief Strategy & Innovation Officer, Clearview Federal Credit Union
• Kathy Sianis, Vice President of Financial Institutions Strategy and Advisory at Posh

The key takeaway? AI is no longer optional; it’s essential for survival in the fast-changing financial landscape. Here’s why you need to seize the moment on AI.

The Risks of Delaying AI Adoption in Financial Institutions

Financial institutions that hesitate to adopt AI are setting themselves up for failure. The risks are clear: operational inefficiencies, loss of market share and an inability to meet evolving customer expectations. As Rodney Hood noted during the webinar, "If financial institutions aren’t embracing AI technology, they risk losing their relevance."

Competition is fiercer than ever, with fintech companies and early AI adopters leveraging technology to gain a significant edge. "The use cases are too profound to ignore," Hood added. AI helps banks and credit unions offer faster, more personalized services and institutions that fail to keep up will struggle to retain customers.

Bill Snider was direct in his assessment: "If you bury your head in the sand and think that this is just a passing thing, you won’t be around in 5 or 10 years." The bottom line? AI adoption is a must if financial institutions hope to stay relevant and competitive. So, how do they start?

How Financial Institutions Can Start Small With AI

It’s natural for institutions to feel apprehensive about adopting new technology. However, as Snider pointed out, "You can take some baby steps to get there." 

"Start small, test it out and make sure everyone is comfortable with it," Snider advised. For instance, launching low-risk AI initiatives, such as internal knowledge assistants or AI-powered search within digital banking channels, helps institutions build practical AI capability without major disruption. This phased approach enables institutions to control AI experimentation, gather valuable insights and make data-driven decisions before committing to larger, more complex projects.

Incremental steps not only reduce the fear of adopting new technology but also help institutions learn and grow at their own pace. Hood echoed this sentiment, saying, "The baby steps, incremental steps with Posh again, are a great way to start." Rather than waiting for large-scale transformation, institutions can unlock quick wins, strengthen operational efficiency and boost customer experience.

For banks and credit unions navigating AI adoption in banking, these early successes build confidence, align leadership and lay the groundwork for responsible AI adoption at scale.

How Banks and Credit Unions Can Overcome Barriers to AI Adoption

One of the most common barriers to AI implementation is the perceived cost. However, AI offers long-term savings by automating routine tasks and freeing up employees to focus on more complex, value-added work.

Barbara Yastine introduced the concept of "cost redeployment," explaining that AI allows financial institutions to shift resources from operational tasks to areas that enhance customer experience and growth. "It’s a cost redeployment lens," Yastine noted. "You’re taking money that you no longer need to spend because you’re using AI and redeploying it toward customer experience, growth and innovation."

In reality, AI tools reduce the total cost to serve by handling routine tasks, increasing agent productivity and improving customer service efficiency across banking services. Institutions embracing artificial intelligence are better positioned to streamline banking operations, support regulatory compliance and fund customer-facing innovation — all while reducing overall administrative overhead.

Building Internal Support for AI in Banking

Another major barrier to AI adoption is internal resistance. Leadership and staff may fear that AI will replace jobs or disrupt established workflows. However, overcoming this resistance is crucial to AI success. Engaging leadership early and educating staff about AI’s benefits can alleviate concerns and build a culture that embraces innovation.

Rodney Hood emphasized the importance of board engagement, stating, "Make sure that your policies allow for responsible AI adoption and that you've engaged your board in the process." By getting senior leaders on board and ensuring that AI aligns with the institution’s strategic goals, financial institutions can foster a more receptive environment for AI integration. 

A Simple Roadmap for AI Adoption

To make the process of AI adoption less daunting, here’s a simple roadmap to follow:

1. Start With Internal AI Use Cases:

Begin with employee-facing AI applications to streamline banking operations and improve staff efficiency. Tools like Knowledge Assistants reduce onboarding time and improve regulatory compliance — creating early operational wins without disrupting customer service.

2. Expand to Customer-Facing Solutions:

Next, integrate digital banking enhancements with AI-powered chatbots and voice assistants. These AI tools improve customer service, reduce call volume and enhance customer experience across channels, especially in high-traffic banking services.

3. Engage Leadership and Boards:

Successful AI implementation requires alignment with strategic goals. Engage senior leadership and board members early, fostering ownership and accountability for AI initiatives.

4. Prioritize Data Security and Compliance:

Select AI technology providers that meet banking sector compliance standards. Protect customer data, follow regulatory frameworks and maintain financial stability through rigorous risk management protocols.

5. Track Performance and Optimize:

Monitor key performance indicators (KPIs) like customer satisfaction, AI system adoption rates and operational efficiency to refine your AI integration strategy over time.

By starting small, focusing on customer expectations and engaging leadership early, financial institutions can overcome the barriers to AI adoption and position themselves for long-term success.

Don’t wait. Seize the moment and partner with AI experts like Posh to begin your AI journey today.

Want to learn more about AI and banking first? Watch the full webinar for expert insights across a range of AI topics.