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Written by: Robb Gaynor
The Fintagonist, a contrarians view on artificial intelligence in the fintech space. Bringing un-requested insights to the world…
Boards Will Drive AI Change. The bored board was invigorated by a discussion around AI. At a recent board meeting the overall climate was somewhat dark, as it is not an excellent time to be a board member with high rates and shrinking margins. Alas, there is always AI and a lively debate about how to embrace the new tech. And the action. Focus on AI in production AND define success metrics…. Read on fair friend…
Volume #4 Ventura, CA September 7, 2024 --- “Too Many Notes , Robb…. Too Many Notes”…
I waited to present. After a few hours of administrative machinations, the board was ready to move on. OK, the “hours” was actually about 15 minutes, but time was moving slowly in there. I mentally prepared. And tried to read the crowd a bit. Like many contemporary boards, this one was diverse in all aspects except one; they all had a strong opinion on AI. Some were even technologists with a more, shall we say, robust opinion. From robots taking over to a deep discussion on GenAI as the only thing that matters, we moved on to talk about and study case studies, working examples of what financial institutions are doing today with AI. By looking at real-world examples, the hype of AI started to fade away…. And speaking of the Grateful Dead.
“Too many notes Robb, too many notes” said a Board member after I presented the 67+ different AI app features FI’s have rolled out. Just like the movie, too many notes, isn’t that what they accused Mozart of, in the Hollywood version? Well, I listen to the Grateful Dead and Jerry truly does or did play way more notes than others, just listen some time, it can make you cry…. Jerry was not an AI Avatar BTW. I digress once again.
AI Point Solutions. This bored board member was saying there were too many little AI apps. Too many notes. AI is bigger they claimed. In reality, not true. Point solutions. Not platforms. That is where AI is succeeding. In hundreds of AI case studies not one is a monolithic app brought in by a bank to do everything. Rather it is “death by a thousand cuts” as AI is cropping up all over the place. There are a few AI platforms out there right now, these platforms have 1 or 2 apps in production at any given FI, so maybe this represent the beginning of AI platform hegemony. A thousand apps or a monolith…. Let’s move on…
Definition of Success. Next, this Board was interested in leveling the playing field and agreeing on a working definition for AI. But not just what AI was, but a cleverer focus on defining AI success; how this organization would measure their AI results. By stressing the success metric, the emphasis is on delivery and being in production. And this approach encompassed a basic definition of AI to boot. Agreement on the definition took a bit of time and next, a discussion on the breadth of AI’s impact on the organization ensued.
A Word on FI Departments. 15 different departments within an FI are using artificial intelligence. This financial institution realized AI would strike all parts of their org. So, first, they added a metric to track how many departments adopted AI. Next, they decided on an FI-wide effort, one project to pull together all their AI initiatives. And one project manager to manage logistics. And one ring to, sorry, different storyline…. They realize making AI a success is going to take “people” resources, and they need to get organized, fast.
Searching for AI Vendors. There are a lot of vendors with AI capabilities. Out of the 120 vendors behind the live case studies in the SFAI archive, 18 alone focus on the area of compliance. Many are incumbent vendors. These vendors are adding AI to their product. They have a roadmap and on the roadmap are enhancements that qualify as AI. The new vendors, some 50% of the total, usually have some underlying AI tech and repurposed it into an application in a specific area like compliance or fraud monitoring. They went from tool to app, a common software evolution story (it’s harder to sell tools).
Roadmap It. For a financial institution, this task of managing AI is, in actuality, a task of managing vendors. All FI’s are dependent on dozens of tech vendors. Each one is working on adding AI. A simple way for an FI to start on their AI journey is by asking all their key vendors for an AI roadmap. They have them ready. Then, chose what to implement, based on priorities, etc. Easy peasy. You got AI.
Ah, it sounds so easy when it’s not your job to do. When you’re outside. When you’re writing oft ignored commentary. AI is here and the boards are in a place to drive and demand change from their organizations. The hype can be paired away, success metric defined, and progress made. Demand roadmaps from your vendors and get going as the race is on, yes, I did it, another GD reference. I think the lyric goes “the race is on and here comes AI in the backstretch, Board ache's goin' to the inside, my fears (of AI) are holdin' back they're tryin' not to fall”…. Oh, it must be the Ventura sunshine