What Does Winning Look Like at Your Bank? For some banks, it is achieving specific ROE or ROA metrics, while for others, it might be an asset growth target driven by organic growth or M&A transactions. At other banks, it might mean being a good steward of the bank for the benefit of the community or to pass the bank on to future generations in a better position than it was previously. Whatever your bank's goals, technology is a foundational element that can drive success in achieving your goals, or it can be a significant obstacle to overcome to reach your goals.
First, the Obstacles. There are a variety of obstacles banks can face that create impediments to achieving their goals. Some of the most common are as follows:
Your Technology Staff.
Technology has become a much broader field over the past 30 years and one that has become much more specialized. There are specialists in cyber security, infrastructure, project management, data communications, support, and more (including requisite knowledge of the core and application vendors supporting the banking industry).
It is no longer possible to have a single person or two or three who can know everything. Turnover, retirements and the availability of qualified individuals with the appropriate technical skills are all impacting IT departments in the banking industry. Understanding that technology is important; it's critical that interpersonal skills are also present in the tech staff to effectively communicate with the board and CEO so you can make risk-based decisions appropriate for the institution's level of risk tolerance.
Think About Your Tech Staff: The team you rely upon has gotten you to where you are today; are you satisfied with those outcomes? Will this same team be able to get you where you want to go in the future? Is IT staffing optimized for your institution? Are they pushing your objectives forward, or are they stalling them?
Your Vendors.
There are more vendors today offering more products and services for financial institutions than ever before. There are also a record number of unregulated vendors, with no oversight and with limited internal controls. For a weekend read of how a tech firm can fail and, more critically, the impact on the financial institutions they work with, read about the Synapse bankruptcy here (former FDIC Chair Jelena McWilliams was appointed as the bankruptcy trustee[1] in the case) https://www.cnbc.com/2024/06/07/synapse-bankruptcy-trustee-85-million-of-customer-savings-is-missing.html.
Private Equity (PE) firms are also actively buying technology and audit firms that are active in the banking space, and it's not unusual for firms to sell more than once to a succession of PE firms, some of which are based in foreign countries. The risk to financial institutions is in the firm's focus once private equity takes over.
Cyber Attacks
Cyber attackers are constantly looking for ways to access financial institutions, and the biggest and most popular entry point is through email. Cyber attackers are targeting the email accounts of people you know, like, or trust at entities such as trade associations, vendors, auditors, and regulators. (The OCC made two recent announcements about a breach of their email system this year, read more at https://www.occ.gov/news-issuances/news-releases/2025/nr-occ-2025-30.html).
Taking over an email account of an individual at one of these entities allows the attacker to send malicious emails that are actually coming from the email account of the individual account that has been breached – but it is not the person you know that’s sending it – it's the cyber attacker. This attack creates financial, regulatory, legal, and reputational risks. Most impactful is that it takes a significant amount of management time to address the issue over a period of months or years, time which could have been devoted to achieving the bank's strategic goals.
Think About Cyber Risk as a Lender: Different technology and email providers have different levels of risk, the same as different borrowers inherently have differing levels of credit risk. Each provider also has various configuration choices that can increase or decrease risk.
As a lender, the more open your lending policies are, the more likely you are to sustain loan losses. The same is true for choices made regarding technology and email - the more open the platform, the more risk you incur.
Similar to lending, the decision relies on determining how much risk you are comfortable taking and understanding the risks you accept to avoid very unpleasant surprises. If you want to know more about the risks involved with various technology choices and email options, contact us at solutions@bankonitusa.com.
Regulators.
There is more regulatory focus on technology and cyber security than ever before. Why? Regulators are seeing a record number of cyber security breaches at banks, and they are concerned about the risk banks are accepting at Fintech firms. These firms are not regulated and have lax internal controls, and they are concerned about the service deliverable banks receive when the vendors they rely upon sell.
IT Examinations: IT examinations will likely get harder for the above reasons. 53% of examiners classified as "advanced IT subject matter experts" were eligible to retire in 2024[2]. How will the turnover of experienced staff at the regulatory agencies impact your institution? How will a successful cyber-attack, reliability or service issue at a key vendor, or turnover with your IT staff impact your exam?
Opportunities With Technology
The good news is that opportunities are limitless; understanding the risks involved is important. One of those opportunities is creating a vast array of other opportunities that are unknown in their reach and scope.
Artificial Intelligence
Google, Facebook, Airbnb, Uber, and many others (including online banking applications) were companies made possible because of the Internet. Artificial Intelligence (AI) will have the same impact on businesses of all kinds, including banks and other financial institutions all of our lives; there are companies that are not yet in existence today that will be developed due to AI.
You likely have staff using AI (officially or unofficially) in their jobs. Why? Because it makes their job easier. Think of the personal banker using Chat GPT to write a follow-up thank you letter to a new customer or a loan officer using AI to write a credit memo. AI has a multitude of uses that save time. Step one is determining where it is in use, what it is used for, and creating a policy around what is acceptable and what is not.
When considering the use of AI in more advanced forms, first ask your team, "What are we trying to solve for?" Consider Uber. Uber was trying to make it easier for people to get from point A to point B and do it in a more cost-effective way than the traditional options at that time (rent a car, get a taxi, or hire a private driver).
While the focus with AI has been on individual applications such as ChatGPT, the real determining factor for success in using AI is going to be how well it can utilize the use of the an individual institution's information. The various AI engines are much more likely to become commodities. Think about different web browsers such as Safari (Apple), Explorer (Microsoft), or Chrome (Google). While each has differences (and each is optimized to work with their respective owners' other applications such as email or productivity suite of products), they all serve a similar purpose, and it comes down largely to personal preference on which to use.
Is AI Making Us Dumber?
"Tools like GPS and generative AI make us cognitively lazy," said Louisa Dahmani, a neuroscientist at Massachusetts General Hospital, in a recent Wall Street Journal article.[3] Dahmani showed that habitual use of GPS navigation reduces one's spatial memory. A study published in January in the journal Societies found that frequent use of AI tools such as ChatGPT correlated with reduced critical thinking, particularly among younger users. Microsoft researchers also found that those with more confidence in generative AI engaged in less critical thinking when using AI.
All of that having been said, there’s another aspect to AI that’s worth thinking about: it will enable your bank’s employees to work better, faster, smarter than they can on their own.
Bank employees aren’t going to be replaced by AI; they’re going to be armed with tools, the use of which will drive bank service, profitability and growth. What will give an individual employee value will be determined by how well they adapt to and use the thousands of AI tools that are available today to manage their workflows, and that number will increase going forward.
Are you a financial institution Chairman, CEO, or President with questions about technology at your institution? Would you be interested in discussing your bank’s strategy, in confidence, with no obligation. We’re here to help your bank win! Contact us at solutions@bankonitusa.com or 405-653-1920.
[1] https://www.cravath.com/news-insights/us-bankruptcy-court-appoints-jelena-mcwilliams-as-chapter-11-trustee-for-synapse-financial-technologies-inc.html
[2] https://www.fdic.gov/financial-reports/2024-annual-report
[3] https://www.wsj.com/tech/ai/how-i-realized-ai-was-making-me-stupidand-what-i-do-now-5862ac4d?st=bjHtR9&reflink=desktopwebshare_permalink