At this point in the relatively short life of artificial intelligence (AI), we’ve heard many different angles of the banking story. It has been called a job killer and a job creator. It has established itself as an excellent fraud detection application but requires human intervention to keep it on track. It even earned an entire section in this year’s letter to JPMorgan Chase shareholders from CEO Jamie Dimon, giving a high priority to the bank’s move to the cloud.
But you won’t find any hedging about AI from Lynn “Tut” Fuller, CEO and founder of Capra Bank. The Dubuque, Iowa, community bank just celebrated its first anniversary and grew from $50 million to $300 million during that period.
Fuller — a 15-year veteran of the financial services industry, including a stint at Heartland Financial — sees huge potential for AI in banking. And leading this capability is technology’s ability to handle risk assessment and management without exposing a significant portion of the business to headcount or human error.
“I think in banking you’re dealing with an inherently uneven playing field,” he told PYMNTS recently. “Because we are in a world where there are a lot of complicated rules and regulations that change frequently. And with such a situation, only those who can afford the armies of people and resources can win. And maybe that’s why. Many great communities have lost their community banks.
“What AI has done is bring in a highly skilled risk professional to monitor and manage processes and procedures better than any small army of risk professionals. And it comes through 13 years of risk data provided by risk professionals.
According to Fuller, the human element in risk management is fraught with bias and sometimes costly mistakes. The bank he founded prides himself on implementing the latest integrated tech platforms tailored to his target market segments and teaming up with proven banking talent who are locally empowered.
Fuller is confident about his bank’s future, in part because the pandemic he believes has eliminated the need for an extreme branch presence. That required scaling within the structure he set up for Capra, leveraging the technology and tools of the big banks, local decision-making and the quick turnaround times of the best local community banks.
This ability to scale without losing high-quality risk assessment and management was recently boosted at Capra. Hapaxwhich has announced its new AI tool designed specifically for the financial services sector.
Hapax System AI leverages an exclusive data set acquired through a partnership with CBANC, including over 20,000 documents, over 10,000 hours of video, and over 230,000 in-depth conversations between bankers, questions and answers. are This dataset ensures that the tool’s responses are both relevant and verifiable, addressing unique industry challenges, particularly in the compliance and regulatory areas.
Already adopted in the beta program by more than 20 banks, including Capra and American Bank of Commerce, Hapax has secured more than $2.6 million in funding from RHS Investments.
As Fuller said, Hapax AI aims to democratize access to critical regulatory information, leveling the playing field between large and small financial institutions. According to Hapax, the biggest set of questions from the first customers is around compliance. However, customers are also increasingly demonstrating that the tool will be used across all bank functions, marketing, internal communications and policies, and vendor vetting in all possible applications.
Having AI on board will be a competitive factor for Fuller and his team. He also believes that its availability will allow community banks to compete with larger institutions in general. For him, it also represents a full-circle moment in his career, after attending medical school at the University of Michigan as well as business school and working at major companies from Bain to Heartland. .
“I’m big on the community banking space,” he said. “And I think there are a lot of people who agree with me. Community banks are very important. And I don’t think people understand their importance until they’re lost. And when I say Lost, I mean I’ve seen so many times where you can tell how good the community banks are in a city, just by driving through the city. And we have to do something to end that.’ ‘