The year-and-a-half-long excitement over AI has surely prompted financial institution (FI) boardroom agendas that include the question, “what’s our AI strategy?” But that question doesn’t work for most of the banking industry — for FIs that aren’t investing in AI research and development, it’s too broad to get an actionable answer. A more productive series of questions for most would be “what’s our modernization strategy,” “what tactical steps should we take to modernize,” and “what do modern solutions need to be successful in our environment?” At that point, the conversation can turn to the part AI plays in bank tech.

AI is a category of enabling technologies for solutions that address specific problems. Types of AI are behind point solutions that FIs should already be thinking of for their technology roadmap. Machine learning, for example, is known for its role in robotic process automation for document scanning and processing, biometrics for facial recognition and liveness detection, fraud and AML detection, underwriting, and risk management. Generative AI is increasingly known for its use in next-generation conversational virtual assistants, back-end tasks for customer support, and on the margins, synthetic data for training models.

But the big picture about modernization should come first. Bankers need to think about the customer experience they want to provide, how the FI can become better integrated and more efficient, and the lengths they’re willing to go to make changes to their processes and technology. Core modernization preferences indicate how much may change — respondents to CCG Catalyst’s US Bank Stability and Innovation Survey 2023 preferred to take things slowly by building a middleware or modern architecture infrastructure.

Even by taking baby steps toward infrastructure modernization, FIs will be better prepared to augment their tech stacks. Downstream changes will include point solutions that AI enables, and in the long run, it will mean that FIs are better prepared to integrate data from different lines of business and products. In the end, FIs will unlock data from the bank’s disparate systems and make holistic data usable by all applications, including those that are AI-enabled.

But before bankers can put the FI in motion toward that ideal, they need to come back to the boardroom. The business needs a clear long-term vision, and by extension, a well-thought-out innovation strategy. The right senior management and organizational structure need to be in place to execute the board’s vision. Once those are in place, modernization becomes an option, and leading-edge solutions can become a reality. AI inevitably enables some of those solutions, but it’s an end, not a starting point.