Expert: AI will help banks manage inflation, competition

Artificial intelligence offers banks the chance to do more with less at a time when inflation is eating into profits, said Andrew Busch, global market strategist for BMO Financial Group’s Chicago-based investment banking division. .Speaking June 10 during the Minnesota Bankers Association conference in Brainerd, Busch said AI frees up time for new hires to be more efficient and proficient while focusing on higher-level work. He sees the advancement of AI as part of a longer-term trend of technology taking away some jobs while adding other positions. “This is a way to be more productive, more efficient and generate more profits,” he added.The Trump administration has directed regulators to promote AI innovation over regulation and created a research and development plan for the emerging technology. He has also proposed a moratorium on state and local regulation of AI for a decade.Busch cautioned bankers that they still must understand what AI can do and the value they want to generate from the emerging technology. He predicted that agentic AI — a structure or stack of the technology that connects to each other as autonomous decision-makers such as a chatbot — will eliminate less-valuable work at banks. Commercial banking examples for AI include automating end-to-end credit application reviews; client relationship intelligence agents; portfolio testing; and commercial onboarding. Busch’s hourlong presentation also touched on the economy. He listed China’s economic downturn as a top economic factor for this year. The country is going through a major housing crisis as the country’s housing market has been in a downturn since late 2020. China has adopted electric vehicles at a much faster pace than the rest of the world, Busch said, so its demand for gas and oil is down significantly. The United States has underbuilt for single-family homes by a half-million on an annualized basis since the foreclosure crisis of the late 2000s. Busch also spoke of longer-term risks such as high U.S. debt, including the future of Social Security and Medicare along with rising insurance costs amid worsening climate volatility. Trump has announced a 10 percent tariff on all U.S. imports. This week, he announced a deal with China in which the US would impose 55 percent tariffs on Chinese goods. He recently said he would send letters to trading partners soon to set unilateral tariff rates. Busch said the Federal Reserve remains hesitant to cut interest rates because of the tariffs.The United States is heavily dependent on consumer spending with it consisting of 70 percent of the economy. That’s higher than 52 percent in the European Union. Busch said Trump is utilizing Congress abdicating many of their trade tools to the executive branch. CPI inflation was measured at 2.3 percent in April, while shelter inflation grew 4 percent. Though Busch acknowledged slowing inflation, he said prices are still much higher than average.