Editor's Note: This column was included in the Sept. 11 version of The Pulse enewsletter. I was struck by recent reports highlighting how more consumers and small businesses are turning to artificial intelligence for financial advice. .As consumers have less spending power due to inflation, more than half are using AI for financial advice. Consumers turned to the technology most often for saving strategies — 45 percent — and credit-related questions — 41 percent. Fifty-eight percent of small businesses are using generative AI, up from 23 percent two years ago, according to a recent report from the U.S. Chamber of Commerce.Though those statistics seem troubling for community banks, financial institutions still have an important role in the market that advanced technology will not be able to provide: A human touch. This empathetic, customer-first approach is paying off for both small businesses and banks alike, as evidenced by a feature story we ran this month in BankBeat magazine. State Central Bank, a $52 million bank based in southeast Iowa, had been roughed up by loans across the country made during the Great Recession, including one for an unfinished condominium project in Sarasota, Fla. To ensure the project was completed, State Central Bank worked with both the broker and Home Depot. “We have stayed with our customers, and almost went broke doing it,” said President and CEO Dan Logan. Today, State Central Bank has an industry-leading 4.5 percent ROA and remains one of the oldest family-owned businesses in the country. Many of its underperforming loans are now performing, and the bank is now focused on working with local customers. Logan’s quote — along with State Central’s recent financial results — illustrate the success community banks have by providing empathetic, customer-first service. Despite the rise of AI, the need for small businesses to work through problems with trusted, human experts will never change.
