How Banks Can Use AI to Boost Operational Efficiency

In a nutshell 🥥 As the financial industry is facing increasing pressure to optimize operational efficiency in banks to enhance customer experience—all while managing staff shortages—AI presents a game-changing opportunity. By turning it inward to streamline operations, automate repetitive tasks, and support staff by quickly equipping them with the right customer information, banks can boost productivity by up to 30% and drive revenue growth. From AI-powered chatbots to predictive analytics and smart queue management, FIs that embrace AI will position themselves for success in the evolving banking landscape. Below, we explore key AI-driven strategies that can transform your bank’s efficiency and CX.

How AI Can Transform Retail Banking Operations

Retail banks are under increasing pressure to improve operational efficiency, grow deposits, and enhance customer experience—all while managing staff shortages and reducing long lines in branches. Artificial Intelligence (AI) presents a significant opportunity to streamline internal operations and boost productivity, leading to increased revenue and improved customer satisfaction.

Turning AI Inward to Boost Staff Productivity (and CSAT)

Unleashing AI tools on customers comes with inherent risks, particularly when banks struggle with centralizing and structuring their data effectively. Instead, many retail banks can find more immediate value by focusing AI on internal operations.

AI has the potential to automate manual processes, optimize staff workloads, and improve technology-driven initiatives. Research shows that banks can enhance productivity by up to 30% by integrating generative AI into their workflows. Additionally, AI can assist human employees in offering personalized financial advice, tailoring banking products, and streamlining customer onboarding. Banks implementing AI in this way could see revenue growth of 6% or more within three years.

Given ongoing talent shortages in the banking sector, many financial institutions must decide whether to develop in-house AI solutions or leverage third-party platforms. For immediate efficiency gains, outsourcing AI-powered solutions may be the faster and more practical option.

3 ways to use AI in Banking to Improve Operations (with Examples)

1. Use AI like internal chatbots to enhance staff knowledge and service.

AI-powered chatbots can revolutionize internal operations by acting as on-demand assistants for bank employees. These virtual tools can quickly retrieve information, answer complex queries, and improve overall service efficiency by reducing the time staff spend searching for data.

Morgan Stanley introduced an AI chatbot to support its financial advisors by providing instant access to the firm’s knowledge base. The ‘AI @ Morgan Stanley Assistant’ is now used by over 98% of advisor teams, enabling them to respond to client inquiries more efficiently and accurately.

2. Streamline compliance and regulatory processes with generative AI.

Regulatory compliance is a major challenge for banks, requiring extensive document reviews and adherence to evolving legal frameworks. Generative AI can accelerate these processes by analyzing vast amounts of regulatory text, identifying key requirements, and assisting risk teams in making informed decisions.

Industry leader Citigroup Bank leveraged generative AI to analyze over 1,000 pages of new banking regulations. By working alongside risk and compliance teams, AI provided key insights much faster than traditional manual reviews, helping the bank adapt strategically and mitigate future risks.

3. Integrate AI that accelerates IT and legacy banking system upgrades.

Many banks struggle with outdated legacy systems that slow down innovation and efficiency. AI can enhance IT operations by automating coding tasks, optimizing system updates, and facilitating smoother transitions to modern infrastructures.

Goldman Sachs launched internal AI tools to assist its software engineers in writing and testing new code. This approach significantly speeds up the modernization of legacy banking systems while also automating data preparation and integrations for smoother IT transitions.

The Branch of the Future: AI’s Role in Banking Transformation

What exactly is a ‘Branch of the Future’?

The mysterious “branch of the future” is really just a way to describe a modernized banking scenario that integrates optimal technologies, digital banking services, and personalized customer experiences to optimize efficiency branch efficiency, and meet the demands of an increasingly discerning customer base.

These branches focus on:

Seamless digital-physical integration: Customers can transition effortlessly between online banking, mobile apps, and in-branch experiences.

Self-service and automation: AI-driven kiosks, virtual tellers, and biometric authentication enable faster, more convenient transactions.

Flexible staffing models: With AI assisting in routine tasks, bank staff can focus on higher-value interactions like financial consulting and relationship management.

Enhanced customer personalization: AI-driven analytics allow branches to offer tailored financial products, proactive recommendations, and improved service experiences.

How Does AI Fit into a Branch of the Future?

AI is a critical enabler of the branch of the future, improving both customer interactions and internal operations. Key applications include:

AI-Powered Chatbots & Virtual Assistants

These tools handle common inquiries, appointment scheduling, and basic transactions, reducing queues and freeing staff for complex tasks.

Predictive Analytics for Customer Needs

Artificial Intelligence helps banks analyze customer data to anticipate needs, providing targeted product recommendations and proactive support.

Smart Queue & Appointment Systems

AI-powered queue management optimizes customer flow, reducing wait times and improving service efficiency.

Automated Fraud Detection & Security

AI-enhanced security measures, including biometric verification and real-time fraud monitoring, help ensure safer transactions.

AI-Driven Staff Training & Support

AI-powered training tools assist employees in staying up to date on regulations, compliance, and financial products, improving service quality.

By embracing AI, the branch of the future will transform into a dynamic, customer-centric hub that offers a seamless blend of digital convenience and personalized financial guidance.

How to Start Using AI for Internal Banking Efficiency

Retail banking leaders looking to adopt AI to transform their offerings should consider the following initial steps:

Identify manual and repetitive tasks.

Gather input from staff on the most time-consuming processes that could benefit from automation. Paper-based workflows often present the best opportunities for AI-driven transformation.

Explore embedded AI solutions.

Many banking platforms now integrate AI/ML functionalities that can optimize operations without requiring in-house development.

Prioritize compliance from the start.

Embedding risk and regulatory considerations early in the AI implementation process prevents costly rework and compliance issues.

Consider simple automation for quick wins.

AI isn’t the only path to efficiency. Implementing automated reminders, notifications, email summaries, and checklists can save staff time and improve service delivery.

By leveraging AI for internal productivity, banks can mitigate staffing shortages, reduce branch queues, and enhance operational efficiency—ultimately driving loan growth and deposit expansion.

AI Banking Strategies Unlocked: The Essential 2025 Retail Banking Trends Report

The above is a mere preview of strategies covered in Coconut Software’s  2025 Retail Banking Trends Report. It provides credit unions and banks with important insights into innovating the customer experience—and revenue opportunities—on every channel.

In addition to AI strategies, the report covers: 

• Customer-Centric Strategies: Learn how omnichannel service models and personalization can help your bank meet evolving consumer expectations.
• Actionable Insights: Access tactics and checklists that will help get you started with  streamlining digital account openings and higher-value interactions.
• Technological Innovations in Banking: Learn how to leverage the latest in AI, data analytics, and automation to improve operational efficiency, reduce costs, increase bank deposits and become a branch of the future. 
• Powerful Stats and Use Cases: Read real-world stories about how leading banks grow revenue, improve customer experience, and gain a competitive edge.

Whether you’re looking to grow your customer base, stimulate mortgage loan growth, deepen existing relationships, or put more power behind your internal operations, this report will help you take decisive action to position your bank for growth.

*Plus* The 2025 report offers at least three insights that can directly contribute to revenue growth. Unlock the insights now.

Frequently Asked Questions

1. How can AI help grow deposits in banks?

AI can analyze customer behavior and transaction data to personalize offers, suggest tailored financial products, and automate customer outreach, encouraging higher deposit growth. This applies to any omnichannel bank strategy focused on unlocking revenue and recovering missed customer opportunities. 

2. What AI-driven strategies can banks use to increase loan growth?

Banks can use AI to streamline loan application processes, assess credit risk more accurately, and automate loan approvals, making lending more efficient and accessible to customers.

3. How can AI reduce queues in banks?

AI-powered chatbots, virtual assistants, and appointment scheduling systems can handle routine inquiries, freeing up branch staff to focus on complex customer needs and reducing wait times.

4. What AI solutions help address bank staff shortages?

AI-driven automation tools can take over repetitive tasks, while AI-enhanced training programs improve employee efficiency, reducing the impact of staff shortages.

5. Should banks build their own AI tools or use third-party platforms?

The decision depends on available resources and expertise. Banks with limited AI capabilities may benefit from third-party solutions, while larger institutions with dedicated teams can develop custom AI applications tailored to their needs.

Retail banks that embrace AI for internal efficiency will position themselves for stronger growth, improved customer satisfaction, and a competitive advantage in an evolving industry.

6. What are the Business Benefits of Using Tech-First Solutions for Banks?

Retail banks looking to improve operational efficiency and customer experience can gain significant advantages by leveraging third-party solutions for appointment scheduling and queue management to automate time-consuming tasks like customer information look-up, manual appointment scheduling, and manual management of in-branch queues. 

These technologies help streamline branch operations, reduce wait times, and enhance customer satisfaction.

Improved Customer Experience: By implementing third-party queue management and appointment scheduling systems, banks can offer customers a seamless experience. Customers can book appointments online, receive estimated wait times, and avoid long queues, leading to higher satisfaction and increased loyalty.

Increased Operational Efficiency: Automated scheduling and queue management free up branch staff to focus on high-value customer interactions instead of manually handling queues. This optimizes staff productivity, allowing banks to serve more customers without additional hiring.

Data-Driven Insights for Better Decision-Making: These systems generate valuable data on customer flow, peak hours, and service demand trends. Banks can use these insights to optimize staffing levels, reduce bottlenecks, and enhance overall branch performance.

Cost Savings and Revenue Growth: Reducing customer wait times and optimizing staff workloads translates into lower operational costs. Additionally, faster and more efficient service can lead to increased cross-selling opportunities and improved deposit and loan growth. These tools truly capture more high-value banking customers.

Scalability and Flexibility: Third-party solutions offer scalable options that can be customized to fit different branch sizes and customer needs. As banks expand or adjust their service models, these solutions can adapt to changing requirements with minimal disruptions.

And: We know a lot about this! Coconut Software (which specializes in appointment scheduling software, lobby management, and video banking) has supported customers in achieving all of the above.