“AI doesn’t just optimize — it transforms. It flattens hierarchy, demands transparency, and dismantles traditional power structures. For those managers who thrive on gatekeeping, AI represents a fundamental threat, eliminating barriers they’ve spent careers building.”
-Entrepreneur Magazine, 12/24
In his most recent shareholder letter, JP Morgan Chase CEO Jamie Dimon called for his team to stay “innovative, ambitious, and disciplined while eliminating complacency, arrogance, and bureaucracy.” It seems many bankers like Dimon have been jolted by the historic disruption caused by the creation of DOGE under the new administration. Many wonder if artificial intelligence (AI) will be the catalyst that breaks down the operations, compliance, and siloed information challenges that have clogged the arteries of banking organizations for decades.
The short answer for most banks is a resounding “No”!
AI will not end bureaucracy simply because there will still be too many humans running around. With all the robots reporting to humans, those pesky, carbon-based life forms will always find creative ways to let ego, rivalry, and insecurity make things more difficult than they need to be.
However, while AI will not eliminate human dysfunction, it can and should be a breakthrough motivator for management to drive next-level efficiencies and operating leverage for their organizations.
Here’s a fun fact, Gonzobankers: In the past five years, the banking industry has grown assets by 30%, from $18.5 trillion to $24 trillion, while total employees have remained flat from five years ago at just over 2 million workers. This leverage increased industry assets per employee to $11.7 million at the end of 2024.
Think about it. How did the industry add $5.5 trillion of assets without adding more humans? Most likely, this operating leverage was achieved with a combination of increased digital self-service, branch closings, back-office scale economies, new effective data models, and competitive pressure from shadow banking and fintech innovators.
Like Dimon’s call-to-action, bank CEOs should challenge their teams to strive for historic improvements in operating leverage over the next five years. Here are two major challenges CEOs should lay down:
- How can our bank grow 30% to 40% in the next five years and end up with the same FTE count, albeit not necessarily the same FTE?
- How can we consistently grow our operating revenue 3% to 4% higher than our operating expenses in the next five years?
Instead, the winners will focus AI on a word Cornerstone Chief Research Officer Ron Shevlin gushes about: creativity. The “smarter banks” of the future will be those organizations that focus on constant exploration and experimentation with AI – starting right now.
Think of it this way:
- The PC democratized computing
- The internet democratized information
- Mobile technology democratized access
- Social media democratized influence
And now … AI will democratize innovation.
We’ve seen banks like SouthState and fintech players like Intuit leaning into new ways to deliver financial services with AI. Instead of positioning it as a shiny new technology, bank leaders should educate and challenge their middle managers to learn AI fundamentals and the specific tools and vendors that will transform their business areas. Instead of hoping for techies alone to understand potential breakthroughs, the leaders of marketing, contact center, compliance, legal, finance, and human resources need to be digging into the gritty details of tools and ways of doing work.
This shift in a manager’s role from hierarchical gatekeeper to enabling continuous improvement is crucial for how winners will become Smarter Banks. Today, the banking industry wastes way too much employee compensation on excess “management” time that adds little franchise value. A key reason for this wastefulness has been the chaotic data environments at banks.
In Cornerstone’s What Going On In Banking 2025 report, only 6% of bank executives felt their organization had a “very effective” data strategy, and 49% said their use of data to improve efficiency has been ineffective. Until banks get their hands around data, too much employee bandwidth will be wasted determining what information is true and what decisions need to be made.
So, leaders should never waste a transformational moment with the present-day AI boom. 2025 is a great time to seriously:
- Get the bank’s data into reasonable shape with categorization/indexing/scalability to support models and agents using the data in the future
- Force managers to dig into the workings of AI and then get creative with how it can be applied to their business areas with specific vendors and tools in the market
- Question the value-add and span of control of each management layer and position. Begin to define what a flatter organization with teams working autonomously and providing transparent performance data could look like
Experienced executives know that with no opposition, bureaucracy tends to creep into organizations and lay its roots eternally. There is a huge opportunity for bankers to achieve a new level of hyper-efficiency by better leveraging and mobilizing the humans these robots will report to. The capabilities and technologies are available to reverse banking’s long history of fostering bureaucratic bloat.
Steve Williams is a founder and chief executive officer of Cornerstone Advisors. Tune in to Steve’s Plugged In podcast and follow him on LinkedIn and X.