It all starts with one candid remark from a commercial lender: “I bet we lose less than 10% of deals because of the time delay… because everybody else stinks too.”

This candid remark points to a hidden cost that very often is not measured enough: the loss of time.

I just came back from several banking conferences and can’t wait to share the insights. This edition runs a bit longer - but I promise it’s worth the read.

The Hidden Cost in Every P&L Line

🔍 What’s going on:
During a panel discussion this week, the moderator of a panel on new technology asked the audience of community banking executives: “How many of you calculate ROI on every piece of technology or software you buy?”

Technology investments don't fit neat formulas. You’re not just buying software - you’re buying faster approvals, better experiences, and staff retention. How do you price the relationship a lender maintains because they’re not buried in paperwork?

One CEO described the operational reality: "People log into a system, they pull a report. If it says do something, they do it. If not, they just save it to show they pulled the report. Takes five to ten minutes per report - a couple hours a day wasted across the team."

Banks aren't measuring it. But they're paying for it.

A CIO at a California community bank explained why: growth added platforms outside the core, and the burden of connecting them fell to business leads who were never trained for integration. People end up working around technology instead of with it - re-keying data, chasing documents, copying between screens.

The recent SBA shutdown made that cost visible. Paper-heavy, sequential workflows that normally seem manageable turned into balance-sheet strain when timing shifted. Everyday inefficiency compounds under pressure.

BayFirst Financial, once Florida’s top SBA lender, reported a $19 million quarterly loss and is now exiting SBA lending after agreeing to sell a $103 million SBA portfolio. That transaction itself is still waiting for SBA processing to resume.

It’s a reminder that every inefficiency compounds under pressure. What looks like small, daily time loss in normal conditions can turn into real balance-sheet strain when the environment changes.

When Time Waste Becomes Talent Loss

The above mentioned Executive VP described what happens when process frustration becomes chronic: “Leads to customer dissatisfaction, lost opportunities, turnover on the customer side, turnover on the banker side. They get frustrated with the process. They don't want to deal with it anymore."

He’d lost three team members in two months: one retired, two left “out of frustration with the process.” Not a people issue. A process issue.

With half the staff he once had, new business can’t grow. So banks compete by poaching talent who bring their book of business - because scaling with manual processes is impossible.

One CEO articulated what many were thinking: "It would be nice to have people who do lower-level work now be free to do more engaging, mentally stimulating work that will help them like their job better and stay with my bank longer."

The question isn't whether to automate. It's whether you'll free your best people before they leave for someone who already has.

Time Loss Creates Coordination Gaps. Coordination Gaps Create Fraud Exposure.

Operational drag quickly becomes risk. When teams are buried in manual work, fraud alerts appear in one system while credit and compliance move ahead in others. No one sees the full picture.

At Money 20/20, Experian's head of operational strategy warned: “We're sitting on precipice of another explosion in fraud with agentic AI coming our way.”

Programs such as FraudGPT now automate document fabrication and social-engineering scams. Meanwhile, deepfakes and synthetic identities now imitate real people so well that static, sequential verification can’t keep up. Modern fraud now deploys camera-injection deepfakes, font-level document edits, and synthetic identities that mature over time until they appear indistinguishable from real customers.

Yet the same AI can defend against those attacks. The opportunity ahead is adaptive trust - continuous, intelligence-driven verification that learns and adjusts with every interaction.

Perfect documentation isn’t a green light anymore — it’s a signal to look closer.

Recent research found over half of small-business lenders detect fraud in up to 10% of applications; smaller institutions see rates above 11%. The rest slip through because no one had time to connect the dots.

Time waste creates coordination gaps. Coordination gaps create fraud exposure. And as experienced staff retire, informal workarounds and outdated permissions quietly expand the window of risk.

The answer isn’t just faster review - it’s synchronized review.

Trust Is the Real Competitive Edge

Community banks have always competed on trust. Customers choose you because they know there’s a person - not a program - behind every decision.

That trust is now being redefined by technology. AI systems are increasingly involved in credit scoring, fraud detection, and underwriting - yet few bankers, customers, or regulators can easily explain how these systems make their decisions. As CFA Institute’s Cheryll-Ann Wilson noted: “If finance professionals and regulators can’t explain how an AI system reached a decision, can they trust it?”

The challenge isn’t accuracy - it’s explainability. Many AI systems deliver decisions without context, turning what should be a transparent process into a black box.

Explainability begins with clarity at intake. When the information feeding a decision - data, documents, and identity checks - is transparent, traceable, and auditable, the outcomes that follow can be confidently defended.

The next wave of resilience, as Fintech Magazine highlights, will come from “re-imagining identity as a dynamic, intelligent, and ethically governed system”- one where AI strengthens digital trust rather than erodes it.

💡 Why it matters: Regulators are already demanding explainable AI. Tools that automate decisions without visible logic risk compliance exposure and erode the very trust community banks are built on.

⚡ Action Step: Treat transparency as a risk-control function, not an afterthought. Map which decisions in your process are human-led, which are machine-assisted, and where explainability breaks down. True trust in AI starts with clean, comprehensible inputs — not just faster outputs.

The Risk of Standing Still

The Bank Policy Institute recently spotlighted a growing concern: regulatory inertia. As AI adoption accelerates, criminals move faster than compliance cycles.

Waiting for perfect guidance isn’t safety. It’s exposure. As Heather Hogsett, Executive Vice President and Head of BITS at the Bank Policy Institute, stated: “Artificial intelligence is causing a seismic shift in society, and it requires an equally fundamental shift in bank oversight - one that acknowledges the risk to the banking system from inaction.”

In its broader statement, the BPI emphasized that failure to update banks’ toolkits for fraud detection, illicit finance prevention, and cybersecurity can pose equal or greater risk than adopting new technologies - calling for reforms to supervisory requirements that currently slow AI deployment.

A technology consultant at the conference put it clearly: "AI won't replace decisioning in community banking. There's that thing we call our gut - you're never going to build that into AI. But AI as a process improvement tool can drive better efficiency ratios while keeping good community bankers in place."

💡 Why it matters: Bank exam frameworks were built for a slower era. When defensive AI is delayed by months of validation, adversaries get a head start. Regulators and banks alike must now account for the risk of inaction.

⚡ Action Step: View innovation as risk mitigation. Start small - pilot explainable AI tools in lower-risk use cases and document results. The lesson from recent bank restructurings isn’t “move fast and break things.” It’s “move fast and explain things.”

Regulators are Creating Space to Modernize.

Across agencies, the message is consistent — less process, more purpose.

At the OCC, Comptroller Jonathan Gould has made it a priority to “reduce regulatory burden on community banks” by shifting examinations from checklists to risk-based reviews. The threshold for the Community Bank designation just moved from $10B to $30B in assets, bringing hundreds more institutions under tailored supervision. Examiners are now being trained on AI, stablecoins, and data automation to “get ahead of what’s coming.”

The FDIC is taking the same direction. As one FDIC official put it, “We’re being less process-driven and more core financial risk-focused.” New procedures are cutting documentation requirements for BSA/AML, IT, and model-risk reviews — and raising audit thresholds to ease compliance for smaller banks.

For once, the window isn’t closing; it’s open.

As one CIO on the regulatory panel put it: “Once you get key agents of change looking at specific business problems, fear disappears. Pick a simple business problem, low-hanging fruit. People will see - hey, this makes sense, it’s a tool.”

💡 Why it matters: Regulators are signaling flexibility, not friction. The institutions that act now can modernize safely under that umbrella instead of reacting later under pressure.

⚡ Action Step: Start with one narrow workflow - document validation, data reconciliation, or intake visibility. Prove efficiency, show compliance lift, and expand from there.

How to Build a Practical ROI Roadmap

Community banks win on relationships - but relationships take time, and time is what manual work steals.

A panelist said it best: “The biggest miss in ROI is time. What do we recover when we make things easier?”

That’s the real calculation: time reclaimed, talent retained, and fraud prevented.

1️⃣ Hours Reclaimed Quantify hours lost to non-value-added work - report pulling, data re-entry, document chasing. Multiply by loaded salary. That’s baseline waste.

2️⃣ Talent Retained As one CEO put it, “Free people from lower-level work so they can do more engaging, mentally stimulating work that helps them stay longer.”

Retention keeps not just staff but relationships.

3️⃣ Opportunity Cost Avoided The cost of inaction equals lost deals and rising fraud risk.

💡 Why it matters: ROI isn’t a spreadsheet - it’s a story about time, trust, and the ability to serve faster without burning out staff.

⚡ Action Step: Before the next tech decision, define what success looks like. Then measure the difference in hours, engagement, and outcomes - not just expenses.

🦊 ZorroFi insight

As one banker put it, the real opportunity isn’t just speed — it’s connecting efficiency with experience.

ZorroFi helps bring that connection to life. By validating documents, fraud signals, and compliance data at intake, it turns disconnected steps into one coordinated flow.

When teams move in sync, customers notice - and that’s where community banks win loyalty.

💡 Want to Dive Deeper?

Demo: I work with CDFIs, community banks, and credit unions on modernizing lending. Want to learn more?

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📅 Next newsletter drops Tuesday, 11/11.