First Bank’s selective AI strategy reflects small-bank constraints

First Bank, based in Hamilton, New Jersey, holds $4.05 billion in assets and ranks 11th among the state’s 49 headquartered banks, according to American Banker. President and CEO Patrick Ryan, who helped found the bank in 2007, is prioritizing personal ties with mostly small-business customers over a rapid rollout of new banking technology.

“We have to make sure we're not making things inconvenient for [customers],” Ryan told American Banker. “But we're not trying to win on bells and whistles.”

Ryan said some small businesses choose a bank based on relationships rather than technology. He said First Bank’s customers are a little bit older, so the bank relies on those established connections.

The choice puts retention ahead of a technology spending race. Large banks are devoting more money to agentic AI, embedded finance and real-time payments than First Bank’s total size, Ryan told American Banker.

What is First Bank changing?

First Bank has added AI tools that make it easier for customers to sign up for online banking and apply for loans. Ryan said the aim is to keep those customers from coming into a branch.

The bank recently added middleware from Cordex to augment its core banking technology from Fiserv. The addition enables embedded payments and creates a path to more digital payment and e-commerce options available through fintechs.

First Bank is also preparing its payment systems to support FedNow and The Clearing House’s real-time payment rails. It is well behind the typical adoption pace for FedNow and the RTP network, Ryan said.

Ryan said client demand for those options is still evolving, so there is no rush. He called being a fast follower a prudent strategy and expects some of the changes to become table stakes.

Ryan said First Bank is still learning about agentic AI. Its small-business client base does not have an appetite for the technology right now, and the bank wants clear demand before it moves.

The bank is considering new tools, including advanced AI, as its clients’ needs evolve. That timing keeps customer demand, rather than competitive pressure, at the center of its technology strategy.

How large is First Bank?

First Bank reported $3.32 billion in deposits, up 4.9% from 2025, and $3.33 billion in loans, up 1.1%. Assets rose 0.5% from 2025.

The majority of the bank’s business comes from small companies within its footprint. Its marketing materials emphasize local ties rather than technological capabilities, matching Ryan’s account of an older customer base. Branches in the Philadelphia suburbs of New Jersey and Pennsylvania, plus a Florida presence, define that footprint.

Ryan said First Bank does not want customers to jump quickly for another bank or a fintech after it has built quality relationships.

How widely are small banks using AI?

An IDC survey conducted on behalf of SAS found uneven AI use among small financial institutions. Information technology leads the list, followed by finance and risk, marketing, customer service and product development.

• 64% use AI in IT.
• 47% use it in finance and risk.
• 44% use it in marketing.
• 42% use it in customer service.
• 39% use it in product development.

Thirty-nine percent said their infrastructure was not ready for broader AI deployment, or that the cost was too high. Thirty-three percent cited the lack of a unified data, analytics and AI platform among their AI challenges.

The distribution shows that adoption is real but uneven. It does not show that smaller lenders have solved the infrastructure and data work required for broader deployment.

What can small banks build together?

Shawn Main, executive vice president and chief business architect for the $5.4 billion-asset Vantage Bank, argued for more collaboration among small banks and credit unions. He made the case at American Banker’s small business banking conference.

Along with Custodia Bank, Vantage Bank helped develop The Hazel Network, a platform for community banks and credit unions to develop new uses for emerging financial products. Those products include tokenized deposits and stablecoins.

Main said institutions need a way to adopt technology faster without taking on substantial risk. Shared platforms let them experiment and learn while building the operational capacity to support new products.

He called that capacity operational muscle and said it is the most important thing. The emphasis is not on acquiring a single technology; it is on creating the staff and systems that can run it.

Why does faster AI content still create a backlog?

Elizabeth Gujral, a director at Cornerstone Advisors, said AI has made it easy to produce content quickly, but the compliance burden remains. She co-authored Speed Is a Revenue Strategy: How AI Agents Accelerate Bank Marketing, a report commissioned by Persado.

At one $3 billion-asset institution that Cornerstone worked with, a single person supported marketing reviews on top of other compliance duties. A larger bank can staff that review queue; a smaller one cannot, so faster content creation mostly means a longer backlog.

“An agent that acts on a customer's signal in real time only helps if review keeps pace,” Gujral said.

Data connectivity presents another constraint. One $3 billion credit union interviewed by Cornerstone spent eight months connecting its analytics platform to core data and its marketing system before it could run a handful of always-on campaigns.

Gujral said smaller institutions have fewer people to perform that integration work. They can also restructure staff faster than a large bank can, which gives them an advantage when they decide to change operating models.

One marketing leader she spoke with embedded a compliance team member inside marketing. Campaigns were shaped before they reached formal review, so faster production did not leave the same queue for formal approval.

What comes next for First Bank?

First Bank’s approach remains measured. Ryan said the bank is considering advanced AI as client needs evolve, while its preparations for FedNow and real-time payments continue. The next expansion will depend on what customers ask for, not on a deadline to match larger competitors.

For smaller banks, Gujral’s warning is the practical constraint. Faster AI output has value only when review and integration can keep pace, and staffing determines whether those systems can actually work. That makes customer demand, rather than a technology deadline, the deciding factor for First Bank’s next AI and payments rollout.