The Future of AI in Small Business Banking With Jeremy Hodges

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TL;DR:

• Live Oak Bank differentiates itself by combining fintech innovation with personalized, high-touch support for small businesses.
• AI and automation are enhancing backend operations, allowing employees to spend more time helping customers rather than processing paperwork.
• The bank prioritizes a human-first approach, ensuring AI is an enabler rather than a replacement for customer relationships.
• Live Oak’s high-yield savings accounts and SBA lending expertise provide small businesses with better financial options than traditional banks.
• AI-driven process automation streamlines loan applications, document handling, and customer follow-ups while maintaining transparency and trust.

Before we dive into the key takeaways from this episode, be sure to catch the full episode here:

Meet Jeremy - CTO of Live Oak Bank

Jeremy Hodges, CTO of Live Oak Bank, is redefining how artificial intelligence and technology serve small businesses in banking.

With a background in both startups and enterprise technology, he’s focused on integrating automation and AI to enhance—not replace—the human connection that sets Live Oak apart.

Under his leadership, Live Oak has streamlined lending processes, optimized customer service through AI-powered tools, and maintained a high-touch approach that helps small businesses thrive.

His product-first mindset ensures that technology investments directly address business pain points, creating efficiency without sacrificing personal service.

Committed to innovation, AI implementation in banking services should foster collaboration between technology and business leaders, ensuring AI is implemented thoughtfully and responsibly.

He believes that by treating every customer like the only customer, Live Oak Bank can deliver financial solutions that truly make a difference

How Live Oak Bank Stands Out From Traditional Banks

Live Oak Bank sets itself apart from traditional banking giants like JP Morgan and Bank of America by prioritizing small businesses.

Unlike large financial institutions, which often overlook smaller clients, Live Oak offers a highly personalized experience with dedicated vertical-specific experts.

Whether it’s veterinary clinics or self-storage businesses, Live Oak’s specialists understand the unique needs of each industry, providing tailored financial guidance.

The bank's commitment to customer service extends beyond digital interactions—its team has been known to fly out to meet business owners in person.

This hands-on approach, combined with its fintech-driven operational model, allows Live Oak to move faster and offer more flexibility than traditional banks, helping small businesses access the capital they need without unnecessary hurdles.

Modern Banking AI—Without Losing the Human Touch

Live Oak Bank embraces artificial intelligence as a tool to support human relationships, not replace them.

Jeremy Hodges emphasizes that AI should free up employees’ time for more meaningful customer interactions rather than becoming a barrier between clients and bankers.

“AI can automate, but human relationships still matter most.” — Ankur Patel

The bank's approach ensures that when customers call, they are connected to a real person first.

However, if wait times increase, AI-driven automation provides an option to handle certain tasks while keeping a human-first approach.

Artificial intelligence is also being used to assist employees by automating follow-ups and document collection, but the initial customer interactions remain human-driven.

Live Oak is committed to transparency, ensuring customers always know when they are engaging with AI while maintaining their ability to request a live representative at any point.

How AI and Automation Help Small Businesses Secure Funding Faster

Live Oak Bank’s SBA lending expertise is a key differentiator, and AI is playing an increasing role in making loan processing faster and more efficient.

The bank has a digitized loan origination system, which was initially built and spun out from Live Oak itself, allowing loan officers to work more efficiently.

AI and banking automation eliminate repetitive tasks, enabling employees to focus on assisting business owners rather than dealing with cumbersome paperwork.

Jeremy notes that artificial intelligence is also helping the bank challenge existing workflows by questioning whether each step in the process is necessary.

This approach speeds up approvals and funding times, helping small businesses access capital more quickly than they would through traditional banks that rely on manual, paper-heavy processes.

Why High-Yield Business Accounts Should Be the Norm, Not the Exception

Unlike large banks that offer low or zero-yield business accounts, Live Oak Bank has always provided high-interest savings and CDs for small businesses.

Jeremy explains that big banks struggle to shift away from their traditional models, making it difficult for them to provide competitive yields.

Live Oak, being a digital-first bank, designed its system differently from the start, making it easier to pass higher yields to customers.

This focus on offering competitive rates ensures that small businesses maximize their financial resources rather than leaving money idle in non-yielding accounts.

Jeremy also points out that market trends are slowly forcing traditional banks to adapt, but Live Oak remains ahead by maintaining its long-standing commitment to high-yield offerings.

The Power of Specialized Lending: How Live Oak Masters SBA Loans

Live Oak Bank is the largest SBA 7(a) lender by dollar volume, and its deep expertise in government-backed small business lending sets it apart from competitors.

Jeremy highlights that, unlike traditional banks, where SBA loans are just one of many offerings, Live Oak specializes exclusively in SBA lending.

Their loan officers are highly trained in SBA guidelines and requirements, ensuring a smoother, faster process for borrowers.

The bank also works closely with the SBA and has developed proprietary digital systems that streamline loan origination and approval.

By focusing entirely on SBA lending, Live Oak ensures faster decisions, clearer communication, and better guidance for business owners, making it a leader in small business financing.

Balancing AI and Human Expertise: A Blueprint for Digital Banking

Jeremy stresses that artificial intelligence should be used to enhance human expertise, not replace it.

At Live Oak, automation handles routine tasks, such as document management and process tracking, freeing up employees to provide high-touch service.

The bank also uses AI for workflow efficiency, ensuring loan officers and customer service teams can quickly access relevant customer data.

Artificial intelligence also helps small business owners by allowing them to interact with the bank at any time, even outside regular hours.

However, Jeremy is clear that AI models will never be a replacement for personal relationships, ensuring that every customer interaction retains a human-first approach.

This balance between AI-driven efficiency and expert human support defines Live Oak’s digital banking strategy.

Avoiding AI Hype: How to Invest in the Right Tech for Business Impact

Many companies rush to adopt artificial intelligence just to stay ahead, but Jeremy warns against implementing AI for AI’s sake.

He highlights that businesses should first identify pain points before investing in AI technologies. At Live Oak, AI is introduced only where it provides measurable benefits, such as reducing administrative work or improving process efficiency.

Jeremy also notes that many large-scale tech projects fail because they don’t align with actual business needs. Instead of following the hype, Live Oak focuses on solving real problems, such as reducing loan processing time and improving customer service workflows.

By ensuring AI investments are business-driven rather than tech-driven, Live Oak avoids costly missteps and maximizes impact.

What’s Next? The Future of AI in Small Business Banking

Jeremy acknowledges that AI in the banking sector is still in its early stages, and what works today might look completely different in 12–18 months.

However, he sees significant potential for AI to streamline backend operations, automate repetitive workflows, and personalize banking experiences at scale.

“Personalization at scale is the real AI opportunity in banking.” — Ankur Patel

Future AI advancements could include more intelligent loan processing, improvements in real-time customer support, and better predictive financial insights.

Live Oak is also exploring agentic AI, which can take autonomous actions, further simplifying lending and operational tasks.

“We use AI to simplify processes, not to remove people.” — Jeremy Hodges

However, Jeremy emphasizes that AI must always align with business needs, ensuring it enhances—not replaces—the personal relationships that define Live Oak’s service model.

Want to learn more about AI’s vision in the community-focused banking industry? Check out this episode on the future of credit unions: practical strategies for adoption and success with Shawn Dunn.