AI and Small Business Banking: Opportunities and Fraud Risks

Artificial intelligence has grown rapidly over the past year, and its influence on small business banking is significant. It’s important for businesses to be aware of both AI’s positive and negative effects.

On one hand, AI tools are helping business owners save considerable time. Automated bookkeeping identifies unusual transactions, cash flow forecasting detects potential shortfalls before they become problems, and fraud alerts are increasingly built into existing bank accounts. For owners who single-handedly manage bookkeeping, forecasting, and vendor relationships, as many do, these tools can return a significant number of hours each week.

On the other hand, the same AI capabilities that power these tools also power scams aimed directly at small businesses. Fraud losses tied to business email compromise and wire transfer fraud rose sharply over the past year, and small businesses remain a preferred target because their defenses are often thinner than those of larger companies.

Where Can AI Help?

The most useful AI tools for small business banking are not flashy. Rather, they automate repetitive administrative work that tends to accumulate when one person is responsible for bookkeeping, forecasting, and vendor management, which is the case for many small businesses.

A few areas in which these tools are proving genuinely useful include the following:

Automated Bookkeeping

Automated platforms now categorize expenses as transactions occur and flag anything unusual, rather than requiring a manual review weeks later during reconciliation.

Cash Flow Forecasting

Rather than estimating whether funds will be available before a large payroll run, these tools analyze transaction history and provide advance warning of potential shortfalls.

Many banks now build transaction monitoring and alerting directly into business accounts, flagging unusual activity as it happens rather than after a statement arrives at the end of the month. The most effective approach is to identify the single process that consumes the most time, often scheduling, bookkeeping, or invoicing, and test one tool against that process specifically. A focused pilot tends to produce better results than a broad rollout.

It is also worth noting that AI performs best on repetitive, rules-based tasks. It is not a substitute for judgment in situations that depend on relationships or context, such as a vendor negotiation or a sensitive client matter.  Human judgment is still critical in these cases.

Where Is AI Being Used Against Small Businesses?

The same technology that streamlines bookkeeping and forecasting is also being used to target small businesses directly. This is not a hypothetical risk. Business email compromise and wire transfer fraud together accounted for well over half of all fraud claims last year, with the average loss per claim reaching well into six figures.

Small businesses are a preferred target, not because attackers believe they hold greater value, but because their defenses tend to be thinner than those of larger companies. Most small business owners either manage cybersecurity themselves or rely on staff without formal training, and relatively few consider their current defenses mature.

A few forms of AI-enabled fraud are worth knowing by name:

Cloned Voices and CEO Fraud

A convincing voice clone can now be created from as little as 30 to 60 seconds of audio, often taken from a podcast interview, a webinar recording, or a marketing video. Attackers use these clones to impersonate an executive or a trusted vendor over the phone.

AI-Generated Phishing Emails

These messages are written to match a target's typical tone and reference real organizational details, allowing them to bypass the obvious red flags that older spam filters were trained to catch.

Fake Video Calls

In more elaborate cases, attackers have used AI-generated video to impersonate executives on a live call in order to authorize a fraudulent transfer.

There are warning signs, even in sophisticated attempts. On a cloned voice call, listen for unnatural pauses or inconsistent pacing, and for background audio that does not match the caller's claimed location, such as a supposed airport call in which the audio sounds too clean.

The Habit That Prevents Most AI-Enabled Scams

Recognizing a deepfake or a cloned voice is difficult, and the technology is only becoming more convincing. For this reason, the most reliable defense is not attempting to detect the fake. It is verifying any unusual request through a separate, trusted channel before acting on it. This approach, known as out-of-band verification, is the foundation of practical payment fraud prevention.

This means that before sending money, sharing credentials, changing payment instructions, or installing new software, business owners should take one additional step to confirm the request through a channel other than the one on which it arrived. If an email requests an urgent wire transfer, call the sender using a known phone number rather than one provided in the email. If a phone call requests a change to payment details, confirm the request in person or through an established point of contact before proceeding.

This single habit, verifying through a separate channel, addresses the majority of AI-enabled scams, regardless of how convincing the voice, email, or video may be. Because urgency and pressure are core tactics in these attacks, a brief pause to confirm is often the most effective safeguard available.

Conclusion

AI brings both real opportunities and real risks to small business banking, often at the same time. It is making everyday tasks such as bookkeeping, forecasting, and fraud monitoring faster and more accessible, while also giving scammers more convincing tools with which to work. Neither trend is likely to reverse, which makes a measured approach the appropriate one: take advantage of the tools that save meaningful time and build the habit of verifying anything unusual before acting on it. This combination, using AI deliberately while remaining alert to how it can be misused, represents the best protection currently available.

Connect With a Business Banking Advisor

Fraud prevention works best when it is built into your day-to-day banking rather than added after a loss. Kearny Bank helps New Jersey business owners put practical safeguards in place, including Positive Pay, ACH filters, and multifactor authentication on wire and ACH transactions. If you would like to review the controls on your business accounts, connect with a Kearny Bank business banking advisor to talk through what makes sense for your business.

Authors

Sumanpreet (Sonia) Kaur

VP/Sales Market Lead

Sonia Kaur is a results-driven banking professional with over 20 years of experience in the financial services industry, specializing in sales, business development, and team coaching. For the past four years, she has been with Kearny Bank, where she has grown significantly in both professional expertise and leadership capability.

Sonia is known for a strong work ethic and genuine passion for the industry, and has built a reputation for coaching and developing high-performing sales teams. She takes pride in mentoring her team, helping them reach their full potential, and fostering a collaborative, growth-oriented work environment.

Driven by a commitment to excellence and continuous improvement, Sonia combines deep industry knowledge with a people-first approach — consistently delivering results while empowering those around her.