PentEdge Brings AI Guardrails to Credit Unions

By John San Filippo

In the rapidly evolving landscape of financial technology, artificial intelligence (AI) has become both a beacon of efficiency and a source of significant anxiety for smaller financial institutions. Lisa Pent, the founder and CEO of PentEdge, recently shared how her firm is addressing this tension by providing credit unions with the tools needed to embrace AI safely and transparently.

Bridging the Service Gap

Lisa Pent

About a year ago, after recognizing a distinct void in the market, Pent founded PentEdge. Having previously worked at large IT professional services firms like ThoughtWorks and Cognizant, she observed those organizations often focused almost exclusively on the top 10 banks and credit unions. Pent wanted to bring that same high-level service to institutions below that top tier.

“I launched the firm wanting to bring the same level of service that those kinds of companies would offer to Morgan Stanley or JP Morgan, for example,” Pent told Finopotamus.

Overcoming the Fear of AI

In speaking with potential clients, Pent discovered a recurring theme: fear of the unknown and, more specifically, fear of regulators. Many credit union leaders worry that adopting AI without the proper staff or oversight could negatively impact their regulatory ratings. Pent recounted a conversation with a financial institution CEO during a conference boat trip where this concern became clear.

“The regulators could come in and say, ‘Gee, you know, we really wish you would digitize ABC,’” Pent said. She noted that the CEO asked, “Could that possibly cause us to bring our rating down?”

In response, PentEdge developed a message centered on “AI with guardrails.” The goal is to show institutions that many AI use cases, such as summarizing board minutes or drafting management discussions, are simply efficiency tools that should not cause regulatory friction.

“Are the regulators going to be concerned that you summarized those minutes using an AI tool?” Pent asked. “No, they’re not. That’s just making yourself more efficient.”

A Regulator-Friendly Dashboard

The centerpiece of PentEdge’s offering is a tool that identifies AI touchpoints within an institution’s existing vendor ecosystem. By ingesting vendor spend data, the tool creates a comprehensive view of where AI is running – even in legacy software that may have added AI features years after the initial purchase.

“What I’m really hoping to do is to help bring some of these institutions into a comfort level with AI by helping them with a tool that shows them exactly where AI is being used in their environment, and then have that tool be something that produces a regulator-friendly dashboard,” Pent explained.

The tool also generates a risk score, which can be mitigated by documenting “human-in-the-loop” processes. Pent used the example of loan processing software to illustrate this point. “A human makes the yes or no decision,” Pent said. “The mitigant is that they always have a human in the loop to make the final decision, or they don’t take the recommendation full stop, and then that produces, essentially, a risk score that they can then share with the regulators.”

Driving Efficiency Through Transparency

Beyond risk management, the PentEdge tool offers a potential financial upside by identifying duplicative software. Pent noted that many financial institutions are hesitant to remove old software, leading to unnecessary costs.

“[The software] has the potential to be completely self-funding because of the savings that you get if you identify duplication across different vendors that you’re using today,” Pent said.

Credit Unions Needed

PentEdge is currently seeking additional partners for its early adopter cohort. These partners receive a tailored financial package in exchange for providing feedback during the product development journey. Deployment typically takes only a few weeks, and Pent emphasized that the tool is designed to be exceptionally user-friendly.

Ultimately, Pent’s mission is rooted in the success of the credit union movement. “We at our firm are really passionate about the role that credit unions play in their local economies, and we want to see them thrive,” she said.