The age of the cognitive credit union
Credit unions are known for their meticulous, personalized care of members. Their smaller size, attentive service and community involvement set them apart from big banks and other huge financial institutions. Now, with the emergence of generative artificial intelligence, credit unions have the opportunity to take their member mission to the next level.
Leveraging AI capabilities to maximize the potential of preexisting data will allow credit unions to care for their members better than ever. If implemented properly and based on a foundation of trust, AI will usher in the age of the cognitive credit union – a credit union that capitalizes on data and digital technologies to proactively serve its members and its community. Credit unions today must prioritize the utilization of AI capabilities so that they can offer their members better products and services at more affordable rates.
Understanding these data points enables organizations to provide hyper-personalized care to each member. At PenFed, 80% of our interactions with members are through digital platforms. Every time they visit and use the website, they leave behind digital forensics that can be used to tailor services to that member. Much of that potential has historically lain dormant, however, as the enormous investment necessary to make that data actionable has predominantly focused on “risk signals.” For example, institutions often look at that data with a certain lens, such as fraud, cybersecurity, compliance or credit risk. With generative AI, credit unions can also unlock that data’s potential for “reward signals” to better serve their members.
Similarly, credit unions can utilize AI capabilities to maximize other available data like card transactions or upcoming events like a certificate renewal by creating predictive and hyper-personalized offers to reward members. Take, for instance, the member who consistently pays off big purchases on a credit card immediately. Instead of reaching out simply to verify that a purchase wasn’t fraudulent, credit unions can use that data to offer the member a preapproved credit line increase or a “one-tap” digital payment option if they are close to their balance limit. Or take the member who has an upcoming certificate renewal but has not chosen to auto-renew. A credit union can proactively reach out to that member and offer a simple digital experience to renew. Credit unions can utilize the available data to both protect and reward their members. AI technologies empower credit unions to take a more holistic approach to data-based customer service.
This paradigm shift is a significant improvement from traditional banking models, where the focus is predominantly on looking for risk or self-serving rewards, to a focus on member rewards. And there is a real opportunity for credit unions to create a “Blue Ocean” strategy, simultaneously pursuing differentiation and low cost. While it may seem paradoxical, consider that most financial institutions today are combing through the same mountain of data in “silo” risk applications, such as cyber risk, fraud risk, credit risk or collections risk. This is extremely expensive. With AI and a comprehensive data strategy, the same data can be used to look for both reward and risk signals.
But with nearly 80% of the public distrusting businesses to use AI responsibly, there is a trust gap that needs to be addressed to be successful in this next transformation. Credit unions can build on the trust advantage they already enjoy by creating a “Trusted AI Platform” to support the responsible use of AI. This platform would address the concerns such as data privacy and retention, intellectual property, AI “hallucinations,” toxicity and bias.
Digital transformations have enabled credit unions to improve member experience and streamline business operations, but are still reactive in many ways. AI will transform the way credit unions do business by giving us the capacity to proactively offer each member a hyper-personalized experience. Beyond the hype, AI is a powerful tool that will only continue to strengthen. By utilizing it early, we can position credit unions for continued success in the future.
This is the age of the cognitive credit union. We have the tools to be more efficient, more customized and more in tune with our members’ needs and how we can meet them. AI allows credit unions to create a place where members belong and where trust is built through a community-minded, holistic model that knows and cares for every member. As leaders, we should always be committed to putting our members first, and utilizing AI technology is the next step toward maximizing our member mission.
