The intelligence is artificial, but the advantages are real

From restaurants to retail, industries where customer service is an integral part their business continue to deal with major staffing shortages. This includes financial services and financial institutions, and by extension, credit unions.

Securing reliable and long-term frontline help devoted to providing member service was difficult even before the COVID outbreak. Following the tidal wave of closures of physical branches that accompanied pandemic lockdown, many member service representatives left for other positions, or simply never came back.

With no end in sight to the staffing crunch, and members demanding a more personalized service experience, credit unions must consider an option many previously thought was too expensive, ‘impersonal’, and too complex to maintain. They must take a serious look at artificial intelligence.

Even for those credit unions where the majority of staff returned to a brick and mortar location, chatbots and other AI platforms can be used to reduce pressure on member service representatives. AI can be used to intercept the most frequently asked (and easily answered) questions, freeing up live member service representatives to concentrate focus and energy on more complex issues and providing the more personalized attention members often say they want.

A Cornerstone Advisors report conducted in January surveyed roughly 300 bank and credit union leaders and found that 30% of credit union respondents have already invested in or deployed chatbots in 2022, with an additional 25% planning to do the same in 2023. By 2028, the financial services industry is expected to spend $86 billion on artificial intelligence. This represents a sevenfold increase from the $12 billion spent in 2020.

This transition to a more digitized form of member service can help to deliver a more seamless experience for the member and increase the overall efficiency of the whole credit union. Chatbots can handle significantly more routine tasks such as balance inquiries, respond to them exponentially faster than humans, and are not limited to business hours. For multi-branch credit unions, the nearly limitless data gathering ability of AI can increase the effectiveness of the entire system by showing how member interaction varies by specific location down to the second.

Reducing stress on employees and having a more efficient allocation of resources may not be the only benefits of joining the AI trend. It could prove a gateway to a future frontier as AI expands its abilities.

A Harvard University research paper recently concluded that predictive modeling could look beyond the parameters of traditional credit scores and uncover “hidden” borrowers that are creditworthy but overlooked. This could mean a whole new subset of potential lending for credit unions.

Almost every segment of the credit union industry could be transformed by the power of AI. New forms of fraud prevention, member acquisition, and risk management are all being developed with built-in AI connectivity. Consumer surveys consistently show members want a more customized experience with their credit union, but the sheer amount of data available at the personal level has reached a point where human processing is not practical. AI can sort and analyze mountains of data to spot new trends in member habits.

There will always be anxiety when standing on the cusp of a powerful new technological advance. Weighing cost versus ROI, in-house versus vendor, technological complexity, and employee training are all factors that can vex management teams. But with data silos continuing to grow with each passing day, committing to artificial intelligence now is a very smart choice.

John Dearing

John Dearing

John Dearing is a managing director at Capstone, a leading advisory firm focused on helping credit unions and CUSOs grow through proactive strategic growth programs and mergers and acquisitions. He ... Web: Details