By Ray Birch
MADISON, Wis.–Mark Meyer recognizes that artificial intelligence is going to deeply affect financial services, disrupting everything from payments to members who no longer need auto loans—and believes it’s time for credit unions to pause to truly think through what the new technology may mean.
“I do think it's fundamental that we all understand what the technology is and how it works,” said Meyer, CEO of the Filene Research Institute. “This is very similar to what we experienced a decade ago with blockchain. When it started showing up, fully understanding what is distributed ledger technology was essential.”
Meyer pointed out that with a good understanding of blockc and are being developed with inside and outside the movement.
Taking a Pause
As part of that, he said, “We need to pause to seek to understand what machine learning is and what is artificial intelligence. I've heard the phrase augmented intelligence, because we are still in its infancy of utilization, learning what enables it and how it works.”
Meyer’s comments are appearing here as part of a CUToday.info series examining what new breakthroughs in AI will likely mean for credit unions, financial services and the broader markets.
Meyer said that in addition to the need to gain greater knowledge of AI, it is just as important to establish safety nets and guardrails.
“As we see this technology being introduced, what are the bumpers and boundaries that we're going to put into place around utilization?” he asked. “First and foremost is safety and soundness and protection of members’ identities and their PPI data. So, making sure that as we see AI being incorporated, what are our policies underneath that?”
Not a Perfect Solution
Meyer also reminded that AI is anything but a perfect technology.
“We also need to recognize that AI contains data from human beings. Therefore, there will be biases in it,” he reminded. “A couple of years ago Filene did a report on the potential ethical implications on overutilization of AI in financial services and the unintended biases in outcomes that could be harmful to members. Understanding how you will protect your members’ data as you employ AI is essential.”
That understanding must include how credit union employees will interact with and deploy artificial intelligence.
Where to Turn First
“One of the things we did at Filene is we asked our interns—we have about a half-dozen of them. They're already college students. They're already using AI. At Filene, it's very critical that our organization understands how we will eventually adopt and incorporate AI into our research,” he said. “So, we turned first to those who are already using it in a research setting.”
What are the best use-cases for AI in financial services?
“I don't personally have those answers, but I think that's where we need to shine a light,” he said. “For instance, to augment interview questions for talent or to augment job descriptions. Perhaps writing code, which could be an efficiency play. Possibly those would be great use cases.”
Meyer described AI as performing like a Google search on “hyperdrive.”
Mark Meyer
“Currently, if I would like to buy a nice gift for my dad, Google results are going to bring things up that are going to be very sponsored; who pays the most to be higher,” he explained. “So, I would be likely to purchase something that may or may not be very personalized to my father—not in the way AI could powerfully aggregate more information--especially with instructions about my father--and give me back a more personalized gift than what I could find on Google.”
The Relevant Issue
Meyer said the reason that’s relevant for CUs is it involves payments.
“How we purchase and how we're going to be influenced in purchases is going to change,” he said. “When you look at that main touchpoint for the consumer and how they use their financial services, it's the payments mechanism and how we pay, and where the payment is tied and tethered. That is where a new form of purchasing and payment will probably evolve in the next two years.
“If I were to speculate, the implications could be very broad as too how that new payment transaction happens,” continued Meyer. “If it's outside the walls of the credit union, it could be disintermediation in financial services. So, how you are evolving and modernizing your payments, and your payments partners, is going to be very critical. This could accelerate disruption of payments.”
Who Needs an Auto Loan?
Meyer said AI could also affect auto lending by hastening consumers’ move away from buying and owning cars.
“Again, this is speculative, but AI could further accelerate the opportunity for driverless cars, which could further accelerate the appeal of automobile subscription based car services,” Meyer said. “And that would disrupt the automobile lending opportunity.”
Meyer said when it comes to artificial intelligence, credit unions are going to likely have to learn to play together.
“For example, Origence might be able to pull solutions together to keep credit unions competitive, such as, ‘We have an amazing fleet of credit union cars you can subscribe to across the nation’.”
The Unanswered Question
Meyer said it is hard to predict whether AI will benefit the large or small CUs, saying deep pockets could help larger organizations, yet AI could also begin to level the entire playing field, helping smaller credit unions.
Meyer concluded by saying AI could have the same, or greater, impact on people’s lives as have cell phones, noting that smartphones now dominate consumers’ daily activities.