SAN FRANCISCO–They are two letters that have come to dominate much of the conversation in credit unions, as they have elsewhere—AI—and those conversations have been so far ranging about every aspect of the operation and business model that it seems there is only one place to turn for an answer—AI.
Artificial intelligence. It has engendered hope (ability to cut costs and compete regardless of asset size); fear (new competitors and loss of white collar jobs), amazement (creative marketing approaches) and concerns (AI does make mistakes and has exhibited bias).
CUToday.info has provided extensive and ongoing coverage of AI’s rapid presence in the world in general and credit unions in particular (just go to the CUToday.info search engine and type in “AI” sometime), and today kicks off a series of articles offering both the big picture predictions and the smaller picture ways credit unions and CUSOs are already exploring the technology.
The One Certainty: Uncertainty
The one thing that is certain is there is plenty of uncertainty. Indeed, one recent survey found, for example, that AI is viewed as both the greatest protection against and threat from money laundering.
And yet credit unions are pressing ahead, unsure of what’s around the virtual corner but sure they can’t afford to be left behind.
The race to adopt, respond to and interact with artificial intelligence, of course, received a massive boost with the public release of ChatGPT by OpenAI in late November of 2022, which reached an astonishing 100-million users in just two months. Other similar solutions soon followed, including Google’s Bard AI and Bing Chat.
What ChatGPT Says About Promises, Threats
In exploring the promise and the threat of artificial intelligence on credit unions, it seemed only appropriate to pose that question to ChatGPT. Here is how it responded:
“Artificial Intelligence (AI) technologies like ChatGPT offer both promises and potential threats to credit unions,” ChatGPT responded.
While edited for brevity, here is the overview of the promises and the threats of the technology to credit unions, according to, well, the technology itself:
The Promise
- Enhanced Member Service. “AI-powered chatbots can provide round-the-clock customer support, helping credit unions assist their members more efficiently and effectively.”
- Personalized Assistance. “AI can analyze member data to offer personalized financial advice and product recommendations.”
- Operational Efficiency. “AI can automate various routine tasks such as answering frequently asked questions, processing transactions, and handling administrative tasks.”
- Risk Assessment. “AI algorithms can analyze large volumes of data to assess credit risk more accurately.”
- Fraud Detection. “AI can identify patterns indicative of fraudulent activities.”
The Threat
- Job Displacement. “The automation of tasks through AI could lead to job losses for certain roles, especially those involving repetitive tasks like data entry and basic customer support.
- Data Privacy and Security. “AI systems can potentially be vulnerable to hacking or data breaches, exposing member data to unauthorized access.”
- Bias and Fairness. “AI systems learn from existing data, and if that data contains biases, the AI can inadvertently perpetuate those biases. This could lead to discriminatory practices in lending or customer service.
- Depersonalization of Service. While AI can provide personalized experiences, some members might prefer human interactions for complex or emotionally sensitive matters. Relying solely on AI could lead to a sense of detachment for some members.”
- Technical Dependence and Errors. “Overreliance on AI systems without proper human oversight could lead to errors that might not be caught until they cause significant issues.”
- Initial Costs and Implementation Challenges. Implementing AI systems requires financial investment, training, and integration with existing infrastructure.
‘Balanced Approach Needed’
“In the context of credit unions, a balanced approach is crucial,” ChatGPT stated. “Leveraging AI can enhance member services and operational efficiency, but it should be done with careful consideration of the ethical implications, data security, and the potential impact on employees and member relationships. By addressing these concerns and implementing AI responsibly, credit unions can harness the benefits while minimizing the risks.”
What’s Happening in Credit Unions
In just the past few months CUToday.info has reported on organizations such as:
- Origence, which has used ChatGPT to write code and job descriptions and to boost lending, among other things
- MSUFCU, which has used AI to increase certificate revenueby 1,000%
- Trellance, which has rolled out new natural-language processing and generative AI-powered solutions
- Co-op Solutions, which for several years has been using AI to fight fraud
- Numerous fintechs, many with credit union backing, that have introduced AI-based solutions around numerous applications, especially loan underwriting and predictive modeling
- PSCU, which earlier this year introduced a new intelligent fraud decisions solution
- Glia, which in April announced an AI voice banking feature and virtual assistants
- Dozens of credit unions that have also introduced chatbots as they seek to lighten the load on call center staff
What’s Ahead?
What’s ahead? Some have predicted almost entirely virtual credit unions, especially when AI is combined with future iterations of the metaverse. Others have suggested credit union boards will need to consider an AI member, and that members of the management team might be replaced, including AI CFOs and even marketing directors.
And yet others have pushed back, saying the personal touch of credit unions will always demand a human touch and will remain a market differentiator.
As noted, no one is sure what the future holds, but as part of this series CUToday.info looks forward to providing at least some direction. As always, we welcome your feedback and input.