Why Credit Unions Need to Implement Artificial Intelligence

The pillar of the Credit Union industry is member service. Credit Unions have strong relationships with their members and strive to do what is right. It is a common misconception that Artificial Intelligence will remove the human aspect from banking with a Credit Union. In reality, AI is an opportunity to deepen those already strong member relationships. Artificial Intelligence can automate and improve services delivered to members while also improving your Credit Union’s bottom line.

Implementing Artificial Intelligence at your Credit Union can allow you to:

  • Offer a new service to a member at an opportune time
  • Provide an even greater customer service experience when a member has an issue
  • Deliver the convenience members seek and delight your customers

These are the experiences members are demanding and that Credit Unions must provide in order to remain competitive in today’s banking environment. And, all this starts with data.

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CU 2.0 Fintech Friday: Coalesce AI

It’s CU 2.0 Fintech Friday! Today, Chris Otey sits down with Coalesce AI to discuss all things credit union, fintech, and digital innovation.

fintech partnerships

Coalesce.ai helps credit unions introduce the power of AI and machine learning into their operational ecosystem. Their platform utilizes User-Defined Machine Learning, which allows clients to train Coalesce.ai’s automation platform how to gain expertise in a certain set of tasks.

Coalesce.ai’s systems helps credit unions and financial industries reduce error and increase efficiency while saving time. By reducing or eliminating the possibility for human error and the necessity for manual labor, Coalesce.ai lets ten credit union employees accomplish the work of a hundred.

For credit unions, Coalesce.ai found that “the operations of a financial services firm like a credit union today requires—especially in the middle and back office—a lot of tedious, manual, repetitive work: opening spreadsheets, scanning emails, filtering through PDF documents. And with this new AI technology, we’ve been able to automate the way that some of that gets done at credit unions.”

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CU 2.0 Podcast: Series 14 – AI for Credit Unions Part 2

It’s the Credit Union podcast! CU 2.0 is excited to bring you the fourteenth in a series of podcasts from Robert McGarvey. Welcome to the CU 2.0 Podcast, regular interviews with credit union leaders, thinkers, movers, shakers and more. Today’s topic is talking about the real credit union mission. Today’s subject is AI for credit unions.

Welcome to AI, Part 2 in the CU 2.0 Podcast series.  Last week our podcast explored email and AI through the eyes of Coalesce, a DCU Fintech Innovation Lab company. This week, in Part 2, we explore voice and AI through Posh Development, another DCU Fintech Innovation Lab company – a podcast about the Fintech Lab can be found here.

Either way, great stuff is happening that you need to know about to stay current.

Bank of America is pushing its AI bot Erica hard. But just maybe you can fight back with your own voice bot. That’s part of the Posh promise.

This is a podcast you can’t miss. AI definitely is the future. It’s up to you to understand and control it.

Click the photo below to listen now!

ai for credit unions, artificial intelligence fintech

Check out other podcasts in the series here!

2019 Credit Union Technology Trends to Watch

Wow.  What a year! The credit union and FinTech worlds are frothy and lots of change is underway. This year, some of the walls came down and credit unions saw more of the real world. Digital Credit Union has an incubator fostering FinTech Startups and the Boston FinTech Community. NACUSO’s Next Big Idea Competition brought in new concepts and innovative ideas to solve age-old credit union problems. A great example of this is LenderClose, a digital lending platform, which allows community lenders to streamline the lending cycle. Everywhere I looked this year, credit unions were actively looking to do things differently. It was great! Now, let’s keep the momentum going. To continue last years methodology, I thought we should compare last year to this year in terms of comparing each trend in the “Real World” versus its presence in “Credit Unionville.”

For 2019, there are seven technology trends that Credit Unions need to keep top of mind.

credit union trends

1. Cloud

Credit Unions continue to lag behind the Real World in Cloud adoption. However, we did see some major progress here this year. Ongoing Operations now has 40+ credit unions ”All-In” on the cloud and even has its first $1 Billion+ credit union client that no longer owns a server, storage, or its own network. The credit union has fully embraced the cloud, and it is awesome.

We continue to come across credit unions that have adopted “Cloud First” strategies. This is an improvement but it isn’t far enough. Adopting a Cloud First strategy at this stage is like going from a horse and carriage to a car when airplanes exist. We must rip the Band-Aid off and go faster.  If we don’t, all we are doing is widening the gap between credit unions and the Real World. Credit Unions will miss out on the next major trends like Machine Learning and Artificial Intelligence. Cloud stays in the #1 trend to watch spot because in my mind itis the #1 impediment to credit unions moving faster and being competitive in today’s environment.

2. Digital Transformation

 Like last year, this term is still way overused. Trust me, I know. In fact, I wrote a book on it. The good news here is that I think credit unions understand the urgency. No longer do I see tons of non-responsive websites. Credit unions are working hard to modernize their service delivery and make it more digital.

In fact, the good news continues with this trend. Digital transformation is a major issue for all legacy businesses, not just credit unions. So, we aren’t alone here. Furthermore, the tools, technology and collective experience necessary to be a digital ninja are becoming cheaper, improving quickly, and are more accessible than ever. I continue to believe this is a top issue and priority that every credit union marketing and technology team should be addressing in their 2019 plans.

3. FinTechs

First off, let me just say wow. The number of FinTechs in my database has nearly doubled (approximately 400). The number was high when I first started tracking the trend, but there are roughly twice as many now than when I wrote the book Credit Union 2.0 in 2017. I monitor this landscape closely, and every week I come across at least five additional FinTechs that interest me. It is increasingly difficult simply to keep track of what is out there, let alone figure out who to partner with.

As long as capital is cheap (although getting more expensive), this trend will continue. The average entrepreneur sees the pain and challenges with modern banking and is working to close the gap. The best news here is that more and more often FinTechs intend to go to market by partnering with banks and credit unions.

If we look back over the past 20 years, we went from having one mainframe to having one server and business application for every 2.5 credit union employees. Sadly, I think we will see something similar happen with FinTechs. The ability for a FinTech to profitably serve a key group of members or a single business function will be huge. Four out of every five presenters at NACUSO’s Next Big Idea Competition were FinTechs. Furthermore, itis the gateway tools are being built. Cloud Platforms, Middleware companies, i.e. AlphapackConstellation, and OnApproach, are creating entirely new ecosystems that will speed up creation and adoption. This will lead to financial success.

4. Marketing Automation

Personalization in marketing is key. In our 2018 work, Credit Union 2.0 partnered with a handful of credit unions to implement and transform things such as the attrition process and 2nd chance checking members. I won’t lie, this was really challenging at first. It took almost nine months and 1,000+ man hours to figure out the right formula. I’ll share that formula with you today. In order to pull marketing automation off, a credit union needs to unwind the 20+ platforms it uses. Next, you need to document key business processes and transform your entire way of thinking. We have found that you can’t simply start by fixing one platform or one tool. The answer is to pick one product or service and then build and test all the components on a new platform that is as integrated as possible to the old.

Get good at that one thing, optimize it, and then perfect it. An example of this is 2ndchance checking. This product requires 100-200 blogs and twenty different nurturing campaigns to take a prospective member from finding you on google to signing up for the product. To transform all of your credit union’s products and services, the average credit union will need 200-300 nurture campaigns, 50 landing pages, and about 3000-4000 blogs, videos & content pieces. I know that sounds daunting and perhaps as difficult as climbing Mt. Everest, but you had better get started. If you don’t take these steps, you just won’t exist in twenty years. In 2019, plan to ditch your dated email marketing platform and switch to a true marketing automation platform that can leverage web, social, and other delivery channel components.

5. Analytics

 Credit Unions are definitely working hard on this trend. Within the credit union industry, many credit unions have purchased analytics platforms. Other credit unions have hired data scientists. There are even two distinct credit union analytics conferences now that are phenomenal: AXFI and CUAnalytics.

The industry is aware of the power of data and is actively working to leverage analytics. A terrific example is CU Rise, which was built on the OnApproach platform. CU Rise took data pools, ran them through machine learning and watched as their initial attrition model went from a 6x better prediction to 9x within a few weeks. This is the future.

However, analytics go hand in hand with Marketing Automation. If you don’t know how to leverage and use the analytics or you aren’t prepared to invest in both sides, analytics alone won’t do you much good!

6. Artificial Intelligence & Machine Learning

This trend is hot and it is only getting hotter. Every single FinTech I saw at the latest event I attended was using Machine Learning in their product. All of them…

When thinking about AI/Machine Learning, I want to provide a key perspective here. In March, Bank of America launched Erica, a natural language/AI based chatbot. Within six months, approximately 45% of BofA’s customers were using it. It took 25 years for ATM’s to get that same adoption rate. It took Amazon’s Alexa two years to get that adoption rate. This trend is speeding up and getting hotter. Be on the lookout in 2019 for my book on this very topic. AI and Machine Learning is the future.

7. IT Security

This topic is still cyber hot, and credit unions continue to be well aligned at the forefront of key cyber trends. The main thing I noticed this year is that the hot labor market that I predicted for 2018 has gotten even hotter. This tight labor market is making it difficult for credit unions to find cyber experts. Furthermore, the NCUA’s focus on SIEM (Security Incident Event Management) continues to crank up the pressure.

So, as we approach 2019, sit down with this list, your executive team, and your Board. Start talking (out loud) about each of these trends and how each trend may impact your Credit Union. How might each trend change your members’ perceptions and/or expectations? What should your Credit Union be investing in? Now is the time to set yourself up for a successful 2019 because tomorrow is too late.

If you’d like to talk to discuss how any one or more of these trends specifically affect your Credit Union, please reach out to me directly at [email protected]. I love to talk about technology trends.

Happy Holidays!

CU 2.0 Podcast: Series 13 -AI for Credit Unions

It’s the Credit Union podcast! CU 2.0 is excited to bring you the thirteenth in a series of podcasts from Robert McGarvey. Welcome to the CU 2.0 Podcast, regular interviews with credit union leaders, thinkers, movers, shakers and more. Today’s topic is talking about the real credit union mission.

Welcome to AI, Part 1 in the CU2.0 Podcast series.  Next week we’ll post AI, Part 2, an exploration of voice and AI. This week looks at a company focused on text and AI. Both are products of the DCU Fintech Innovation Lab in Boston – a podcast about that here.

Either way, great stuff is happening that you need to know about to stay current.

Why? It’s because a lot of credit union work is mundane, tedious, boring really. It needs doing, no question, but how best?

Enter Coalesce. The company’s tagline says it all:  “AI software that automates tedious work for financial services.”

You’re not interested because credit unions are special? Coalesce is in the DCU Fintech Innovation Lab in Boston – hear the podcast about the lab here – and it is already working with Digital Federal Credit Union, BECU, and the NASA credit union, among other financial institutions (including some megabanks). It has a good credit union pedigree.

The Coalesce focus is on automating monotonous, rote work, particularly around handling incoming member emails (70% it turns out can be answered by machines) and also auto loan applications. Hunting for fraud is another, promising avenue for AI.  AI, it turns out, is good doing these jobs faster and cheaper than people.

Are the machines taking over? Greg Woolf, the Coalesce founder and CEO, laughed at that.  For good reason. The Coalesce version of AI is built around input from people who also are in charge.

Put away those Matrix fears and come for a ride into tomorrow where machines do a lot of the work people honestly don’t want to do and the machines are good at it.

Click the photo below to listen now!

credit union AI

Check out other podcasts in the series here!