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!

When the Credit Union “Human Advantage” Adds Up to Zilch

By Robert McGarvey

For CU2.0

artificial intelligence

Ask credit union senior executives how they plan to beat banks and – I have heard this every time I have asked – they say “our people.”

They elaborate that their people are good, kind, caring credit union people, from the community, and this will be the deciding weaponry in the upcoming wars.

Sigh.

There are so many problems with this thinking it is hard to know where to start.

And I am a person who in fact believes that many credit union people, in fact, are good, kind, caring.

That’s not the problem.

The problem is a two-headed monster that is set to devour that credit union narrative.

Increasingly, the busiest branch is the online website and the next busiest is the mobile app. Personally, I have never been in a branch of my chief credit union (whose nearest branch now is on the other side of the country from me). I have called maybe twice in the last five years.

Are they nice people? I guess. I really haven’t had much to do with many of them. The CEO, whom I know, is and as long as he responds to my emails (which have never been about personal account issues) he’s a good guy in my book.

But I like the mobile app, I like the online banking, and they introduce new features fast enough to keep me from getting frustrated (and, yeah, I have a Chase account too and Chase keeps me in the fast lane).

Here’s a factoid from the latest Digital Banking Tracker via Pymnts: “Mobile banking apps are more popular than ever, with recent research indicating they have become one of the three most used app categories in America as of 2018.”

According to the Fed, in 2017 about half of US adults with a smartphone had used it to access banking.

The digital access numbers are just going to explode in the near future.

The more digital we become the less human interactions matter.

And then the second shoe drops. According to that same Pymnts publication: “Bank of America, just two months after its release, is celebrating the one-millionth user of Erica, its app based, artificial intelligence (AI)-enabled chatbot. Erica is designed to meld AI, predictive analytics, and natural language to serve as a virtual financial assistant.”

AI is going vertical, it is changing how we interact with so many elements of our lives.

AI also is becoming human plus.

In a talk at the recent WOCCU conference in Singapore, keynoter Shivvy Jervis warned that digital technologies – think Erica, Amazon’s Alexa, etc. – are becoming “more human.”

You bet.

She added: “Even as we are becoming more digital, I believe digital technologies are becoming more human.”

And we are embracing them.

Hotels, for instance, are racing to equip rooms with Alexa to answer our questions (when does the restaurant open for breakfast?) and to perform simple chores such as raising the room temperature and turning off the desk lamp. We are becoming accustomed to dealing with these digital intermediaries – I have three Alexa’s in my house plus a Google Home device – and we like them.

Why should I call a human to find out if a check cleared when I can ask Alexa? Many, many credit unions now are rushing to go live in Alexa and what this adds up to is a lessening of the importance of the human face of the credit union.

Nobody is suggesting that humans aren’t important to credit unions and their members. Of course they are, and that is why I urge credit unions to invest in retraining branch employees to move from transaction processing to financial consultants.

People can – and should – be a credit union assets because members will still come into the branch and call into the call center. It’s just that fewer and fewer of us will depend upon those channels as primary avenues for financial services.

That means the smart credit unions – the ones that will survive – are investing in their digital transformation. That is the future of financial services, that is where the wars will be won. Take a deep dive into big data, into mobile banking, and – absolutely – into AI tools such as Alexa and more.

A decade from now it will be considered absolutely normal to talk with a computer about one’s finances. You need to be there sooner.

And you need to accept that tomorrow’s battles won’t be won just because you have “the best people.” Which you may have. But a lot more – mainly digital – will figure into choosing winners and losers and you need to be in the thick of that game to remain a competitor.

Be there.

Want to learn more on artificial intelligence (AI)?

Must a Credit Union Hop on the AI Train? 

Must a Credit Union Hop on the AI Train?

By Robert McGarvey for Credit Union 2.0

 

Short answer to the question posed in the headline: yes.

More nuanced answer: Yes but slowly, deliberately.

Right now, AI – artificial intelligence – is the hot buzzword in fintech circles. AI means using a computer’s brains to do tasks that traditionally have been done by people, such as speech recognition, translation, and decision making.

What’s happening now is that suddenly AI is entering our homes and offices at a brisk pace. A few years ago, Apple’s Siri – widely introduced in 2011 – was an early form of AI and now there are many, from robo-advisors that plan retirement portfolios to Amazon’s Echo which will let a user do at least some banking with voice commands.

Right now, a lot of AI is more in the spirit of demonstration. “Alexa, what’s the weather?” Sure, it’s cool that she talks to you – but it’s not honestly much faster than clicking an app on a phone.

Next phase AI will be beefier and deliver more benefits, say the experts. Already the money-center banks are deeply diving into AI so ignoring this trend at your peril. But, no, you’re not behind, said Celent in a recent research report on AI and banking. “Relatively few banks have begun production or even full-blown research at this stage. For those who think they’re lagging, the good news is that they’re not — there’s still some time.”

In late 2016 when Celent asked financial institutions to prioritize technology initiatives, AI came in dead last, tabbed by only 6% as a top focus.

Probably today that number has nudged up but don’t expect that AI suddenly is the top priority. It isn’t.

But it remains important to monitor.

Celent added: “We take a rosy view of AI in banking — for those who embrace it, AI will over time provide a better experience for customers and employees while delivering real business value on every dimension.”

Question for you: how and where can you offer AI tools to members? And are there behind the scenes places where AI can star but out of member sight.

In that latter regard, be ready to use AI to help fight fraud. CO-OP is a player in this space and the idea is that a smart computer can get very good at spotting fraud earlier than a human likely would. A real promise of AI is that it can detect criminal innovations just about as soon as they are launched and, theoretically, will thereby cut the loss volumes in the first phase of a criminal gambit. That all sounds realistic, if the AI is powerful and updates itself.

AI, say the experts, will also help credit unions reduce financial risks through better – faster – analysis and very probably earlier warnings about accounts heading into trouble.

What’s tantalizing about AI is that it promises real time, tangible deliverables – if implemented carefully. How to do that?

Celent in its report, offers a three step map for financial institutions looking for entry points into AI.

Step one: “Keep an eye on the market, learn the landscape.” Read articles such as this one and definitely read case studies of financial institutions and AI deployments.

Step two: Put your data house in order (AI needs clean data, simple as that), consider using a partner, and look for ways to help people (members).

Step three: Start small. Track progress and adjust.

Celent’s bottomline: “While there’s more AI smoke than fire in mid-2017 (that is, more banks are talking about it than implementing it), every bank should develop a strategy for incorporating AI into their technology stack over the coming years.”

Do as Celent prescribes.

And know that a key area of AI interest among money center banks are so-called chatbots where consumers engage in what looks like realtime conversation with a computer. Word of advice: pick one out and play with it. Then play with it more.

Can your credit union go the chatbot route?

There’s also a lot of interest in developing product recommendation tools a la Netflix or Amazon where, because you streamed all of House of Cards, the service recommends similar videos and – often – the recommendations are stunningly on target. Can a financial institution do likewise? Many think so. Watch this space for exciting innovations.

Sometimes fintech is more sizzle than steak, more promise than reality. That’s almost certainly not going to be the case with AI. Stay aware of progress. Stay ready to jump in. That’s your 2017 action plan.

Chatbots – A Gimmick? Or Can They Add Real Value For Your Members?

By Amy McCaughey

Go on almost any financial institution’s website, and you are likely to encounter some sort of chatbot. As artificial intelligence (AI) becomes more and more ingrained in our lives, it is a good time to take a step back and ask ourselves, is AI really useful?

A chatbot is a form of AI that talks with people, provides information, and performs tasks based off of that information. The best example of AI that many people use every day is Apple’s Siri or Amazon’s Alexa. While sometimes Alexa can be a real help, most users have also found the opposite.

You: “Alexa, play Cake by the Ocean”

Alexa: “Adding cake to your shopping list”

However, the key to AI is that as you use it more, it gets better. The more you use Alexa and Siri, the better they get at many of the tasks you ask of them.

Chatbots are similar and are AI assistants for website users. The main difference between a chatbot at Alexa, is that you are in control of how a chatbot is being utilized on your website and ensure that your member experience does not suffer. A terrific strategy for chatbots is to limit the number of tasks it is capable of to just those where a chatbot can do an even better job helping your members than a human could.

Chatbots do several things really well:

  • Help you find information
  • Answer simple questions
  • Startup conversations based on your specified interests
  • Talk with you & recall pages on the sites you have visited
  • Make suggestions
  • Be there for members 24/7

These characteristics make chatbots terrific options for guiding a member throw a process on your website, answering frequently asked questions, or recommending a product/service for a member ask he/she answers a series of questions.

While AI is a constantly expanding field, and there are many new and exciting ways for your Credit Union to utilize AI, chatbots are a terrific place to start. Building or purchasing a chatbot for your Credit Union’s website can help improve members’ digital experiences and close a potential customer service gap.