This piece is based off of a roundtable discussion at the CU 2.0 Brainstorm Event in July 2021. It is not intended to be comprehensive—rather, it will provide a cursory introduction to AI for credit unions.
This is an excerpt from FinAncIal: Helping Financial Executives Prepare for an Artificial World. Grab your copy here!
In the previous chapter, I showed various uses of AI in modern products and services. I hope that gives you an idea about what AI has been used for in other industries. More importantly, I hope that it shows how disruptive AI is—ridesharing, content streaming, and online shopping used to be taxis, Blockbuster, and brick‑and‑mortar retailers. Today, those services are industry standards, and their former competitors are afterthoughts.
When I thought my old 4×4 finally kicked the bucket last month, I started looking at new cars. But car salespeople have a reputation for being pushy and not entirely trustworthy. So, I browsed dealer inventories online, and whenever I wanted more info, I asked their chatbot.
I loved it! It was surprisingly human. And I got to engage on my own terms without any high-pressure sales tactics. Only when I was considering a test drive did I engage with an actual person.
And that’s because the site chatbot got my contact info and helped me schedule a visit.
Credit unions should take note.
By Robert McGarvey
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.
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.”
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.