Artificial intelligence. Source: Shutterstock
We have seen the ways in which artificial intelligence has impacted payments and mobile banking among large banks, whether through new machine learning fraud detection features or more conversational chatbots. AI technology holds the potential to transform global banking over the long-term, with McKinsey estimating it could deliver up to $1 trillion of added value a year for the industry.
Credit unions, however, have failed to keep pace with banks, lagging in their adoption of AI capabilities among payment and mobile banking functions. They are constrained by a lack of resources, but also sometimes hold onto the comfort of traditional banking services their largely older members have come to expect. Ultimately, this complacency hamstrings their ability to attract and retain younger members who demand more advanced digital capabilities.
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It has become increasingly harder to build and maintain brand loyalty as the digital transformation has accelerated around them, particularly with advancements that allow customers to switch to another bank account online in under 10 minutes. But despite their more limited resources, credit unions can still seize opportunities to sharpen their competitive edge on the AI front.
Credit unions that have integrated widely-used biometric technology into their apps are primed to adopt facial recognition login capabilities to boost security and expedite the payment process.
They can also prioritize the implementation of general money management features that personalize the member experience. They could, for example, adopt application programming interface (API) technology to more easily track spending and payment data.
With APIs, members gain a much more comprehensive view of their finances by linking their credit union data to external accounts. Credit unions could use insights gained from member habits and financial histories to build AI features that, for instance, inquire about lending needs after an excessive spending spree or use someone's bill payment history to time payment alerts. They could use AI to recommend credit cards to members who exhibit certain spending behaviors. With specific financial recommendations, they can cultivate the more personalized relationships that distinguish them from banks.
Credit unions may struggle to implement the in-house AI technology of large banks, but they can play a role in ensuring the third-party firms they hire maximize use of digital capabilities. Catering to more targeted audiences, credit unions are better positioned than banks to collaborate with vendors, pushing for specific AI initiatives while addressing long-standing service gaps based on market analysis.
With the explosion of AI technologies has come notable advancements in the ability to recognize what customers need and guide them through specific journeys, such as with Bank of America's Erica.
The virtual voice assistant allows users to make payments entirely through a chatbot without navigating outside the interface to connect to a representative. Such technology has become common among fintech firms and national banks, equipping them to respond to advanced customer queries with personalized insights. Credit unions could encourage vendors to adopt similar chatbot technology, freeing live chat representatives to focus on more complex questions.
They could flag other needs, whether for API-based access, new transaction displays or better alert functions, urging vendors to implement member-centric features while helping fuel AI growth for the industry.
No AI function, however, is likely to resonate without a clean, creative interface. If credit unions adopt these features, they also need appealing designs and presentation. Insights into financial behaviors, for example, should be visible and have interactive components. Credit union could highlight a few insights to catch the member's attention.
Chatbots need to be proactive, launching to offer help, for example, when a member has idled on a page too long trying to complete a task. Asking for feedback on presentation also helps determine how to best engage members.
Gina DeCorla Gina DeCorla is Senior Research Analyst at Curinos, a New York, N.Y.-based global data intelligence business serving global financial institutions across lending, deposits and digital banking solutions.
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