Enhancing Credit Unions With AI: Best Practices & Applications

The credit union industry must constantly adapt and innovate to remain competitive with banks and other financial services competitors to appeal to new members and retain their current ones.

While artificial intelligence has been around for quite a while, we’re just now seeing numerous industries have access to user-friendly platforms with immediate commercial use.

When implemented correctly, AI has the potential to revolutionize credit unions, making them an attractive option to consumers for their personal financial needs. Leveraging AI for chatbots, personalized marketing and improved fraud detection certainly has significant advantages in improving the overall member experience.

If you are harnessing AI’s power, however, it’s essential to recognize that doing so comes with great responsibilities. Credit unions can mitigate the risk of using AI by following best practices regarding cybersecurity, governance and applications.

Cybersecurity

There are three best practices a credit union should consider putting into motion to reduce the risk of cyber-attacks when taking advantage of AI for systems and processes.

• Protecting sensitive data: Credit unions, or any organization for that matter, should never input company-specific information into a public AI platform. Examples of these platforms include ChatGPT, Google BARD and Microsoft Bing. When you input information into one of these platforms, the company that owns the AI keeps the data forever and can run analytics on it.
• Securing credentials used to access public AI platforms: One of the first attack vectors of publicly accessible AI platforms is the credentials used to authenticate and use the platform. Public AI platforms rely on the consumer to protect their user’s own login information, which means your employees could inadvertently bypass any internal identity access controls you have in place. It’s possible for bad actors to compromise weak credentials and gain access to all the information your employees input into the public AI platform. As a best practice, encourage all your employees to enable and use multifactor authentication on any account accessing a public AI platform. Doing so ensures that only authorized personnel can interact with the AI platforms, minimizing the changes of malicious activity.
• Continuous vigilance: Now more than ever, staying updated on emerging threats and vulnerabilities associated with AI systems is critical. As AI technology evolves, so do potential risks. Remaining hypervigilant about them will help you avoid cyber threats.

Governance and Standards

Credit unions that decide to utilize public AI platforms should consider developing some standard operating procedures related to its governance.

• Internal policies: Taking time to create internal policies that limit the use of company-specific information in public AI platforms is a critical step in safeguarding your data. Your policies should clearly define what data can or cannot be used with AI systems to ensure compliance with data protection regulations and applicable ramifications.
• Inventory and monitoring: Conducting an internal audit of what AI platforms are currently in use within your organization is a best practice. Consider regularly monitoring their performance, security and adherence to your internal policies. Doing so will ensure that the use of the AI platforms align with your credit union’s goals and values.
• Procedural guidelines: Your standard operating procedures should also include guidelines as to when employees can and should not use AI. Set aside time to train employees on responsible AI usage, setting clear direction for AI-powered decision-making, and monitoring AI-driven processes for fairness and transparency.

When and Where It Makes Sense to Use AI

Once you have thoroughly identified possible cybersecurity threats and implemented plans to best protect your data, you can explore all the ways AI can enhance the operations of your credit unions, including improving the member experience, personalized marketing, and fraud detection and prevention.

• Improved membership experience: Supplementing your human member service representatives with AI-powered chatbots and virtual assistants can help your credit union deliver a quick and more efficient member experience. Allowing these tools to handle routine daily inquiries frees your staff to handle more complex tasks and improves the overall member experience.
• Personalized marketing: AI technologies also have the potential to analyze vast amounts of member data to generate personalized recommendations and offers, create tailored financial solutions or usage campaigns, and provide insights to improve member satisfaction and engagement.
• Fraud detection and prevention: One thing AI does well is anomaly detection. With this, AI can be used to identify fraud and mitigate it quickly. To date, most fraud avoidance efforts are still manual repeatable processes that are perfect candidates for AI and automation. AI’s enhanced ability to detect and prevent fraud through anomaly detection can help credit unions to reduce losses and protect their members.

Platforms Beyond ChatGPT and Their Roles

It is safe to assume that, by now, most have heard of ChatGPT and are familiar with its capabilities. Considered a natural language AI model, ChatGPT is a good tool for drafting content creation and the development of member interactions. GitHub CoPilot, another language model, facilitates coding and development tasks, while Microsoft Bing, when used along with ChatGPT, can improve search functionality, providing more accurate and context-aware search results.

Another subset of AI technologies is referred to as text-to-image. Copyrights for AI-generated images are not available today, so this is a consideration when using these platforms for commercial use. Here are a few platform examples, but there are also others.

• Midjourney can transform text descriptions into visual representations, which can help create visually appealing marketing materials.
• DALL-E generates unique images from textual descriptions, allowing credit unions to create customized visual content.
• Stable Fusion enables the integration of text and images, offering a versatile tool for various creative applications.

In Summary

AI can transform the credit union industry by optimizing its day-to-day operations. By adhering to best practices and carefully considering when and where to utilize AI, credit unions can leverage the technology to serve their members better while at the same time safeguarding their data and ensuring responsible usage.

By embracing AI ethically and strategically, you can set your organization up for success to compete in the ever-evolving financial services industry.

Ralph Owens is the Chief Information Officer of the $755 million, Houston, Texas-based Members Choice Credit Union.