Embracing AI in the Credit Union Industry: Balancing Innovation with Security

I recently had the opportunity to participate in a panel discussion titled "The Cognitive Credit Union" at Dreamforce 2024. The conversation centered around how AI is transforming the Financial Services industry, and I wanted to share some of my thoughts on this exciting topic. I'll delve into three core components: the impact of AI on customer/member experience, balancing speed with security and compliance, and training and enablement's role in creating an AI-literate workforce as a strategic asset for business growth.

1. Overcoming Data Challenges to Enhance Member Relationships

Many financial institution leaders feel the urgency to adopt AI quickly but feel hindered by data limitations and cost concerns. The new generation of Data Lakes and GenAI Services are priced on consumption models, which can be more challenging to budget upfront than the traditional user-based licensing model. However, the upside of this work is significant. By leveraging AI effectively, banks and credit unions can:

• Micro-segment members to understand their unique needs.
• Deliver hyper-personalized financial product recommendations.
• Create the right content on the fly, enhancing member engagement and satisfaction.

This approach not only strengthens relationships but also positions credit unions to meet member expectations proactively, significantly reducing call center call volume. Low-effort customer interactions such as these reduce costs by decreasing up to 40% of repeat calls, 50% of escalations, and 54% of channel switching (Source: Gartner). Forrester researchers agree that customers overwhelmingly prefer proactive support: 71% of customers favor it (Source: Forrester Research).

2. Balancing Speed with Security and Compliance

While innovation is crucial, financial institutions can't compromise on security and compliance—especially as global AI regulations continue to evolve. As an example, deploying autonomous chat agents that securely assist members with tasks like applying for auto loans or making payments.

A thoughtful approach to AI includes three core components to ensure all AI applications adhere to compliance standards, maintaining trust and integrity:

1. Clearly stated policies around AI Initiatives with a governance plan in order to ensure consistent adherence to organizational principles and government regulations
2. Human accountability for AI tools, whether they are Human-in-the-Loop or not.
3. Traceability and Data Provenance allowing systems to be audited by tracking decisions back to their data inputs and processing steps, ensuring compliance.

By doing so, credit unions can innovate rapidly without sacrificing the security their members expect.

3. Focusing on People and Talent Enablement in AI Initiatives

Technology is only as effective as the people behind it, and an AI literate workforce is a strategic asset. Of workers who use GenAI regularly, "77% say that it makes them better at their jobs" (Source: Grammarly). Business leaders are seeing exciting improvements in productivity, customer service quality, cost savings, and innovation speed.

A people-first approach ensures that:

• Teams are equipped to harness new technologies effectively.
• Investments in AI yield desired outcomes through proper talent development and enablement.

These initiatives not only improve operational efficiency but also empower their workforce.

Balancing Risk and Reward with Data

Data is a powerful tool that carries both risks and rewards:

• Risks: Mishandling data can lead to financial loss, reputational damage, and regulatory penalties.
• Rewards: Properly utilized data drives growth, innovation, and enhances member satisfaction.

The opportunity lies in implementing robust data governance with strong policies and procedures.

• Educating staff on data privacy and security best practices.
• Ensuring ethical use of data by being transparent with members and mitigating biases in AI models.

By balancing these elements, credit unions can turn potential challenges into opportunities for growth and trust-building.

In Essence

AI enables banks and credit unions to move swiftly while delivering personalized experiences, maintaining stringent security and compliance standards, and empowering their teams to utilize new technologies effectively. The future of AI in the Financial Services industry is promising, and I'm excited to be part of this transformative journey!

DM me to continue the conversation on how we can leverage AI to help credit unions better serve their members and drive this industry forward.