It’s an exciting time to be in the financial institution sector and have a front row seat to the transformational changes artificial intelligence (AI) is bringing to this industry.
Feeling a little uncertain of where to begin with AI? Or maybe machine learning is already driving results for your credit union or bank and you’re unsure of your next move? Either way, there are plenty of learning opportunities in the classroom of innovation. Let’s talk (or read) about the ABCs of AI.
From A to Z, artificial intelligence is assisting financial institutions with their greatest work yet. Here’s how:
A is for automation. AI can learn and automate basic to advanced tasks, reducing the errors, inefficiencies, and delays that come with manual, human-run processes. As employees are busier than ever, automation reduces distractions and lets your employees focus on their role priorities.
B is for brainstorm. AI isn’t just for IT; it supports all levels and types of roles within a financial institution. If your marketing, HR, digital, and sales teams aren’t leveraging ChatGPT, you’re missing out on brainstorming support for content topics, SEO, campaign ideas, and sales and recruiting conversations.
C is for credit unions. Credit unions, along with community banks, need machine-learned tools to stay relevant in a predominantly digital banking landscape. Additionally, in these tough employment times, automation can alleviate the workload on employees and delay hiring additional human talent until the economy regains strength.
D is for digital wallets. Younger generations may be check-writing illiterate but 66% of Gen Z and 67% of Millennials use digital wallets As we will dive into later in the blog, credit unions in particular must meet this digitally demanding demographic on their platforms of choice.
E is for expectations. 25% of consumers expect to open an account digitally but instead were directed to visit a local branch. These shifting expectations ramp up the urgency to integrate AI into banking services.
F is for fraud. Last year, the FTC reported $8.8 billion dollars lost to fraud. Halting the bad actors in their tracks through fraud prevention has never been more crucial. Fraud detection AI can monitor and analyze cardholder transactions, flagging potentially fraudulent ones.
G is for growth. Year-over-year growth is a must to sustain a business, even for mission-based, not-for-profit credit unions. How your organization chooses to deploy AI will determine the velocity of growth. For example, machine-learned credit decisioning can stimulate portfolio growth by approving more loans (up to 40%) while decreasing losses by 15% compared to traditional, manual loan approvals.
H is for humans. Can humans and AI really work together? There is no need to fret over AI replacing all human jobs. AI done right will help workers focus on their business-specific work and outsource admin tasks to machine-learned assistants. Marketers, IT, and HR need to focus on the creative, business-specific work that can’t be replaced with AI.
I is for innovation. AI is helping financial institutions innovate in ways that were previously only for big banks and fintech. Take for example the ability (and affordability) of adding conversational AI to your call center that cuts wait time and call abandonments down to zero.
J is for journey. Lest you be discouraged, digital transformation is a journey. It isn’t a switch to be flipped overnight. It will require time, planning, and most importantly, partners and peers who have gone ahead of you on the digital transformation path.
K is for knowledge. The attractability of AI is programmable knowledge. The more AI is used for a specific task or function, the more it learns how to do that task effectively and efficiently. This is why it’s a powerful resource to aid - not replace - humans’ work.
L is for leading indicators. Another feature of AI is predictive analytics. These analytics are more advanced than traditional data modeling and provide leading (compared to lagging) indicators for clearer foresight and stronger decision-making.
M is for market share. According to Experian, credit unions hold the largest market share for used auto financing. There are enormous conversion and cross-sell opportunities here that may be missed without AI integrations that help engage this growing market segment.
N is for nimble. It is estimated that 80% of traditional banking institutions will die within a handful of years and that banking business will go to neobanks and fintechs. Without AI, traditional institutions cannot be nimble and retain their share of the market.
O is for optimize. AI can optimize nearly every area of the business including: personalized and consistent service, fraud prevention, loan decisioning, marketing campaigns, and so much more. AI automation can also streamline processes across teams and provide a single source of data truth for workers and decision makers.
P is for privacy. AI for extra sensitive financial matters, like debt collection, can provide borrowers with greater privacy and trust in their financial institution. AI can also detect data breach threats in real-time and respond quicker during business or non-business hours.
Q is for quiet. AI isn’t only accountholder-facing. There are many ways (i.e. fraud prevention, compliance etc.) that artificial intelligence works quietly in the background, making your institution more efficient and protected.
R is for regulations. Financial institutions must consider the regulatory environment before onboarding AI. When investing in AI tools, look for ones that are designed with banking compliance in mind, for example, CECL and UDAAP.
S is for strategy. AI takes the guesswork out of strategic planning by aggregating data insights from all corners of the business, integrating them into a single data hub. These data analytics help decision makers design strategic plans according to your institution's unique risk appetite.
T is for trust. In 1979, 60% of Americans trusted their financial institution, compared to 27% today. It’s time for FI’s to repair trust with their people. Trust is built when consumers receive a seamless user experience, data privacy, and financial transparency - all end results of AI.
U is for uninterrupted. What happens to your banking services in the event of a natural disaster and other impactful event (say a pandemic) that causes business to stall regular operations? AI fills the gaps, providing 24/7 services to your accountholders - no matter the emergency.
V is for video. Short-form video has the highest ROI of any marketing channel. Skip DIY video creation and leverage a plug-and-play creation platform so all teams (from marketing to HR to sales) have video creation abilities.
W is for withstand. In these recession-like times, it may be instinctual to withdraw budgetary allotment to new technology. We’re here to argue that that approach won’t help withstand economic storms. It’s time to play the long game with wisdom: invest in the AI that will make the most impact on your current challenges and build from there.
X is for UX. The user experience - it’s all about what end users (your accountholders and potential accountholders) feel and think after encountering your banking. Even though it’s not human, AI can greatly impact how a user feels toward a brand. Users don’t demand flawless; they just want seamless experiences - without glitches that cause them to pause their banking journey and reach out for additional support.
Y is for younger generations. Credit unions and community banks need to grow their market share, especially among younger generations. Only 4% of Gen Z and 5% of Millennials are members of credit unions. Credit unions as a whole have not succeeded in capturing the younger generation’s interest or business. As the older generations become obsolete, credit unions must welcome the younger generations with personalized, digital experiences - or they too will become obsolete.
Z is for zig-zag. The present economy and shifting consumer expectations can provide a puzzling back-and-forth of priorities. “Consumers want digital only banking!” “No, they want to talk to a human!” Automation, smooth digital experiences, and AI-learned admin tasks can lessen the zig-zag effect between digital and human-powered service.
What’s next?
From ChatGPT to virtual AI assistants powered by Allied Solutions, artificial intelligence is a must-have for credit unions and community banks to retain a competitive edge with fintechs and big banks. What’s your next AI move?
Implementing AI across your financial institution is a journey. Let us be your guide. Click here to get started.