Automating the future: AI in US credit unions (2024)

Credit unions pride themselves on putting their members first. But in today’s fast-paced financial world, keeping up with that growing demand can be a challenge. This is where Artificial Intelligence (AI) and automation come in.

Credit unions represent a growing segment of the US financial sector with around one-third of the country’s population having a credit union membership.¹ At the end of 2023, there were around 5,000 credit union businesses² and a further 4,470 FDIC-insured commercial banks in the country.³ It’s become an incredibly competitive market. And credit unions must maintain their member-centric approach while competing with larger institutions, like banks.

Yes, credit unions have traditionally held the upper hand with competitive rates and lower fees, but the financial landscape is evolving. Research indicates that consumers are adopting new technology even faster than businesses;⁴ if credit unions are to keep up with their members they must evolve with the times. Banks often hold the advantage in terms of branches, ATMs and technology, enticing younger generations who rely heavily on mobile banking and digital tools.⁵ The good news is, there’s a solution for credit unions: AI coupled with automation.

US retail bank customers are losing faith in their banks, with declining satisfaction over the last two years.⁶ With this dissatisfaction, credit unions now have a chance to shine by evolving and using AI to provide a more personalized and efficient banking experience. So, how can AI help?

How AI can help credit unions to shine

Using AI to personalize services

Personalization is key to member satisfaction, but catering to diverse financial needs can be complex. AI allows credit unions to bridge this gap. Using the power of data analysis, AI can transform member interactions by offering personalized financial guidance. By analyzing spending habits and financial goals, such as loan histories or transaction patterns, AI can identify personalized products and services.

This can include real-time budgeting tips, targeted savings opportunities and even automated alerts – all tailored to each member’s specific situation. This not only enhances the member experience but also strengthens the credit union’s competitive edge.

Enhancing communication with conversational AI

Today, convenience and accessibility are paramount for consumers, particularly credit union members. This is where conversational AI, powered by Natural Language Processing (NLP), shines brightest. Conversational AI goes beyond simple chatbots by understanding the nuances of human language through built-in semantic and sentiment analysis. This allows them to handle complex questions and requests, even adapting their responses based on context and the user’s intent.

The benefits of conversational AI extend beyond convenience too. It can automate 99% of repetitive tasks, freeing up staff for more complex member interactions. It also offers a win-win for both credit unions and members. By streamlining operations, conversational AI enhances user experience and boosts member engagement by 125% through personalization. With it, credit unions can redefine member communication, creating a 24/7, personalized and efficient experience.

Streamlining processes

One of the most common banking services offered by credit unions is loans.⁷ Unions understand the need for a swift and secure loan application process and AI provides that solution. By automating document verification and initial credit assessments, AI can significantly reduce processing times. This translates to faster loan approvals for members and improved efficiency within the credit union.

Beyond streamlining processes, AI plays a vital role in security too. Its ability to analyze vast amounts of data in real time allows for the identification of fraudulent activity. This proactive approach protects both the credit union and its members from financial losses. Generative AI can also help credit unions enhance their security and privacy further by using facial recognition, biometric authentication or data anonymization.⁸

Building a strong foundation for AI in credit unions

For credit unions across America to truly benefit from AI and remain competitive, the technology must be implemented correctly. However, successful implementation requires a strategic approach that addresses not just the technology itself, but also the human element.

As credit unions are member-centric institutions, the human element will always remain a crucial part. And at the heart of any successful AI initiative lies a well-prepared workforce. As well as thinking about their customers, credit unions must prioritize a comprehensive change management strategy to guide employees through this transition. This includes clear communication about the potential of AI, its impact on roles and the benefits for both members and employees. Conducting a thorough assessment of the current workforce capabilities can help identify any skills gaps that AI may create, allowing unions to invest in targeted training programs. However, this is only one aspect of becoming ‘AI ready’.

Retaining compliance with AI

Data is the lifeblood of AI. High-quality data fuels accurate and reliable models, ultimately leading to better member experiences and more efficient operations. Moreover, the financial sector is heavily regulated, so establishing robust data management is essential.

To ensure reliable and accurate AI models, credit unions must prioritize data management. After all, it’s a sector that uses a lot of data, so establishing clear guidelines early on for data collection, storage, access and ownership will help keep credit unions on the path of AI readiness. Automation can support further here, by helping to extract data from various sources, further enriching AI training datasets while also freeing up staff.

The legal framework surrounding AI is rapidly evolving, and it’s advised that credit unions should work closely with legal counsel within their sector to stay ahead of emerging AI regulations, particularly in areas surrounding data.

1. Statista, Credit unions in the United States – statistics & facts ↩︎
2. IBISWorld, Credit Unions in the US – Number of Businesses ↩︎
3. Statista, Number of FDIC-insured commercial banks in the United States from 2000 to 2023 ↩︎
4. SaS, Your customers aren’t afraid of new technologies. Are you? ↩︎
5. USNews, Credit Union vs. a Bank ↩︎
6. Retail Banker International, US retail bank customer satisfaction holds steady but trust declines: JD Power ↩︎
7. Unbiased, Credit unions: what are they and how do they work? ↩︎
8. Origence, How to Embrace and Love AI in Credit Union ↩︎