AI(Artificial intelligence) concept. Source: Adobe Stock

Artificial intelligence (AI) is becoming the norm in both business infrastructure and consumers' daily lives. AI is an intelligent and virtual resource that deploys data to replace and improve business functions previously completed by human capital. Artificial intelligence can be leveraged to expand business, lighten staff load and enhance member experience.

The Federal Reserve has noted a steady trend of financial institutions closing physical branches. The pandemic only expedited this trend with 5% of all credit union branches closing during or since the pandemic. While physical branches aren't dead, smart AI is enhancing members' experience outside of the branch through mobile banking, call centers and payment processing. The use of AI is now part of a digital-first strategy for credit unions. While AI is rapidly becoming routine, some credit unions are slower to adapt and implement AI.

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Slow adoption of AI poses risk such as:

  • Reduced member retention: While member loyalty is overall strong in the credit union industry, members may move their membership to another credit union, or even a bank or fintech, that matches their digital needs and provides a seamless experience for all their banking needs. Consumers, primarily younger generations, gravitate toward the personalized experience that AI can offer.
  • Higher cost for staff training: AI can replace many routine tasks like depositing checks into a share or draft account or answering questions that members might call or chat in, such as, "What is my balance?" or "What is your routing number?" When these tasks continue to be completed by humans, continuous training is needed. Unlike staff, AI can be quickly programmed or re-programmed for efficiency.
  • Drop in sales of products and services: Credit unions offer a variety of products and services to help members' financial well-being as well as increase non-interest revenue. Yet members are often lacking awareness on which products and services best suit their needs. Lack of education and product knowledge can cause members to simply not seek out a product or service, causing a decrease in sales.

All these pain points result in more costs and an eroded member experience.

Expansion Opportunities for Credit Unions: Mobile Banking & Payment Processing

Nearly 60% of credit unions surveyed for NAFCU's 2021 Report on Credit Unions noted that an AI learning machine was an investment priority for 2021. AI is being used to automate and streamline multiple areas of the business, including: Member service and call centers, operations, marketing campaigns and lead generation, payment processing and mobile banking. In particular, payment processing and mobile banking offer opportunities to increase revenue, member experience and staff efficiency.

Here are two ways credit unions can implement AI to improve a member's experience.

Enhancements to Mobile Banking

With branches shutting down and the world continuously shifting toward a remote environment, mobile banking usage increased, particularly in the under 65 demographic. Mobile banking – online or through a mobile application – gives your members access to your credit union's services at any time, at any location.

Mobile banking provides member access to many tools, such as:

  • Quick balance checks;
  • Online chat;
  • Travel notifications;
  • Account transfers;
  • Remote deposit capture;
  • Bill pay;
  • ATM locator;
  • Apply for a loan; and
  • Payment calculators.

Mobile banking can interact with members outside of the branch, outside of branch hours. This helps members get answers and help faster and can reallocate human capital to more complex areas of the business.

However, simply being online often is not enough anymore. Because of the digital age and top consumer brands offering sleek, seamless service, there is a growing consumer expectation for personalized service from their banking institution too. While a standard mobile banking platform can be functional, a user-friendly, AI-fueled platform offers a fast, sleek and personalized experience. Without AI, mobile banking is simply transactional. With AI it can become a highly interactive, delightful and engaging experience for your members.

A 2021 report from Forrester highlighted that call centers give inaccurate information 36% of the time whereas AI has shown to be 90% accurate. While this poses both compliance and poor member experience concerns, a user-friendly mobile banking platform can provide members with answers to questions that they might otherwise place a call or visit a branch for, thus decreasing call center volume and branch foot traffic. A robust mobile banking platform can drastically reduce abandonment rates and help members get answers to their questions quickly by redirecting information to streamline operations and member experience.

Seamless Payment Processing

Advanced AI systems can carry the same seamless experience from mobile banking to payment channels. To increase payments received and improve member experience, credit unions should have an agile infrastructure to receive loan and product payments from borrowers. One top credit union advocate projected in NAFCU's report that payment processing will be a priority investment in the industry over the next three years.

Because financial situations, especially debt situations, are highly emotional, 62% of consumers said that they would prefer to work with artificial intelligence over a human, according to research from tech company Drift. AI enables robust self-service for members to set up payment plans, skip a payment, view payment calculators and submit payments.

Fraud prevention in payment processing is another top priority for credit unions. Due to the speed and highly programmable nature of AI, payment processing with AI can offer seamless payment processing while scanning for fraud red flags. AI provides multiple layers of authentication, chosen by the credit union, to allow strict, authorized access to payment portals.

The Results: How AI is Changing Credit Unions for the Best

Mobile banking and payment processing with a platform that elevates product and service sales can positively impact revenue. One solution, from interface.ai, boasts of improving online conversion of online product purchases by over 500%. Advanced AI can reduce stress on staff and offer Amazon-like, around-the-clock service to help with members' everyday questions, while having an impact on your bottom line. With some AI machines, revenue can increase by 30% per member, according to interface.ai.

Credit unions are increasingly investing in technology that supports AI. These investments are fueling operational efficiencies and savings, while matching members' growing expectations for personalized, digital tools.

Your credit union demographics are unique, and so are the solutions that best fit and enhance your business operations. AI for your credit union will not be a one-size-fits-all. Advanced and benefit-driven AI is scalable, taking into consideration your business goals, human capital, resources and membership base. As you finalize your budget and strategic plans for the new year, consider how AI fits into your credit union's future.

Charlie Peterson

Charlie Peterson is SVP for Allied Solutions, a Carmel, Ind.-based provider of insurance, lending and marketing products for financial institutions.

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