Guest Editorial by Adrian Moise, Founder and CEO of Aequilibrium
For almost two years, financial institutions have been fascinated with how they can utilize nascent artificial intelligence (AI) technology to improve their operations. In particular, many banks and credit unions are interested in how their customers and members might interact with these tools. AI-enabled solutions like virtual assistants and automated customer service have profoundly impacted user experiences for financial institutions.
Many financial technology providers have made great strides in offering effective AI tools designed to improve the user experience. Klarna, the Swedish buy now, pay later provider, implemented an AI assistant that has engaged in 2.3 million conversations with customers since February of this year, generating an estimated $40 million in profit. Many traditional financial institutions have begun incorporating customer-facing AI tools as well. According to the Consumer Financial Protection Bureau (CFPB), more than 98 million customers have engaged with their banks’ chatbots in 2022. The CFPB estimates that this figure is expected to grow to 110.9 million customers by 2026.
The motivation for financial institutions to implement these tools is not difficult to understand. Financial institutions want to provide the best possible customer service at any hour of the day. Generative AI solutions like ChatGPT and others have demonstrated an impressive ability to respond to inputs and provide helpful solutions effectively. The potential of AI to enhance customer service is vast, and these tools have more functionality than just the front end. Many of the most compelling use cases for AI tools involve back-end integration, promising a significant improvement in customer service.
Financial processes are notoriously complex, time-consuming, and difficult to understand. According to NerdWallet, a mortgage loan's underwriting and closing process alone can take anywhere from 30 to 60 days. While these processes are vital for the entire mortgage, they can negatively affect the customer experience.
Consider the average mortgage application experience. An applicant has to wait several weeks to receive approval, often dealing with repetitive requests for additional documents and status updates. With AI integration, the system can automatically verify the applicant’s ID, income, and credit history within minutes. AI continuously updates them about their application status, and within a few days, the applicant receives their loan approval. This enhances their experience and frees the credit union staff to assist customers more efficiently.
In this example, AI tools can take a process that usually takes weeks and can be vastly sped up with automation tools. While the applicant does not directly interact with these AI solutions as they would with an automated chatbot, their customer experience has been dramatically improved solely due to the sheer speed of this otherwise lengthy process. Indeed, these AI tools are so effective precisely because customers do not see them. AI tools can make other technologies invisible, making their processes seamless for members. The efficiency of AI in speeding up processes is a testament to the operational improvements it can bring.
To revisit the earlier example, AI tools can automatically check for ID information within a document as an applicant applies for a loan. Usually, this process must be completed manually, involving a credit union knowledge worker manually reviewing the document and verifying the ID information by hand. AI technology can complete the same task more efficiently, while the human knowledge worker can work on other tasks. This also improves the customer experience, as applicants move through the process faster.
AI technology is here to stay, and the impetus is on credit unions to integrate these innovative solutions into their operations. While customer-facing tools like chatbots and automated assistants have a place in the future of financial technology, credit union leaders need to think of other ways to implement AI tools. Back-office implementations have the potential to improve efficiency drastically, enhancing the member experience by making other processes invisible.
Even bleeding-edge technology like VR can help credit union members in unexpected ways. VR training helps credit unions train their knowledge workers using AI-powered learning modules, which lowers operational costs for institutions while providing higher quality training. These programs also improve the member experience in less visible ways. A better prepared staff can manage member needs more effectively, improving the member experience vicariously.
By embracing both front-end and back-end AI solutions, credit unions can improve service delivery and achieve greater operational efficiency. The future of credit unions is not just about leveraging AI, but about transforming their operations and member engagement. As technology advances, institutions that proactively integrate AI will be well-positioned to lead the way in member satisfaction and operational excellence. Credit unions must, therefore, view AI as a tool and a strategic imperative that can revolutionize their operations and member engagement for years to come.