AI: Pioneering Credit Union Empowerment Towards Future Expansion

In the financial ecosystem, deposit growth is essential, especially for credit unions. These non-profit institutions not only accept deposits and extend credit but also play a pivotal role in serving their communities with a focus on collective welfare.

Credit unions stand at a significant juncture: how can they harness artificial intelligence (AI) to enhance deposit inflows and stimulate loan growth?

By the close of 2023, the United States was home to 4,604 federally insured credit unions, serving a staggering 139.3 million members, according to the National Credit Union Administration. Unlike commercial banks, credit unions are member-owned entities that depend heavily on deposits to fund their loans, which are their primary assets. These institutions often offer more favorable borrowing rates than commercial banks, making strong deposit growth crucial for their long-term financial stability and continued member investment.

Despite a 4.1% increase in total assets among federally insured credit unions in 2023, many faced challenges with low core deposits. This decline partly stemmed from consumers depleting their pandemic-era savings. Additionally, the ease of shopping around for better deposit rates and the Federal Reserve's persistent high-interest rates, coupled with ongoing consumer financial stress, means credit unions must find innovative ways to maintain liquidity, stay competitive, and manage both their risks and their members' financial health.

Amidst the buzz surrounding AI, credit union leaders are exploring how this technology can unearth new opportunities to bolster deposits and enhance loan growth.

The journey starts with data.

Identifying Hidden Opportunities

Credit unions can leverage AI to identify untapped opportunities within their existing member base. For instance, members might hold loans at other institutions. By analysing data, credit unions can offer competitive refinancing options, presenting a holistic and tailored solution to meet these members' financial needs and differentiating themselves from competitors.

Targeting the Right Prospects

AI can also refine the process of identifying and targeting potential new members. By accessing data on consumers' financial behaviors, such as deposits held at other institutions and estimated income, credit unions can more accurately target segments that align with their growth objectives, attracting additional deposits.

 Driving Results with Automation

Automation is another significant advantage AI offers. Data-driven marketing campaigns can be automated to yield the best outcomes. Insights alone are valuable, but automated tools can convert these insights into actionable strategies, connecting credit unions with potential new deposits and cross-sell opportunities effectively.

 For example, products like Autopilot by Bond.AI, a fintech start-up, enable credit unions to visually compare their financial health and risk factors against other institutions at the click of a button. Although such information is publicly accessible, AI streamlines its collation and presentation, making it readily digestible and actionable.

 Enhancing Member Satisfaction and Revenue Growth

Beyond streamlining data collection and reducing guesswork, smart targeting powered by AI can significantly boost member satisfaction and revenue growth. Credit unions, particularly in rural communities, are often the financial institutions of choice, providing excellent alternatives to larger banks. They facilitate more than mere financial transactions; as member-owned cooperatives deeply embedded in their communities, they represent the heart and soul of the areas they serve.

While AI may not transform the fundamental mission of credit unions, it is revolutionising how they operate. The technology is not solely about automating tasks or replacing human effort; it’s about uncovering new opportunities and fostering resilience. Credit unions that effectively leverage AI to add value for their members and translate insights into actions will reap greater benefits than those adhering to traditional practices.

This AI-powered future, focused on enhancing community-oriented financial services, is a vision to be genuinely excited about.