AI as the new frontier: empowering credit unions for future growth

Deposit growth is vital for financial institutions, and especially for credit unions, which are non-profit financial institutions that accept deposits and extend credit for their communities, in addition to providing other community-focused functions.

How can credit unions leverage AI to help boost deposits and improve loan growth?

As of the end of 2023, there were 4,604 federally insured credit unions in the USA with 139.3 million members, according to figures from the National Credit Union Administration.

As member-owned institutions, credit unions rely on deposits to fund loans, which are their primary assets. The borrowing rates at credit unions are often more competitive compared to those of commercial banks, so robust deposit growth will help ensure that credit unions continue to invest in their members and ensure financial stability for the long term.

While total assets in federally insured credit unions increased by 4.1% over 2023, core deposits at many credit unions remain low, driven in part by consumers using up their savings accrued in prior years during the pandemic.

At the same time, it is easier than ever for consumers to shop around for more attractive deposit rates. Coupled with the Fed’s persistently high interest rates and continued consumer financial stress, credit unions need to find ways to maintain adequate liquidity and remain competitive, while also managing their own risks and the financial well-being of their members.

With artificial intelligence (AI) being the big buzzword of the last year, can credit union leaders leverage this technology to help identify new opportunities to boost deposits and improve loan growth?

It all begins with data.

• Identifying hidden opportunities: How can credit unions identify hidden opportunities? Think of existing members who might have other financial relationships at other institutions, for example. If they have a loan product at a different institution, can you offer a competitive product for this member and help them refinance their existing loan? Can you also differentiate against your competition and provide a more holistic and tailored solution to meet their financial needs?
• Finding the right prospects: How can credit unions best identify and target new prospective members to bring in additional deposits? Imagine having access to data about consumers’ financial potential (their deposits held at other institutions and estimated income, for example) that can enable you to better target the right segments for your institution.
• Driving results with automation: How can credit unions automate their data-driven marketing campaigns to bring in the best results? Having insights is a great start. Automated marketing tools can help take this one step further by converting insights into actions and connecting the institutions with potential new deposits and cross-sell opportunities.

With products such as Autopilot by Bond.AI (a fintech start-up that I advise), credit unions can visually assess how their own financial health and risk factors perform against that of other credit unions with a click of a button. While such information already exists in public domains, collating it and putting it in a readable and digestible format takes time.

Beyond automating time-consuming data gathering tasks and reducing guesswork, smart targeting will go a long way in increasing member satisfaction and enable revenue growth for credit unions. In many rural communities, credit unions are the financial institutions of choice and offer great alternatives to bigger banks . But these credit unions facilitate more than just money movement. As financial cooperatives, they are owned by their members and embedded within the communities that they serve. They are — in many ways — the heart and soul of a community.

While AI may not change what a credit union does, it is slowly changing how the work is being done. But it is not just about automating tasks and replacing humans — it is also about identifying new opportunities and building resiliency. Those that can leverage AI to create more value for their members and convert insights into actions will stand to benefit more from the technology compared to those who maintain the status quo.

Instead of a sassy chatbot, this is an AI-powered future that I can be excited about.

About the author

Theodora Lau is the founder of Unconventional Ventures, a public speaker, and an advisor. She is the co-author of The Metaverse Economy (2023) and Beyond Good (2021), and host of One Vision, a podcast on fintech and innovation. She was named one of American Banker’s Most Influential Women in FinTech in 2023. She is also a regular contributor and commentator for top industry events and publications, including BBC News and Finovate.