AI Can Help Credit Unions Make Payments Smarter and Credit More Accessible

Beyond the chatbots and hype, artificial intelligence has the potential to improve financial services.

Jeremiah Lotz, managing vice president of digital and data at PSCU, told PYMNTS that AI will wind up being a high-tech tool that can help credit unions improve the personal touch for which they’re already famous.

Most immediately, AI can augment and improve payments, and more specifically, help to defend against fraud and risk, which is already becoming commonplace.

“These are certainly viable applications, but there are so many broader opportunities for AI as we look to the future,” Lotz said.

The Basics — and Beyond

At a basic level, AI can be leveraged to understand how and when a consumer is about to move money from one account to another — and help ascertain the best way to move those funds, he said. That includes whether to use faster payments’ real-time rails or whether it makes more sense to use traditional payment methods where time is of less importance.

But the decisions must be made quickly. The challenge is to do so in a way that does not create a significant uptick in false positives.

“Leveraging AI to analyze all the different data points is going to be critical so that the financial institution can look at the data, let the payments ‘go’… and identify if there is a need for a review of that payment or that consumer or that business,” Lotz told PYMNTS.

The benefits of AI within financial services extend far beyond the confines of simple money movement, of looking at balances or account funding.

Improving Supply Chains

Lotz said AI also will find firm footing in improving supply chain dynamics. The richer levels of data collection and analysis can help gauge consumer demand, from a merchant perspective, and to examine consumer behavior, tied in part to the orders just received. The information can, in turn, give better insight into the inventory and stock that needs to be kept on hand in anticipation of where the consumers’ tastes and preferences might be headed. The positive ripple effects include helping merchants avoid stockouts and overstocks.

At an individual level, the opportunity is there for FIs — and CUs, especially — to help members gain access to new ways to pay for the goods and services they want. FIs can personalize the offers and financing they extend to accountholders.

“This includes the growth of relationship lending,” said Lotz, “and to increase the lending capabilities and practices” that move beyond traditional channels.

No matter the application, FIs will find AI invaluable in reducing manual tasks and operating costs.

“Machine learning is going to be critical for businesses,” Lotz said.

Looking ahead, he said consumers and businesses will expect their CUs to keep current on how AI can be, is being, and should be used to benefit all stakeholders.

For CUs, he said, “AI can enhance the philosophy of building those personal relationships — and to understand the members in even deeper ways.”