AI Is For Everyone

Is AI real?

Yes.

It is an extraordinary capability that has the potential to help credit unions in myriad ways, from better underwriting and streamlined member service to more efficient back-office support and almost anything else you can think of.

Does AI matter to your credit union? Yes. (See above.)

Do you need to know about AI? Yes. (See above.)

Should you be using AI?

That’s kinda’ like asking if you should be using running water, a flush toilet, or sliced bread. YES! And you already are.

Machine learning, in all its variations, has been around for decades, and credit unions have been benefiting from it for more than a generation. We just haven’t recognized automated underwriting, decision-making assistance, or risk management tools in these terms.

So why all the hype?  Several reasons.

First, Generative AI — what is most often thought of these days when someone mentions AI — is new. It’s software that transforms some prompts and rules — and huge datasets — into a product that looks like original thought. (It’s not, but it looks like it.)

Second, like anything else that appears shiny and new and too good to be true, Gen AI commands attention from a wide variety of consultants and companies. Most know their stuff and can help you take advantage of this new capability; others are just layering “enhanced by AI, or “AI powered” on top of existing products to make them seem better.

Third, the Gartner Hype Cycle is real, and Gen AI is now approaching “The Peak of Inflated Expectations.” You can see this both in the commercial hyperbole noted in reason two and in the increasingly apparent limitations in the current technology, most often noted as “hallucination,” or the creation of reasonable-sounding but wholly inaccurate outputs.

So, what to do?

First, make sure you understand — at a basic level — what Gen AI is and what it isn’t. It is amazing; it is NOT magic.

Fundamentally, it’s still stuff we understand intuitively — databases, sorting software, learning algorithms, and lots of processing power. What’s changed is the size and scope of the datasets and the power of existing tools to process this data at unprecedented speeds.  Altogether, this set of evolutionary tools is delivering revolutionary results.

Second, become familiar and comfortable with the array of risks and challenges involved:

• Confusion and fear among your team about how AI might change or even eliminate their jobs.
• Governance and policy concern, including data security and the protection of personably identifiable information, the risk of leakage of other proprietary and sensitive information from the use of public tools like ChatGPT, and vendor management and performance assurances.
• Regulatory and statutory risk around data privacy and security, vendor dependence, relationships with examiners and regulators, and the need to adopt risk management and mitigation policies (Chat GPT can write a reasonably good one).

Finally, work with your leadership team and board to think through why you are investigating, investing in, and using AI. Why is working with AI important to your credit union? It’s okay for the answer to be any of the following:

• We want to learn, experiment, and observe the results, problems, impact, and success of experimentation.
• We want to be more efficient and productive — to deliver better products and services, be more secure, manage risk, and prove compliance at lower cost. (This is an operational play, not a strategic one.)
• We want to be more effective — to deliver better member service and more relevant, more impactful, and more sustainable value to members and other stakeholders. (Ultimately, this is the strategic play, even at the short-term cost of near-term efficiency.)

Regardless of your choice, though, what matters most is that you and all your stakeholders know and understand which of these objectives you are pursuing and why. That’s critical to overcoming fear and concern about potential impact and encouraging the safe, responsible, and productive exploration of new tools and opportunities.

It’s a truism that every effort, every business investment, involves tradeoffs — opportunity cost. Making conscious, thoughtful choices, and knowing the why behind them, is the only way to ensure your credit union gets the most out of the investment of time, money, and effort you are already making in Generative AI.

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