AI Lending The Pros and Cons of AI in Credit Union Lending


The Pros and Cons of AI in Credit Union Lending

AI lendingYou are undoubtedly aware of the artificial intelligence revolution we are all living through. Even though popular tools like ChatGPT have only been out for about a year, they've already made a major impact—to the point where the global AI market size is expected to reach a staggering $407 billion by as soon as 2027. ChatGPT itself had over a million users within the first five days of going live.

Of course, this demands the question: is AI a good thing or a bad thing for the world of lending in the credit union industry? Answer that question by keeping a few important things in mind about the pros and cons of this innovative technology.


PRO: An Improved Member Experience

From a bird's eye view, the number one advantage of implementing artificial intelligence in digital lending has to do with all the ways it can potentially improve the member experience.

People are willing to talk with a virtual agent if it gets them the support they need exactly when they want it. Members will leverage AI tools to open new accounts if it means they don't have to deal with human error and incorrect limits. AI can and will help make it easier to begin using the lending products members want—all with the same level of personalization and attention to detail they have come to expect.


CON: AI is a Major Investment

While it's true that tools like ChatGPT are out there and readily available, deploying an effective, reliable, and scalable AI solution for an entire credit union is a lot easier said than done. These systems get better over time, yes—but they need constant updates to get to that point. There will also be a bit of a learning curve involved for both employees and members. This will require a big upfront investment that your credit union might not be able to make right now.


PRO: More Sophisticated Fraud Prevention

Fraud is one of the biggest problems facing your credit union today. Artificial intelligence can absolutely be invaluable tool to detect and prevent fraud. AI can make it easier for fraud investigators and even front-line credit union employees to more quickly understand the signs and factors that contribute to fraud, thus putting them in a position to do something about it faster as well.

AI can scan for suspicious activity in real time, instantly alerting the right person even when inherently complicated situations are unfolding. Enhanced data analysis can be used to spot discrepancies that a human likely would have missed, and a more passive solution certainly would have, too.


CON: Losing Out on That "Human Touch"

Finally, understand that using AI too much runs the risk of reducing the personalized, human element that members come to credit unions for in the first place. They don't want a cold and impersonal experience—they can get that experience from any other financial institution. Your members want to know that they're being taken care of by someone who cares. If you offload too many tasks to AI, you'll start to lose that key competitive advantage.


Navigating the Future of Lending: Embracing Artificial Intelligence with FLEX

As so many other industries are finding out right now, artificial intelligence is here to stay. It's not a matter of "if" it will impact how we think of lending—in a lot of ways, it already has. Therefore, it's up to you to review the advantages and disadvantages of this technology to see which applications make the most sense for your credit union and its members.

At FLEX, we pride ourselves on our ability to help credit unions harness the full potential of digital lending. We've recently authored an eBook with that goal in mind. Click the button below to read more. 

FLEX Digital Lending


Preston Packer

Written By: Preston Packer

Executive Vice President | CMO at FLEX Credit Union Technology
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