Accelerating Growth within a Credit Union in a Post-Pandemic Society
Leveraging Artificial Intelligence
Over the course of the pandemic, the global economy has faced a myriad of challenges, so credit unions have experienced the need to find creative ways and means to retain their existing customer base and, if possible, to expand their footprint.
The most common challenges for CUs include:
- Estimation of current and supposed risks
- Lack of customization and proper analytical tools
- Existing customer base engagement
- The attraction of new customers, especially millennials
Since credit unions have a community-based focus, they began to experience additional pressures as some larger financial institutions began to extend their reach into the new customer demographic.
Why are the FICO score & BI tools not enough?
Though FICO and traditional BI tools may provide a comprehensive view into a customer’s historical creditworthiness, they are no longer the answer to addressing some key areas the pandemic has presented, because:
- They lack flexibility and don’t reflect the customer’s behavior within the credit union
- FICO is primarily a historical view of behavior
- FICO and BI tools do not account for personalization
As the pandemic continues to apply unprecedented pressure on the community, it is essential to proactively identify products, services, and sectors that may be at higher risk than others such as mortgages, personal loans, auto loans, or other financial services.
Struggling to provide more personalized services to all groups of members, including typical “thin-file” clients, such as millennials, is a strategic growth area for credit unions. At present, FICO and/or BI tools aren’t an adequate solution for this demographic.
Furthermore, the growth of competition in the CU business makes it difficult for credit union executives to demonstrate what distinguishes their credit union from others. Simply providing a digital experience is no longer sufficient, since almost every credit union now offers online and mobile banking services.
So, if leveraging FICO or existing BI tools is not efficient anymore, then what is? Here’s when AI and machine learning come to the rescue, as they enable credit unions to proactively address the mentioned challenges.