Whether fraud prevention, call center optimization, voice recognition, AI (artificial intelligence) bots or self-service analytics, industry insiders say 2018 will be the year of integration.
“Just about every institution we speak with recognizes that integration is crucial to getting faster, better access to data that will help boost operational efficiency, improve member service, and identify and capture new ways to deepen member relationships,” said Tina Baker, CEO of San Antonio, Tex..-based KIVA Group, which counts more than 1,000 credit unions as clients.
Additionally, the rise of “conversational commerce,” coupled with more and more consumers shifting to digital banking, will result in a larger adoption of AI platforms in the coming years, explained Ted Bilke, CEO of San Diego, Calif.-based Symitar.
“More credit unions will advance artificial intelligence from the consideration and planning stage to deployment,” said Bilke. “Engaging with members in a more impactful way may lead this effort as a revenue driver.”
Fintech and security predictions
In an effort to speed new product development and differentiate digital services, Bilke said more and more credit unions will “embrace” fintech partnerships. The step toward collaborative outsourcing, he said, will focus on emerging critical trends such as data management, business analytics, faster payments, business growth via digital channels, commercial lending and deposit growth, and reducing fraud.
“The industry will see strong traction with fintechs focused on small business lending and AI technologies. Internal processes and organizational design will be restructured to formalize cultures of innovation and intelligence,” said Bilke. “We will see more specialty positions such as ‘chief innovation officers’ and data scientists in an effort to become more agile and competitive.”
Whether it is video blogging or implementing a new technology, small to mid-size credit unions are often limited by a budget. In order to “keep pace with a rapidly evolving market,” credit unions must “smartly partner with third parties,” said Dave Stafford, SVP and chief information officer at PSCU.
“Allow your service provider to spend precious capital on infrastructure and scale while focusing key credit union investments on the delivery of products and services,” said Stafford. “Subscribing to these services on an as-needed basis also helps drive agility and responsiveness to rapidly changing market needs.”
When it comes to cybersecurity, Stafford explained that investments in firewalls and intrusion detection and prevention systems (IDS & IPS) remain critical, but “bad actors” are getting smarter and investing faster than CUs. As a result, credit unions have to think steps ahead.
“As cyber defense programs mature, investments are increasingly moving towards a strategy of neutralizing the risk of compromise through more proactive measures like network segmentation, data tokenization and the analysis of user behavior,” said Stafford. “Recognizing that people and process are key components to any comprehensive cyber security program will ensure proper attention is always given to fundamentals like awareness, training and best practices of procedural controls.”
Fewer hurdles ahead with AI?
KIVA's Baker explained that there have been hurdles to adopting AI, but a common practice in the integration service space is to utilize the “Enterprise Service Bus” software architecture. This approach enables interactions between “disparate systems” without enforcing change upon those systems by “encapsulating the routing, mediation and translation logic within micro services.”
The development of this “translation logic,” however, has been “very labor intensive,” added Baker, and requires a domain expert of both systems to map the communications.
“Up to this point, tool support has been limited to [‘what you see is what you get’] tools with limited field-match capabilities,” she said. “It is predicted that research into the use of deep learning to facilitate the development of translation logic will gain interest over the next year to reduce the human workload.”
Gaining members’ trust still key
But all the tech in the world doesn’t matter if it doesn’t exist to serve members, and a new generation of consumers is changing how credit unions do business.
For many years, millennials weren’t understood as a generation, especially in the banking world. And while they have helped drive much of the adopted forward-leaning tech initiatives (i.e., mobile banking), one observer says FIs can no longer simply satisfy the younger generation simply by offering technology. The key, said Chris Otey, chief revenue officer at CU 2.0, is “browser trust.”
“Credit unions are still struggling with how to build trust digitally,” said Otey, who also serves the chairman of the board for the Redondo Beach, Calif.-based South Bay Credit Union. “At my credit union, a trend we are seeing is trying to find new, better and more efficient delivery channels, such as mobile video banking, which we just deployed.”
No longer is cash king, but rather content. Credit unions looking to fortify respective bottom lines will need to focus on this area, explained Otey. Search engine optimization will be critical to success, he added.
“Credit unions do not traditionally create content. They are not writing blogs or articles on how to get a mortgage or how to refinance an auto loan or open an account,” said Otey.
“But they have to start doing these things to build trust digitally. Millenials are actually people buying houses and refinancing cars loans, getting married and having kids,” Otey continued. “They are now adults, but they don’t shop the way other generations have. They research online and are more informed consumers.”