Credit Unions

Credit Unions Place Big Bet On AI And Biometrics

A new decade — and for credit unions (CUs), might this be the decade of data as a conduit of trust, a way to cement customer loyalty?

As reported late last year, PSCU, one of the nation’s largest credit union service organizations (CUSOs), said it will invest $100 million over the next three years to boost innovation and tech-driven solutions available for CUs. The focus is on helping credit unions improve and enhance engagement with their members.

To that end, in an interview with PYMNTS, Denise Stevens, senior vice president and chief product officer at PSCU, offered a roadmap and detailed priorities for where the money will go in the drive to modernize infrastructure. As reported, PSCU is setting its sights on creating an end-to-end payments platform, embracing cloud technology and expanding Lumin Digital, the organization’s proprietary digital banking platform. At a high level, said Stevens, the investments will fund initiatives that help CUs compete more effectively with traditional financial institutions (FIs), where robotics and artificial intelligence (AI) can help create what she termed “actionable outcomes” for credit unions.

Lumin Digital — which she said exists as a digital banking platform that focuses on member engagement and cloud-based, modularized technologies aided by predictive analytics — helps CUs offer digital banking solutions unique to their own needs and their members’ needs.

Digital banking efforts were once only realistic for the most deep-pocketed of traditional FIs. However, “it’s much easier now for credit unions to compete and offer [more] seamless member experiences than [ever before],” Stevens told PYMNTS. That’s partly due to the fact that such technology is more affordable than in years past.

Eyeing Instant Payments

When asked about near-term use cases that might be adopted and promoted more widely by CUs (specifically instant payments), Stevens said that, in the U.S., “we’re still in the early stages.” She noted that entities, such as larger banks, have already connected with The Clearing House, and are bringing transactions beyond card payments toward instant payments. In addition, she cited the recent announcement by the Fed to develop a real-time payments system by 2023 as a likely impetus for credit unions to move toward real-time offerings.

For PSCU, she said peer-to-peer (P2P) is a natural starting point for faster payments adoption, given the emergence of Zelle and Venmo volumes. However, that won’t be the sole driver, she cautioned.

The use cases that make the most sense for a CU to jump into real-time payments center around removing costs tied to transactions, including disbursements, such as for auto loans — where paperwork and steps in the process can be streamlined, and everything is collapsed into a single interaction.

With an eye toward FinTech, doomsday is nowhere in sight for traditional financial firms.

“Go back a few years, and we may have all been worried that [FinTech firms] would take over financial services. What we’ve found instead is that [FinTech firms] are a complement” that add services to credit union solutions, Stevens said. “They can be great partners,” she told PYMNTS, pointing to Mastercard Start Path, which has helped introduce CUs to these smaller, tech-savvy upstarts.

Convenience And The Trust Factor

The seamless customer experience remains the ultimate goal of PSCU’s $100 million investment — and for CUs in general. In the discussion, Stevens said that the roadmap includes “predicting and offering tailored options to membership, so that they do not have to go and dig for it. Nothing is more important than time.”

She noted that, harnessed effectively, CUs can leverage data to help consumers more effectively plan for the future, such as saving for a vacation. In addition, members can turn credit and debit cards on and off. Credit unions may also add new features to desktop, mobile and apps through software development kits (SDKs).

Combining new services across platform models, such as the Lumin Digital subsidiary, can make it easier for CUs to serve members across channels.

“Regardless of whether they show up at the branch or call in to the call center, or use a mobile app,” Stevens said of the member experience, “things need to be, consistently, the same.” In other words, members expect their credit unions to know them, regardless of the context of interaction. Streamlined data enables CUs to create that type of channel-agnostic experience.

Data, she added, offers insight that can spur credit unions to predict habits and trends, becoming proactive in a way that anticipates individuals’ needs through each step of their financial lives. AI and data analytics move CUs away from a cookie-cutter approach, and allow them to choose a range of next-best offers and payment options that, in turn, enhance transaction and revenue growth.

Furthermore, data strengthens efforts to protect consumers. For example, behavioral biometrics can pinpoint how mobile phones are used — the angles at which they are held, and how long it typically takes a consumer to type responses. Detecting, pinpointing and alerting CUs to anomalous behavior, without impeding the customer journey, cements the already high level of trust that exists between customers and the credit unions that serve them.

“Recommitting to that trust, with every interaction, is important,” she told PYMNTS.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.