THE AI/ML INDUSTRY LEADERS FORUM ™

At CUNA’s annual convention last year, author and entrepreneur Peter Diamandis told the crowd of credit union executives that artificial intelligence – better known as AI – would reduce to two the kinds of companies that will exist by the end of the decade.

“Those who are fully utilizing AI, and those who are out of business,” Diamandis said during the Governmental Affairs Conference in Washington, D.C.

Whether or not that becomes a reality is yet to be seen, but in the meantime AI is certainly leveling the playing field between the financial service industry’s haves and have nots.

“Community financial institutions don’t have the manpower or the money like [JPMorgan] Chase or Wells Fargo or Bank of America that put $1 billion a year into technology, and the only way to combat that kind of warchest is with tools like AI,” said Radhakrishnan Srikanth, senior vice president of engineering and AI at Portland, Oregon-based Tyfone.

In an interview, Srikanth said even if AI doesn’t give smaller institutions the exact same technology that the largest banks have, it gets them very close and with a much smaller spend.

“You can get 90% of the way there, and that’s pretty good,” he said.

Tyfone, a digital banking provider, sees its mission as helping communities to have a strong and healthy financial future, and Srikanth said the company does that by assisting community financial institutions to support their members and customers.

Srikanth, who previously worked at Microsoft for 16 years, said the underlying theme of AI is that it allows community financial institutions to have safe, efficient operations while adding value to their members.

“It’s a force multiplier,” he said. “It’s not at a point where it can be totally autonomous, but it is definitely at a point where it’s a fantastic assistant.”

Diamandis said credit unions can take advantage of four basic capabilities when it comes to generative AI: ideating, creating, customizing and extracting.

“Technology is a force that makes whatever was scarce in the past more abundant,” Diamandis said.

And as computational power continues to double, AI, sensors, robotics, blockchain and more technologies are converging to reinvent the future and transform business models, he added.

For Tyfone, AI helps the company code better and faster and has recently begun assisting with automatic responses to requests for information.

Srikanth said the bottom line for Tyfone is that AI saves considerable time for very highly-paid employees. “But we have to be very careful with how we deploy some of this technology,” he said. “It’s evolving so quickly that we have to separate the mission-critical usage from non critical.”

Some credit unions are already realizing a positive impact from AI.

Golden 1 Credit Union, the sixth largest CU in the U.S. by assets, said it has seen a 28% increase in approvals to protected classes of borrowers since it started using artificial intelligence for loan decisions.

At America’s Credit Unions’ [formerly CUNA] Governmental Affairs Conference earlier this year, Sacramento, California-based Golden 1’s CEO Donna Bland said the AI-driven scorecard it now uses led to higher loan approvals especially among protected classes, including women, Latinx and Black people and members older than 62.

Oak Ridge, Tennessee-based ORNL Federal Credit Union partnered with Zest AI to help the  $3.6 billion-asset credit union make better lending decisions, CEO Jenny Vipperman said during the conference.

“One size does not fit all” when it comes to rating potential borrowers, Vipperman said. “A national score was the best that we had when it was the best that we had.”

The bottom line, Diamandis and Srikanth agree, is that AI can help companies serve their customers more efficiently and effectively.

“We are living in the most extraordinary time in human history,” Diamandis said.