From food service to construction, industries are racing to identify how artificial intelligence can improve efficiency, reduce errors, and ultimately lead to higher revenue. AI has the potential to transform financial services, too, and for many credit unions, the question isn’t if to adopt but how.
Todd Woods joined Interra Credit Union ($1.8B, Goshen, IN) as the senior vice president of technology in 2022. The timing was fortuitous.
“Just a few months later in November, everything changed with the explosion of ChatGPT,” he says. “Suddenly, AI became the topic of conversation everywhere.”
Woods joined Interra from a larger institution and was impressed to find the Indiana cooperative was already using AI in the form of a chatbot. Using the bot as a launching pad, the credit union continued on its AI journey.
“Due to the effects of COVID, such as increased call volumes and staffing challenges, the team invested significantly in developing Terra,” Woods says. “It was already showing great success in reducing call volume and improving member service.”
Today, Woods is an “AI champion” of sorts, happily supplying tips to his organization as well as other credit unions for how to strategically adopt AI to enhance efficiency and member experience.
Common Misconceptions
Before a credit union can start using AI effectively, executive teams and boards should be aware of what it actually is and what it can and cannot do. Woods says he’s spent a lot of time explaining that the technology isn’t as new as it seems.
“AI 1.0 has been around for a long time,” he says. “When talking about generative AI, we’re actually referring to what is AI 2.0.”
AI 1.0 relies on rule-based systems and structured data. For example, spam filters in email services use basic machine learning to detect and block unwanted messages. Meanwhile, AI 2.0 can adapt, learn, and process unstructured data more autonomously.
According to Woods, the biggest misconception is that AI is magic. In fact, it won’t just do everything. The user must put parameters around what they want.
“One analogy I use often us that AI isn’t like lettuce,” Woods says. “You can’t just go to the store, pick up some AI, and chop it up into a salad. It doesn’t work that way.”
Another misconception is that AI is like a search engine.
“Recently, I spoke to some of our staff who were getting access to ChatGPT,” Woods says. “One of them asked me to simplify, and I explained it like this: When you use Google, you type in keywords to get the best search results. But with generative AI, you don’t need keywords. You need to ask full questions. It will give you one well-reasoned answer and even tell you where it got the information. If it doesn’t have a good answer, it will say that, too.”
The Foundation For AI Adoption
One of the first things Woods did when he took on his role at Interra was expand the credit union’s existing AI investments.
Interra Steps Up Its Call Center
Through a partnership with an AI solutions firm, Interra made notable improvements to its call center that resulted in:
- 90% fewer calls to overflow.
- 54% decrease in call abandonment.
- 60% call containment rate.
Through a partnership with Posh, Interra implemented an interaction voice response (IVR) system in addition to the conversational chatbot on its digital banking platforms. This allowed members to access assistance 24/7 without worrying about business hours. Employees experienced an increase in capacity, allowing for meaningful interactions and better outcomes.
Today, hundreds of new users interact with Terra each month for complete self-service. The system can address 60% of calls without the assistance of a human.
On the employee side, 125 of 325 full-time employees actively use Posh’s internal AI assistant in their day-to-day job duties.
“It’s like everyone now has their own personal assistant,” Woods says.
In the larger vendor environment, Woods says he asks all of Interra’s vendors what they are doing with generative AI. The more they integrate these capabilities into their products, the more the credit union can benefit.
“Especially for credit unions that might not have the tools or personnel to build these solutions themselves, I advise leveraging what you already have and work closely with your vendors,” Woods says.
Best Practices
For credit unions unsure about how to start integrating AI into their institutions, Woods has several useful tips.
No. 1: Use It
Sometimes, there’s no better way to learn than by doing.
“Don’t just read about AI — engage with it,” Woods says. “Get a free account and start experimenting.”
Familiarize yourself with key concepts like machine learning, neural networks, and different types of AI applications such as predictive analytics or natural language processing. Experiment with different prompts and make notes of the varying outcomes.
Having a general knowledge of AI’s capabilities and limitations makes it easier to strategize how best to use it.
No. 2: Understand The Risks
No technology comes without risks. Common concerns related to generative AI include bias in decision-making, lack of data privacy, and additional cybersecurity risks.
“We make it clear to our staff not to input any sensitive or private information into AI models,” Woods says. “A simple rule is: If you wouldn’t share it in a meeting, don’t share it with AI.”
Interra has since developed a formal AI policy, but Woods emphasizes that it was designed to be broad and adaptable.
“I’m seeing a lot of folks on discussion boards saying, ‘We need to have an AI policy with all these rules and restrictions.’ Well, maybe, but for us, we just wanted to make sure people understood the risks without stifling innovation,” he says.
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3: Understand Credit Union Culture
Woods says Interra’s success with AI has been in part because of the culture within the credit union.
“At Interra, we have a very inquisitive staff,” he says. “We provide access to AI knowing that even if it doesn’t immediately impact someone’s daily work, they’ll find value in exploring it. The more they use it, the more they appreciate its benefits.”
Employees are the best ones to understand how AI might support their day-to-day work, so setting up guardrails and then letting them experiment is a great way to foster a culture of innovation staff members. Workshops, webinars, and working with an AI consultant are other ways to help this process.
“From our CEO down, we’ve been clear that AI isn’t about replacing employees. It’s about enhancing service.”
No. 4: Don’t Be Afraid
AI might feel new and strange to many, but it’s far from what science fiction tends to portray.
“Some worry it will take over jobs or even humanity itself,” Woods says. “But from our CEO down, we’ve been clear that AI isn’t about replacing employees. It’s about enhancing service. For example, our call center has reduced FTEs, but only through natural attrition, not layoffs.”
Woods says Interra remains focused on improving its member experience, describing future plans as “cautious yet strategic.”
Looking Ahead
It’s hard to predict how AI will shape financial services and what the credit union industry might look like even in just one year.
Woods says the general consensus among vendors and other credit union leaders with whom he’s spoken is that the future is bright, but the specifics are still uncertain.
“I’m particularly optimistic about AI’s potential in fraud detection,” the tech SVP says. “The sheer speed at which AI can analyze data could be a game changer. AI adoption varies, but the interest is there.”