Credit Unions

Seize the Day: Navigating Uncertainty With Gusto

Mike de Vere
August 18, 2022

Now more than ever, members are looking to their credit unions to provide quicker and fairer lending experiences. Arise and exceed their expectations — even when the economic outlook is changing minute-by-minute.

A society grows great when old men plant trees in whose shade they shall never sit.

- Greek Proverb

This generation of leaders is being asked to step up and ask, "What can I do to help?" when times of uncertainty find people in need of extra support. 

This is an ideal that is rooted into the very nature of credit unions across the United States, and it is the guiding principle for some of the most successful lending institutions. But leaders aren't just asking that important question in times of crisis. They’re asking this question every day, in every situation, for everyone.

"How can we help?"

"How do we make this better?"

"What is the answer that will do the most good?"

It’s no hidden truth that, at this current moment, our economic outlook is questionable. And in a survey we commissioned with The Harris Poll, almost 80 percent of respondents said they were fearful of a recession in the near future. While it’s hard to predict exactly what we’re up against, preparing for a recession is on top of everyone’s minds — we might as well start talking about how exactly we can do that.

So, the question of the hour: How do we ensure that we’re setting ourselves up to successfully navigate an economic downturn and provide the best support to the most members? 

We start by looking for the helpers.

We’re incredibly lucky here at Zest AI to know many smart folks at credit unions who are already thinking about how they can support their members and provide accessible and fair credit, no matter the economic outlook.

After pulling together a focus group of credit union leaders, the group shared some insights on preparing for whatever’s next to come and thoughts on how we can continue to best serve members. Some ideas they shared include:  

  • “It’s not so much that they want the loan forgiven, but they’re asking for some creativity with repayment options if their circumstances were to change.”
  • "A membership is worth something. Make that count and reward loyalty.” 
  • "We are in the risk business. So, let’s take the risk. There may be some losses. But we have all built that into our modeling, our pricing, and our projections. Let’s not double ding with excessive credit correction.” 
  • "To lend through whatever comes next.” 

At Money20/20 and a NACUSO conference earlier this year, we chatted with financial services professionals across banks and credit unions. We found that over 80 percent of those we talked to thought increased use of AI/ML would lead to better credit scoring. 

With those numbers — the case for AI is sold, right? 

Now, I’d say I’m a little biased in my opinion here, but then I would have to joke about how I could use machine learning algorithms to tone that down for an unbiased decision, and none of you want to hear that one-liner. 

In all seriousness, AI is an excellent propellant for inclusive credit access. But it has to be built with purpose. 

When making better credit decisions and increasing inclusion are designed into a machine learning algorithm, AI reduces inherent biases by toning down signals (ha  — get my joke now?) that often designate borrower demographics like race or gender. 

Better, fairer credit scoring means we can serve more members and do all of those things our credit union leaders shared above. We can be creative, take more risks, and lend through whatever comes next.

Your members believe in you.

We didn’t just ask credit union leaders and financial services professionals to advise us on what members are looking for as we navigate through uncertainty. We asked credit union members for their thoughts as well. I think you’ll be excited, maybe even pleasantly surprised by the results.

Of our credit union members polled in The Harris Poll survey, 85 percent said they believed their credit union cared about them, and 82 percent said they thought their credit union cared about their family's financial well-being. This doesn’t surprise me in the slightest.

What we did find was that 85 percent of credit union members confirmed that their credit union supports them with products and services during harsh economic climates – which was 9 points higher than the average response, which included national, community/regional, and online-only banks.

Even better—yes, it gets even better. When credit union members were asked if their credit union was more equipped than a national bank to support them during harsh financial climates, 86 percent responded yes. As an aside, over half of those who bank primarily with a national bank also responded in agreement to this question, so I’d count that as a double win.

What should you take away from this?Your members believe in you. They trust you to be there to support them with the right products and the right attitude. They know you prioritize them, and it pays off.

So now you’re thinking, “here comes the sales pitch,” right?

You’re not wrong. But I’ve held onto one last data point from The Harris Poll until now. And that point is: 73 percent of all Americans agree that increasing access to credit should be a top priority for financial institutions, especially during an event like a recession. And more credit union members (80 percent) believe the same. And as you read above, AI is a great propellant for increasing credit accessibility.

AI-driven lending was once only available to the largest banks, but now any lender – big or small – can access this technology. A credit union can make lending decisions with more accurate and inclusive scores and ultimately saying yes to more members.

Seeing equity and inclusion in financial services means we have to look beyond our current situations — for better or for worse — and think about the long-term implications of our decisions. This sometimes asks us to take action before we feel “ready.” But how often do we get a few months down the road from a decision and see that we could have moved quicker — especially when it means that we would have been able to help more people?

Zest AI loves working with credit unions because there's an innate drive to do better for their members and the communities they serve. I am a little biased in saying that, but the numbers don't lie. Credit unions working with us are prepared to support their members with more yeses, no matter the economic outlook because we build fair lending into the equation.

***Harris Poll Survey Method: This survey was conducted online within the United States by The Harris Poll on behalf of Zest AI from August 2-4, 2022 among 2,017 U.S. adults ages 18 and older, among whom 414 are credit union customers (defined as those whose primary bank is a credit union). The sampling precision of Harris online polls is measured by using a Bayesian credible interval.  For this study, the sample data is accurate to within + 2.8 percentage points using a 95% confidence level. For complete survey methodology, including weighting variables and subgroup sample sizes, please contact Katie Willem (kmw@zest.ai).

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