NAFCU informs regulators how credit unions leverage AI


The National Association of Federally-Insured Credit Unions (NAFCU) provided federal financial regulators with information on how credit unions use artificial intelligence (AI).

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In a letter to the National Credit Union Administration, NAFCUʻs Andrew Morris, senior counsel for research and policy, wrote that while AI enables credit unions to compete more efficiently with online lenders and fintech companies, it has not altered credit unions’ historical role as relationship lenders.

“Credit unions are leveraging AI to support a variety of operational needs to better deliver safe and affordable services to their members,” Morris wrote to Melane Conyers-Ausbrooks, secretary of the board at NCUA. “Common business functions that integrate AI solutions include underwriting, risk management, marketing, and automation of customer service operations.”

Morris recommended that the NCUA form a working group of credit union industry stakeholders to pursue targeted solutions to leverage AI. He also said NAFCU supports the idea of regulators allowing credit unions to create pilot programs that provide safe harbors for specific AI applications.

“Credit unions are committed to pursuing responsible innovation, but to meaningfully pursue AI and ML technologies requires a supervisory approach that does not add to already high examination burden,” Morris concluded. “The Agencies should consider encouraging AI and ML experimentation through pilot programs, waivers, and other tools designed to embrace AI’s demonstrated capacity to deliver fairer and more accurate predictions of creditworthiness, as well as greater security. Such an approach would not only help expand access to credit in underserved communities but would also ensure that credit unions can continue to offer competitive products in a rapidly evolving marketplace for financial services.”

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