How superior fair lending practices at credit unions enable greater outcomes for everyone

Equitable access to credit isn’t just answering the call for prioritizing fair lending — it’s enabling a better future for all people in this country.

What do you get when you enable thousands of credit unions, big and small, with the ability to make fairer lending decisions? A better economic system for all.

That intro may set itself up like a joke, but trust me when I tell you that it is one of the most serious introductions I could have written. Right now, there are thousands of credit unions in the United States who are at the threshold of creating a better and more fair economic outlook in the country, and just searching for the key to get through those doors. 

So what is the key? Equitable access to credit. And how do we get there? Credit unions leveraging AI in their consumer credit underwriting to unlock that door and build financial equity for their members and create a better, richer, and fuller life for all.

Financial equity for members starts with a healthy credit union.

Ultimately, we have to focus our intentions internally to ensure that credit unions are around for the long-haul. This means there needs to be a tool that unlocks growth potential for credit unions, future-proofing their organizations and enabling them to be more dynamic according to the changing world around us. 

This is where artificial intelligence (AI) comes into play. But not the AI that sends cyborgs into the past so they can walk into a police station with a leather jacket and some shades to see their friend Sarah Connor. AI is powerful, but it doesn’t need to be scary like it can get with a little movie magic. AI can be a helpful tool that pairs with and can be tailored to credit unions and their members. However, credit unions can use AI to efficiently sort through an applicant’s data and determine that applicant’s risk of default more accurately.

The end result of this quick and easy process is that a credit union is capable of lending further down the credit spectrum with confidence. 

National scoring methods gave false positives and false negatives during the last credit squeeze, meaning that credit unions were giving out money to folks who were big risks — as well as not lending to folks who applied and should have been approved — without knowing it. We have the tools needed to make sure that doesn’t happen again.

As business folks, we know that expanding that pool of credit applicants means you are increasing that base of cash flow in your credit union — which is crucial at a time where credit unions are feeling like their pockets are less lined than they’d prefer. By increasing your base, you’re increasing your returns, and the cycle goes on. Add in the optimization of delivery that AI can give to a credit union’s lending business, not only are you saving time and money, you’re meeting a member’s expectation of a quick and easy banking experience.

I’m not saying it’s similar to a loaves and fishes event, but in terms of ensuring that your credit union is still doing business in a time when a lot of other lenders are feeling the squeeze, it feels pretty close to a miracle.

How having a credit union lead members through tough times improves their lives, and the world around us.

So your credit union is feeling secure — that feeling directly benefits your members in plenty of ways. Not only are more members getting credit because you’re accurately risk assessing their financial trends, but they actually have the chance to build their wealth and utilize it in more meaningful ways.

In Harris Poll research Zest AI conducted in 2022, we found that over 80 percent of credit union members believed that their credit union cared about them and their families, and were there to support their financial wellbeing during harsh economic times. Members rely on credit unions to be there when the times get rough, and ensuring you’re able to support as many of your members as possible can only be met with just rewards.

And as a member's trust grows in their credit union, their loyalty does, too. Credit unions want to be the first choice members go to when deciding to buy a car or a home — by amplifying your lending capabilities with AI, credit unions can give themselves a leg up in the competition. If your speed to decision can rival that of a top ten financial institution, even the smallest of credit unions can be a member’s first choice and ensure that the most members are getting the best outcomes.

What a better lending experience with a credit union can ultimately lead to.

With thousands of credit unions across the country, all focused on bettering the lives of members and the communities they serve, there’s the possibility of creating onramps to financial equity for everyone in this country.

What does financial equity look like in action? Well, as more people in this country gain access to fair credit by banking with a credit union like your own, they can participate fully in the US economy. Their participation means that the GDP will grow exponentially. I’ll let the numbers speak for themselves here.

1. The US GDP took a hit of over $20 trillion dollars in the last twenty years because of the Black wealth gap compared to their White counterparts (Citigroup 2020 report).

2. In a situation of full parity for Hispanic and Latinos in the United States, an extra $660 billion could be spent annually with Hispanic/Latino-owned businesses which could generate an additional $2.3 trillion in total revenue each year (2021 McKinsey & Co. report).

3. Gender inequity costs the United States $2 trillion in lost GDP (2016 McKinsey & Co. report).

Fairer lending outcomes are good for your credit union, good for your members, and good for the world around us, and AI is the key to enabling that positive change to happen.

About Author: 
Aaron Long, Head of Client Advisory & Strategy at Zest AI
Aaron Long has 20 plus years in sales, business development, and consulting working for Fortune 100 companies like American Express and McKesson to help them develop new offerings and capture larger market share. Prior to Zest AI, Aaron led the credit union Vertical at Equifax where he oversaw sales, marketing and partnerships.

Aaron was Vice President, Client Management & Sales at Fiserv, Inc. In that role he was responsible for running a high performing Account Management team focused solely on credit unions, creating business and sales strategy, increasing wallet share, energizing diverse teams and being a change agent.

Native of St. Louis, Missouri, Aaron Long currently resides in Atlanta, Georgia. He is a graduate of Georgia Tech with a MBA in Management of Technology and has a BS in Computer Information Systems.

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