How Technology is Shaping Credit Unions & Data Protection

Technology and software implementation continue to reshape common processes, and this is extending into the banking and credit score realm currently.

Using AI to automate certain processes makes finding metrics and important data easier and more accurate, ensuring that each person within the bank receives their correct score every time. 

An article by Credit Union National Association (CUNA) details how these advanced algorithms work to instill fairness and accuracy into the field.


“Artificial intelligence

Zest AI uses machine learning and AI to produce more accurate and equitable credit scores in providing loans to members, says Teddy Flo, chief legal officer.

“We use compliant data sources to produce a risk score that’s fairer to women and people of color,” he says. “This can transform credit union technology, but more importantly the lives of credit union members.”

Traditional credit scoring models essentially divide loan applicants into two groups—“good” and “bad” applicants—with a straight line based on their ability to repay. 

With more advanced algorithms, machine learning provides a more nuanced line that considers more factors and makes fewer errors than the traditional linear system, Flo explains.

Not only do machine learning and AI approve more borrowers, they provide more statistical accuracy regarding their ability to repay, he says. In addition, machine learning and AI scores are a more accurate predictor of a borrower’s ability to pay during economic downturns. 

“By replacing high-risk borrowers with low-risk ones, you can approve significantly more borrowers without increasing risk,” Flo says.

Perhaps most important, Zest AI has developed scoring models that are more accurate and equitable in approving loans for underserved communities, including, Black, Hispanic, Native American, and elderly consumers. 

Overall, the final model can increase approvals by 35% across those population segments.

Flo highlights a credit union that saw a 38% increase in loan approvals without any change in its risk profile.”

Read the rest of this article here. 

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When it comes to financial stability and security, many people are wary of the idea of using automation and technological advancements.

There is a misconception that technology is not safe or using automation can put your data and scores at risk, but recent software is demonstrating that the opposite is true.

Advanced features now exist to protect customer data and even provide insights that manual work would not be able to create.

Much like within financial institutions, automation tools can help your business with certain processes and help to save time and energy.

With the right software tool, your business can see improvements in lead generation, customer relationship management, prospecting, and messaging through automated features.

Your business gets better results with less effort, and all data involved is protected.

Take advantage of technology in your business and automate your lead flow with Cloud Kennect

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