Catch up or miss out: The rapid shift towards AI and personalized banking

In today’s fast-moving financial world, credit unions find themselves at a pivotal crossroads—but also are in a prime position to innovate and shine. With 80% of the deposit market held by the top 20 banks, credit unions must evolve to meet shifting expectations. Once thriving on in-branch personal service and community affinity, they’ve lost their edge in the digital realm—where younger members now demand personalized experiences. While this demographic is more willing to switch financial institutions, credit unions are often not their first choice, making it imperative for credit unions to reclaim their relevance.

While many are still searching for solutions, top credit unions are transforming how they serve their members. By leveraging AI-powered personalization, they’re discovering new ways to grow and secure a brighter future for themselves and their members. But adopting “AI” and “personalized banking” isn’t just the latest buzz—it’s a game changer. So how are they doing that? After all, it’s a chance to not only stay in the game but to play it better than ever. And honestly, who wants to miss out on that?

The new normal: Meeting member expectations

We live in an era of instant gratification, where we expect to be offered experiences, services, and products that are tailored to our unique interests without having to ask for them. Such is the case for our simple everyday things like curated playlists on Spotify, suggested shows on Netflix, and even customized food deliveries via Uber Eats—just to name a few examples. It’s no wonder consumers are no longer settling for generic banking experiences; they have come to expect this level of personalization, available whenever and wherever they need it. Digital-first banking has set a new bar, with big banks and fintechs leading the charge in offering AI-driven personalized services and experiences. For credit unions, this shift is both a challenge and a golden opportunity.

Take this into account: a Deloitte study found that 79% of consumers expect personalized services from their financial institutions. What’s more, 55% would consider switching banks if they don’t get that tailored experience. That’s huge. The demand is even higher among younger people—82% of Millennials and Gen Z prefer banks that offer personalized financial guidance.

Enhancing member engagement

And while members expect this level of personalization, credit unions can benefit from it even more. By acting on AI-driven insights, credit unions can deliver relevant, timely content and offers that are more likely to catch their members’ attention, keep them engaged, and foster improved business outcomes.

For example, a Colorado-based credit union used AI-based solutions to craft personalized digital experiences based on what their members were already doing. The result? A 32% jump in member engagement. Their targeted efforts paid off, showing just how powerful AI can be in improving member interactions. Plus, NCR Digital Banking’s Survey found that financial institutions using AI for personalization achieved 25% higher consumer satisfaction and 20% better cross-sell rates compared to those that didn’t. Clearly, personalization isn’t just a trend; it’s a key driver of member loyalty and business growth for credit unions.

A game-changer for credit unions

By tapping into AI and personalized digital experiences, credit unions can gather digital data to get a clear picture of each member’s unique needs. This means they can efficiently offer highly personalized recommendations, products, and services that meet the preferences of each member, which is one of the main reasons credit unions were traditionally chosen over other financial institutions.

But these experiences can do a lot more for credit unions. For example, a North Carolina-based credit union reported a 400% increase in new deposit account openings and $20 million in new deposits when they started using AI-powered personalized campaigns.

By investing in personalization, credit unions can regain valuable member insights that traditionally came from in-person interactions and continue fulfilling their mission of “People Helping People” in the digital age. This can help them not only meet the evolving needs of their members but also strengthen their position as trusted, member-centric institutions.

Staying ahead: Strategic steps for credit unions

As the financial world keeps evolving, here are some things credit unions can do to stay ahead:

• Prioritize digital innovation: Credit unions must stay ahead of the curve by continuously innovating and exploring new personalization and AI solutions to meet evolving member expectations.
• Partner with data leaders: Credit unions benefit from partnering with data leaders who offer ways to gain member insights and actionable data. This includes investing in digital banking experiences and fostering a data-driven culture.
• Work with fintech experts: Teaming up with fintech companies who know the credit union space can help credit unions quickly unlock AI and personalized experiences and help ensure their solutions align with their values.

The time to act is now. What’s next?

The shift towards AI-driven personalized banking isn’t just a change for credit unions—it’s a transformative opportunity. As more credit unions embrace this change, they’re elevating member experiences, boosting operational efficiency, and securing a thriving future. However, the window of opportunity is gradually closing, and the time to act is now. Credit unions that hesitate to act will find their members exploring other financial institutions that offer the digital experiences they now expect. By partnering with award-winning personalized banking platforms like Spiral, credit unions can deliver personalized digital experiences, attract a new generation of members, and stay relevant.

As community-focused organizations, credit unions have a unique chance to leverage personalization to deepen relationships and enhance member satisfaction, securing their vital role in the financial ecosystem. The question is, will your credit union step up or miss out?