Kirk Drake’s New Book ‘FinAncIal’ Investigates Artificial Intelligence in the Credit Union Space

By W.B. King

While most credit unions are using machine learning (ML) and artificial intelligence (AI) in some form, the industry lacks a cohesive strategy. This premise is among themes covered in FinAncIal: Helping Financial Services Executives Prepare for an Artificial World, a new book by Ongoing Operations’ CEO Kirk Drake.

“In researching the book, what I found to be truly fascinating, and this is 12-to-18 month old data at this point, but 99 out of 100 fintechs that I talked to were actively using machine learning or alternative data or some form of AI in the creation of their products and in the value chain creation of that product,” Drake told John Best CEO of Best Innovation Group and host of The BIGcast Network podcast.

“Yet, I don’t know of very many credit unions that have an active AI strategy to use machine learning in their checking accounts, saving accounts, small business accounts—in all those different pieces and all those areas of the organization,” added Drake who also authored CU 2.0: A Guide for Credit Unions Competing in the Digital Age.

Evolutionary Versus Revolutionary Technologies

In Best’s view, there are two types of technologies that impact the financial services industry. The first is evolutionary technology, such as bill pay. The second is a revolutionary technology like ML or AI.

“Bill pay is one of those things that gets built on slowly with new features added, but it wasn’t anything a person was leaving a financial institution for,” said Best, who wrote the foreword to Drake’s latest book. “A revolutionary technology is something a member would leave an organization to go get. And one that comes to mind that is most recent is remote deposit capture.”

Best asked Drake if he feels that AI is the next revolutionary technology that will make members move to a new credit union or financial institution for a “got to have it” service.

Kirk said he sees three levels to AI. Currently, the credit union industry is in level one, which is basic machine learning. In reference to Best’s model, he called this level evolutionary akin to artificial “narrow” intelligence, such as teaching a computer to successfully play chess against a human.

“We are teaching the computer a bunch of data and how to solve a common set of problems. This gives fintechs an advantage on being smarter and faster in their solutions because they can automate 40% to 60% of the workload that we are still applying to humans,” said Drake.