Canadian credit unions are adopting artificial intelligence primarily to cut costs and streamline internal operations, but are focused on upskilling existing employees rather than reducing headcount with the technology. The findings come from Part 2 of the ‘Banking Disruption Index’, a new report from global digital transformation company GFT Technologies.
The report, which surveyed 200 IT decision-makers in banking, found that cutting costs and increasing the efficiency of internal operations were the top two AI goals for credit unions, with 28 per cent of respondents citing each. However, none of the credit unions surveyed planned to use AI to replace workers, nor did they cite hiring new talent as a primary goal for their AI initiatives.
Higher ROI from strategic AI investment
Despite 72 per cent of credit unions dedicating less than 40 per cent of their IT budgets to AI, the report indicates they are generating a higher return on investment (ROI) in key areas compared to larger retail banks. Credit unions reported an 11.76 per cent ROI from AI-driven portfolio management and a 23.53 per cent ROI from automated compliance. In contrast, the report notes that retail banks’ return percentages in those same areas were below five per cent.
The study also found that credit unions are ahead of other banking sectors in their use of predictive analytics for loan approvals. Twelve per cent of credit unions reported experiencing gains from AI-driven loan approval capabilities, a figure higher than that of retail banks (four per cent), commercial banks (five per cent), and investment banks (three per cent).
The most significant ROI for credit unions came from automated customer support, at 23.53 per cent. Seventy-six per cent of credit unions are now using AI for customer service, with 94 per cent stating that their customers are satisfied with their AI offerings.
Internal challenges and the path forward
While seeing success in specific areas, credit unions are facing internal challenges with AI implementation. The report found that 22 per cent of institutions lack personnel they deem as skilled in the technology, and another 22 per cent are dealing with cultural resistance to AI adoption within their teams.
Andre Gagne, chief executive officer of GFT Canada, commented on the findings: “Credit unions have a huge opportunity to attract Canada’s younger population – and the way to do this is to heighten focus on digital capabilities like AI.
“While the amount and rate at which the Big Six are investing in new technology may not be easily matched, despite co operatives’ historically smaller size they have just as much potential to benefit from AI.
“By strategically dedicating small amounts into the areas that will make the most impact, credit unions have the opportunity to not only keep pace, but surpass the gains other institutions are seeing.”
