A question of relevance

Exploring technologies such as artificial intelligence is a competitive imperative.

August 27, 2021

When discussing artificial intelligence (AI), “small credit union” doesn’t naturally enter the conversation.

Nothing against small credit unions. They’re a vital part of the movement upon which millions of members depend.

But there’s no discounting the serious challenges many small credit unions face, chief among them technology. According to “The State of Small Credit Unions Today,” a white paper from the CUNA Small Credit Union Committee, these institutions frequently lack the scale to afford new technology.

Plus, new technology is time- and resource-intensive to implement, the white paper reports, taxing staff who already serve in multiple roles.

That’s why Northern Hills Federal Credit Union’s foray into AI is especially impressive. The $125 million asset credit union in Sturgis, S.D., implemented an AI-fueled, automated loan decisioning tool to boost its loan-to-share ratio, which fell from 78% to 68% during the pandemic.

This tool will facilitate immediate approval for qualified online applicants and allow Northern Hills Federal to make more loans. More importantly, this AI system will “learn” from each loan approval and rejection, continuously refining lending guidelines to further improve the process.

“Loan underwriters and loan officers spend an inordinate amount of time looking at applications that should be automatically approved,” says CEO Floyd Rummel III.

Based on a review of five years of loan data, Rummel projects AI will increase Northern Hills Federal’s loan approvals by 25% to 40%—a significant boon to both the credit union’s bottom line and to its 9,500 members.

He urges his counterparts at small credit unions to embrace AI to not only grow their loan portfolios but to explore other applications.

Other institutions turn to AI to improve security and fight fraud, foster conversational banking, identify potential risks within their loan portfolios, and unearth opportunities hidden within their data.

Rummel sees exploration of AI as a competitive imperative. “This is the perfect time for small credit unions to get into AI to help themselves stay relevant.”

The continued relevance and prosperity of small credit unions is something we can all get behind.

By the way, we’ve selected our 2021 class of Credit Union Rock Stars, sponsored by Fiserv—and it’s an impressive and eclectic group. Meet this innovative crew Oct. 1 at

BILL MERRICK is deputy editor for Credit Union National Association.