Canada's credit unions primarily employ artificial intelligence to reduce costs and streamline internal operations, but focus on increasing existing employees rather than reducing staffing in technology. The findings are from part 2 of the Bank Confusion Index, a new report from the Global Digital Transformation Company GFT Technology.
A report surveying 200 IT decision makers in banking found that cutting costs and increasing efficiency in internal operations were the top two AI goals for credit unions, with 28% of respondents citing each. However, the credit unions surveyed do not plan to use AI to replace workers. It also does not cite the adoption of new talent as a key goal for the AI initiative.
Higher ROI from strategic AI investments
Despite 72% of credit unions dedicating less than 40% of their IT budget to AI, the report shows that they generate higher return on investment (ROI) in key areas compared to large retail banks. The credit union reported ROI of 11.76% from AI-driven portfolio management and 23.53% from automated compliance. In contrast, the report points out that retail banks' return rates in the same region were under 5%.
The study also found that credit unions were ahead of other banking sectors when using predictive analytics for loan approval. 12% of credit unions reported experiencing benefits from AI-driven loan approval capabilities. This is higher than those for retail banks (4%), commercial banks (5%) and investment banks (3%).
The most important ROI for credit unions was 23.53% from automated customer support. 76% of credit unions currently use AI for customer service, while 94% say their customers are happy with the provision of AI.
Internal challenges and paths of advancement
While successful in a particular field, credit unions face internal challenges in implementing AI. The report found that 22% of agencies lack personnel deemed skilled in the technology, and an additional 22% are dealing with cultural resistance to AI adoption within their teams.
Andre GaniThe CEO of GFT Canada commented on the findings: “Credit unions have a huge opportunity to attract the younger Canadian population, and the way to do this is by focusing on digital capabilities like AI.
“The amount and rates Big Six is investing in new technology, despite its historically small size, are not easily matched, despite its potential to benefit from AI.
“By strategically dedicating small quantities to the areas that impact the most, credit unions not only have a pace but also have the opportunity to outweigh the benefits other institutions see.”
