Credit unions are using AI to automate loan approvals

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In a world where financial disparities loom large, a new player has emerged with the potential to level the playing field.

Zest AI, a pioneering artificial intelligence tool designed to revolutionize credit lending decisions, could be the key to enabling credit unions to help their members achieve greater financial well-being.

After customizing the technology based on a credit union’s unique lending criteria, Zest AI enables lenders to automate loan approval underwriting, processing and compliance functions, while minimizing or reducing risk. Relying solely on data, the tool removes the potential for bias to impact lending decisions. It enables credit unions to increase the number of loans they approve, particularly for those in protected classes.

Aaron Long, head of client development at Zest AI, said the tool shows promising results across the company’s customer base. Loan approvals have increased by 40% on average for all protected classes — 49% for Latinos, 41% for Black applicants, 40% for women, 36% for elderly applicants and 31% for AAPI applicants — all while holding risk constant or reducing it by 20% or more.

Zest AI aims to make its technology accessible to all lenders in partnerships with credit unions of all sizes.

“We are purposeful about the data we use, the insights our technology gives, and the impacts that it can have on a community,” Long explained. “And we’re there every step of the way, making sure that our technology isn’t only performing at its peak, but that clients are getting what they need from the technology, too.”

The implementation of technology aligns with broader trends in the credit union sector, particularly the need for digital transformation. Today, credit unions are not only tasked with updating their technological infrastructure but also with appealing to younger generations and advocating for their customers. Zest AI’s solutions contribute to these goals by enhancing digital lending capabilities, enabling credit unions to offer more personalized and efficient services to their members.

In addition, the upcoming release of LuLu, Zest’s AI Lending Intelligence Companion, will offer credit unions even more nuanced insights into their data, potentially transforming how they interact with and serve their customers. This generative AI tool provides credit unions the ability to ask lending questions about their own lending data or industry insights and get accurate, customized answers within seconds, streamlining decision-making and overall efficiency.

John Bratsakis, president and CEO of the MD|DC Credit Union Association, said the association’s strategic partnership with Zest AI aligns with its core mission of promoting financial inclusion, a core principle among credit unions.

“Zest AI’s underwriting tool allows credit unions to manage risk while expanding access to affordable credit,” Bratsakis said, highlighting the technology’s role in making more informed lending decisions.

The real-world impact of Zest AI is perhaps best illustrated by the experience of Del-One Federal Credit Union. Chief Banking Officer John Chartrand reports a significant improvement in efficiency and decision-making since implementing Zest AI this past fall. Notably, the technology has quadrupled the credit union’s automated decision-making, dramatically enhancing the member experience by streamlining loan processing times.

“This is really the beginning,” Chartrand said. He anticipates further advances in automated decisions as Del-One refines its model with Zest AI.

However, Chantrand said technology alone does not drive financial inclusion. Del-One’s efforts to grow its presence in under-resourced communities, including launching programs to serve the Hispanic and Latino community and supporting minority-owned businesses, underscore the multifaceted approach needed to effectively serve protected classes. Zest AI is a critical component of these efforts, but it’s the credit union’s commitment to inclusivity that makes a difference.

As the journey toward financial inclusion continues, tools like Zest AI offer a beacon of hope. By leveraging artificial intelligence to make more equitable lending decisions and transform their operations, credit unions can better serve their members, particularly those historically underserved by traditional financial institutions. As we envision a future where technology and financial services converge to create more inclusive, equitable communities, the question remains: How will we, as individuals and institutions, contribute to leveraging innovative technologies like Zest AI to ensure no one is left behind in the journey towards financial well-being for all?