More consumers are gaining access to loans with the help of artificial intelligence (AI) – loans that also pay off for financial institutions. That’s the message shared by Commonwealth Credit Union President/CEO Karen Harbin at a Congressional field hearing Friday in Lexington, Ky.
House Financial Services Subcommittee Chair Rep. Andy Barr (R) asked Harbin—who also serves as America’s Credit Unions’ Transition Board Secretary—to testify in his subcommittee’s hometown hearing about her credit union’s experiences with using AI to approve more, stronger-performing loans. The House Financial Services subcommittee hearing covered the use of fintech to access financial services.
Harbin shared how her credit union decided several years ago to “confidently lend down the credit spectrum through more accurate, unbiased decisioning that would not increase risk.”
She outlined how the partnership with Zest AI has helped Commonwealth approve more than 21,500 consumer loans totaling $372 million since 2019, with delinquency on those loans below industry standards and below the overall loan portfolio rate. Harbin added Commonwealth Credit Union has increased its approval rates for lending for auto loans, credit cards and personal loans to traditionally underserved populations.
In just one example, Harbin described how Commonwealth used AI to help a member facing reduced working hours with an immediate decision to approve a $6,000 loan to bridge their looming financial gap.
She voiced concern with potential unnecessary regulatory limitations on this developing technology and urged Congress to ensure continued access for financial services.
“Unfortunately, there is still uncertainty in the regulatory environment with fintech and AI usage. Regulators frequently recognize the advantages of technological collaborations, yet they have also voiced apprehension that certain technologies, like AI, may be functioning in ways that neither they nor consumers fully understand,” Harbin said. “We are concerned that regulators taking a stringent stance on AI usage in the financial sector could disproportionately harm credit unions and smaller institutions while benefiting the largest incumbents.”
