In my recent experience with a Marriott reservation, I felt firsthand the frustration of being caught in a system where the human element was missing, and the “computer” was in control. I’ll spare you the gory details from someone that travels 150 nights a year, but I’ll paraphrase the conversation:
Agent: “I don’t care what the email says that we sent you on your reservation, my computer says you are not entitled to a refund. Nothing I can do, nothing I will do, the computer says so…..”
Guess what, the agent was wrong. After much frustration and several phone calls, it turns out the computer was not right…
In an age where technology is rapidly advancing, it’s hard to ignore the many efficiencies gained, especially in industries like lending at credit unions. Automation and sophisticated software are transforming how we approve loans, assess risk, and serve members.
Take, for example, modern loan origination systems (LOS) used by credit unions. These systems allow credit unions to pull credit reports instantly, assess an applicant’s financial situation in seconds, and issue decisions instantly that used to take hours. In fact, an increasingly large percentage of our members are opting for this channel. For credit unions, this means faster service, fewer errors, and ultimately, more satisfied members.
But there’s a downside to this increasing reliance on technology: technocracy. When members find themselves interacting more with machines than with humans, there’s a risk of falling into a trap where the “computer says no,” and that’s the final word. This creates a concerning dynamic, where technology becomes the ultimate authority, and the personal touch credit unions pride themselves on begins to fade.
A member may have a blemish on their credit history due to unforeseen medical expenses or an emergency beyond their control—factors that a computer simply won’t recognize with empathy. This is where the danger lies.
Another danger credit unions will face, if not careful, is setting up decisions incorrectly in the software. I can imagine a day in the future at credit unions where good loans are declined and opportunities are missed because the employees are confident that the computer is infallible. That’s a frightening future.
Credit unions exist to serve their members, and with that comes the responsibility to understand individual situations, not just cold numbers. A technocratic approach to lending can alienate members, leading them to feel like they’re no more than a number on a screen. The strength of credit unions lies in the relationships built with members, and that personal connection can be eroded when decision-making becomes too reliant on impersonal algorithms.
Yes, technology has made the process faster and more efficient, but it’s critical to ensure that human oversight remains a key part of the lending process. A balance must be struck where technology enhances the experience, but members never feel like they are trapped in a loop of automated decisions with no recourse to appeal to a human.
Ultimately, the goal of technology in lending should be to support human decision-making, not replace it. When a member’s loan is declined, there should always be a clear path for them to discuss the decision with a person who understands their unique situation. Otherwise, we risk slipping into a technocracy that prioritizes efficiency over empathy—an outcome that would be contrary to the credit union philosophy of “people helping people.”
Drop us an email, the world is moving pretty quickly. We want to help you avoid some pitfalls and traps as we move toward a lending environment where automation plays a larger role.
Don Arkell
Owner
CU Lending Advice
don@culendingadvice.com