Originally published on CUInsight.com
Credit unions are at a critical juncture as AI-driven fraud attacks escalate, and members expect faster, more transparent service. This urgency is heightened by ongoing industry consolidation, where credit unions are joining forces to achieve technological and operational efficiency.
At the same time, the emergence of agentic commerce is set to increase operational complexity even further, reinforcing the need for credit unions to proactively strengthen their fraud response. In this environment, fraud resolution extends beyond a back-office duty into a vital instrument for institutional trust and member loyalty.
New research from Cornerstone Advisors highlights a stark reality: while credit unions excel at detecting fraud, they lag in other key areas of fraud and dispute management. Cornerstone’s Fraud Experience Index gave credit unions an overall score of 75, ranking below major card issuers. Only 5% of credit union fraud experiences earned an “A” grade (90+), and 79% of credit unions suffered more than $500,000 in direct fraud losses in 2024, a figure that was higher than any other financial sector.
This gap presents a major opportunity. Credit unions can amplify personal service and community trust by leveraging agentic AI to enhance technology and strengthen the human touch in fraud resolution.
Where the member experience is at risk
When fraud happens, members have three basic expectations: speed, transparency, and empathy. Yet only 42% of customers and members across all financial institutions receive provisional credit during investigations, with credit unions scoring lowest at 56%. This means nearly half of credit union members are left financially stranded while their institution investigates, creating potential financial challenges and eroding trust at the worst possible moment.
The digital experience gap is equally troubling. Eighty-two percent of credit union members reported that digital document upload was unavailable during their fraud experience. Instead of seamless resolution on their mobile devices, members are forced into outdated processes—mailing documents, visiting branches, or waiting on hold. This friction contradicts the digital experiences members are already accustomed to elsewhere.
What performance grades mean for loyalty
Cornerstone Advisors assigned letter grades to fraud experiences across five areas: detection, provisional credit, investigation/documentation, final resolution, and communication. Credit unions scored highest on detection (88%) but lowest on provisional credit issuance (56%) and investigation/documentation (64%). The average fraud experience received a “C” grade (76/100). Only 8% of consumers rated their experience excellent, while 25% gave failing grades.
It’s well documented that poor fraud experiences drive member attrition. The Cornerstone report highlighted this impact: members with superior resolution used their cards 39% more and were 81% more likely to purchase additional products. Conversely, when credit unions fail to identify fraudsters, victims are 40% more likely to leave. But when institutions resolve cases effectively, 62% fewer victims leave—demonstrating the “service recovery paradox,” where effective resolution builds stronger loyalty than if no problem had occurred.
How agentic AI deepens the human touch in fraud resolution
The solution isn’t hiring more investigators or extending hours. Forward-looking credit unions are turning to advanced automated solutions to eliminate friction and empower staff to connect with members. Unlike traditional automation or generative AI, agentic AI operates autonomously, analyzing data, making decisions, and acting without constant human oversight. In fraud resolution, it orchestrates the entire investigation workflow.
Agentic AI automates complexity, not relationships. Machine learning analyzes transaction patterns in milliseconds. Automated document retrieval pulls records, merchant details, and communication histories instantly. Technologies like optical character recognition (OCR) process uploaded documents, transforming them into structured data for immediate analysis. AI also generates clear, plain-language communications, ensuring consistency while freeing investigators to add personal touches.
Real-time dashboards powered by AI prevent cases from falling through the cracks. Systems automatically escalate cases approaching deadlines, flag incomplete documentation, and surface high-priority situations. This transforms case management from reactive to proactive, allowing staff to prioritize based on urgency.
Closing the provisional credit gap
The advantage of detecting fraud faster erodes quickly if the resolution process that follows is slow or friction-filled. Agentic AI accelerates the preliminary investigation, flagging clear-cut fraud cases for immediate provisional credit. This reduces resolution time from days to hours, freeing investigators to focus on complex cases and member communication.
Addressing the human dividend
When AI handles transactional complexity, staff reclaim time for relationship-building. Investigators who once spent 40% of their day on paperwork can now spend that time calling anxious members, explaining next steps with empathy, and proactively reaching out with updates. This shift addresses a key finding: credit unions scored 82% on communication quality during fraud resolution, matching banks but falling short of their potential. AI creates the capacity to exceed expectations and leverage their member-centric culture as a competitive advantage.
How credit unions can turn technology into a trust advantage
Technology alone doesn’t build trust. The way credit unions implement and integrate AI determines whether innovation strengthens or weakens relationships. The most effective fraud resolution systems operate invisibly to members, orchestrating complex workflows behind the scenes.
When a member reports fraud, AI initiates multiple parallel processes—pulling transaction details, analyzing spending patterns, retrieving merchant data, and preparing provisional credit recommendations—in seconds. Agentic AI makes member-centric processes scalable, handling routine touchpoints and flagging situations requiring personal outreach.
Reclaiming the member-centric advantage
The fraud resolution performance gap is real, as is the opportunity. Credit unions may lag in provisional credit issuance and digital capabilities, but they possess a member-first culture that larger competitors cannot replicate. Agentic AI closes the gaps by operationalizing these cultural advantages at scale and transforms fraud resolution into a member-centric value.
Members experiencing fraud don’t want chatbots or automated systems that lack human connection. Members want their credit union to care and prove it through responsive, transparent resolution. Technology creates the capacity for credit unions to deliver on this promise consistently.
The credit unions that grow in the agentic AI era recognize its ability to amplify their mission. They will leverage AI to remove common barriers in traditional fraud resolution, such as paperwork, delays, and information gaps, so staff can focus on what credit unions do best: supporting members when it matters most.
When fraud strikes, the resolution process becomes a referendum on institutional values. Credit unions have a unique opportunity to turn their biggest operational challenge into their greatest competitive advantage—transforming friction into trust, one member interaction at a time.