Navigating the Generative AI Challenge: How Credit Unions Can Secure AI Use Without Stifling Innovation

Generative AI (Gen AI) is rapidly reshaping industries, and financial services are no exception. Credit unions, known for their member-first approach, face unique challenges as they balance the benefits of AI-driven efficiency with the risks of security, compliance, and data privacy.

Unlike large banks with dedicated AI governance teams, many credit unions lack the IT resources to monitor and control AI adoption effectively. Meanwhile, employees—driven by the need to improve productivity—are increasingly using Gen AI tools, often without formal approval. This rise of Shadow AI poses a growing risk, leaving organizations exposed to data exfiltration, compliance violations, and security breaches.

So how can credit unions leverage the power of AI while staying in control? This article explores the challenges, real-world risks, and how Acuvity’s runtime Gen AI security platform helps financial institutions embrace AI securely.

The Growing AI Adoption Challenge in Credit Unions

Credit unions are embracing AI in a variety of ways:

• Automating member services through AI chatbots that handle inquiries, schedule appointments, and provide financial guidance.
• Enhancing fraud detection by using machine learning models to detect suspicious transactions faster than traditional rule-based systems.
• Streamlining operations by automating routine tasks such as loan processing, compliance checks, and financial reporting.
• Personalizing member engagement through AI-driven analytics that provide tailored financial recommendations based on user behavior.

These use cases are driving efficiency, reducing costs, and improving the member experience. However, alongside this rapid adoption, many credit unions lack a clear AI governance framework—leading to blind spots that expose them to security and compliance risks.

The Hidden Risks of Gen AI in Credit Unions

1. The Rise of Shadow AI

Employees are already using Gen AI tools, whether sanctioned or not. From marketing teams refining member communications to analysts generating reports, these tools are streamlining workflows.

The risk is that many of these tools operate outside of IT oversight, leading to data privacy violations, regulatory non-compliance, and potential leaks of sensitive financial data.

For example, a credit union employee might use an AI writing assistant to draft customer emails, unknowingly uploading sensitive member data to a public Gen AI platform—potentially violating GDPR, CCPA, or local data privacy laws.

How Acuvity Helps:
Acuvity’s Gen AI Service Discovery & Risk Evaluation solution helps credit unions automatically discover and analyze all AI services in use—including Shadow AI. The platform provides a real-time inventory of Gen AI applications, ensuring institutions stay ahead of unauthorized AI usage before it becomes a compliance issue.

2. Data Exfiltration Risks

One of the biggest concerns for credit unions is data leakage. Many Gen AI platforms retain user inputs, which means that confidential member information could be stored and even repurposed to train AI models.

This creates a scenario where sensitive financial statements, personal member data, and internal strategies could end up outside of the credit union’s control.

A loan officer using an AI-powered tool to analyze borrower data may not realize that the tool’s terms of service allow data retention. That data could then be accessed by third parties or used for AI training, creating compliance and security risks.

How Acuvity Helps:
Acuvity’s platform evaluates data privacy policies and risk levels for each Gen AI service. It provides a detailed risk assessment that highlights whether a Gen AI tool retains user inputs, shares data with third parties, or poses exfiltration risks. This allows credit unions to make informed decisions about AI usage and block high-risk applications before they become a liability.

3. Data Residency and Compliance Challenges

Many credit unions operate under strict data residency laws, which require sensitive financial data to be stored and processed in specific geographic regions.

This creates a risk where a U.S.-based credit union could inadvertently upload member data to a Gen AI service hosted in another country, violating regulations and potentially losing control over data retrieval.

For example, an AI chatbot service used for member support might store conversation logs on overseas servers, putting the institution at risk of compliance violations.

How Acuvity Helps:
Acuvity’s platform automatically identifies Gen AI services and flags risks due to Gen AI provider having high rosk scores from data residency and other characteristics. Credit unions can investigate the service in question to ensure compliance with regulations like GLBA, GDPR, and CCPA.

4. AI-Specific Security Threats

Even sanctioned AI use cases pose security risks, particularly AI-powered chatbots used in customer interactions.

Gen AI models are vulnerable to prompt injection attacks, where malicious actors manipulate the AI to leak confidential data or generate harmful content.

A hacker could trick an AI-powered banking assistant into revealing account security protocols, enabling social engineering attacks against members.

How Acuvity Helps:
Acuvity’s AI Policy & Enforcement tools allow credit unions to set security controls on Gen AI usage, including automated risk-based enforcement. If an AI service risk rating is above a threhold, Acuvity can issue alerts, limit usage, or apply additional security layers to prevent unauthorized access and data leakage.

A Smarter Approach: How Credit Unions Can Secure Gen AI Use

Instead of outright blocking AI tools, which often drives more Shadow AI use, credit unions need a proactive strategy to ensure Gen AI adoption is secure, compliant, and effective.

1. Gain Visibility: Discover All AI Use in Your Organization

• Conduct an inventory of all AI applications in use—both sanctioned and unsanctioned.
• Use Acuvity’s AI Discovery platform to get real-time insights into AI tool usage across the credit union.
• Monitor AI adoption trends to ensure that Gen AI use aligns with security and compliance policies.

2. Assess AI Risks: Understand Security and Compliance Gaps

• Evaluate AI services based on hosting location, third-party dependencies, and data retention policies.
• Use Acuvity’s Risk Evaluation Reports to clearly identify various factors that can contribute to compliance risks.
• Classify AI tools based on low, medium, and high-risk levels for easier policy enforcement.

3. Establish Clear AI Usage Policies

• Define which Gen AI tools are approved, what data can be used, and who has access.
• Use Acuvity’s Gen AI Policy & Enforcement system to automate compliance with AI governance policies.
• Educate employees on the risks of Shadow AI and how to use Gen AI safely.

4. Implement Smart Enforcement: Control AI Use Without Stifling Innovation

• Use Acuvity’s enforcement tools to block high-risk AI applications while allowing safe, enterprise-approved Gen AI services.
• Apply adaptive security controls that warn employees before engaging with risky AI tools rather than simply blocking them outright.
• Continuously apply security policies as new Gen AI service use is detected.

TLDR: AI Is Here to Stay—Credit Unions Must Adapt

Gen AI is not a passing trend—it is a fundamental shift in how businesses operate. For credit unions, the challenge is not whether to use AI, but how to secure and manage AI effectively.

With Acuvity’s real-time discovery, risk evaluation, and AI enforcement capabilities, credit unions can embrace AI innovation without compromising security, compliance, or member trust.

To learn more, download our Solutions Brief on Securing Gen AI Services in Credit Unions to explore best practices for AI security and compliance in financial institutions.