A data revolution has been brewing in financial services for a long time – and credit unions are well positioned to lead the charge. In fact, credit unions have unrivaled access to their members’ deposit, borrowing and payment transactional data, which offers a treasure trove of personal and behavioral information.
The problem is not with the amount of data available; it’s in not knowing what to do with it.
According to PwC, financial firms enjoy greater access to valuable customer data than any other type of organization. But, due to the prevalence of legacy systems, siloed data graveyards and disjointed data strategies, these organizations struggle to extract valuable insights, using on average only 0.5 percent of the data available to them[i].
As the COVID-19 crisis has forced credit unions to quickly pivot to a curbside delivery financial services model, it has highlighted the importance of data to the member engagement strategy. The pandemic has also accelerated the urgency of building a strong data culture as a strategic foundation.
“In the past, a member would walk into a branch to do a transaction,” says Nish Modi, SVP, Group Owner, Integrate Products, CO-OP Financial Services. “And the teller may recognize they are at a life stage inflection point, whether it’s buying a car or a home, or perhaps losing their job. The representative may be able to interpret this simply by reading the member’s body language or by asking a few questions. Now, in lieu of that personal interaction, data is becoming more and more important in telling that story.”
Data can also help validate changes in behavior patterns during a time of forced business closures and rising unemployment. Members are facing immense pressures in their financial lives, and a comprehensive understanding of these behavioral changes and their root causes will help you serve their complex needs.
“Credit unions have always defined success as having very personal relationships with their members,” says Matt Maguire, Chief Data Officer, CO-OP Financial Services. “Now that we’re interacting with them remotely, trust and support are even more important.”
Unlocking Deep Data Insights
As a credit union, you have a myriad of opportunities to leverage data insights to reinforce the Primary Financial Relationships you hold with members.
For instance, you can mine your members’ credit and debit payment activity to unearth patterns in how they spend today and identify top-of-wallet strategies during both COVID-19 and “normal” times.
Data can also help in predicting payment card fraud patterns — invaluable information for reducing false positives, which can detrimentally affect the member relationship. As criminals take advantage of the current crisis by deploying new scams like those related to unemployment, online shopping and romance, data analysis allows fraud departments to protect your members and manage dispute chargebacks caused by these events.
Finally, your credit union enjoys unparalleled access to members’ deposit and payroll direct deposit data, allowing you to anticipate increased financial stress due to job and income loss. By predicting whether a member may fall behind in mortgage or loan payments, you can proactively offer relief in the form of loan deferrals and fee waivers, as well as by customizing products to help them recover.
Building the foundation
Powerful data insights rely on a well-coordinated and robust data foundation and the establishment of a data-driven culture. According to Maguire, credit unions should follow these key steps:
- Start from the top: To build an organization-wide data culture, your Board and senior leadership need to be vocal and enthusiastic data champions. The C-suite should be intimately involved in developing an overarching strategy and vision that encompasses your data, privacy protection, governance, controls, and key performance indicators (KPIs).
- Define, document and measure: “What gets measured, gets done,” says Maguire. Capture all key business processes and data flows and develop a keen understanding of the KPIs that are relevant to your business. These will differ by department — for instance, in risk management, loan loss levels may be the most critical data point. In your member contact center, it may be average speed to answer or average on-hold times.
- Assign ownership: Accountability is critical to success. Individual department heads need to take ownership of their own data and responsibility for tracking and reporting on trends.
- Establish governance and controls: Although each departmental manager should be accountable for their data, independent controls and a system of checks and balances are also critical. Data relies on trust. The maintenance of systemic firewalls and robust controls will help ensure validity.
- Communicate broadly and often: Once the foundation is established, make sure to educate everyone in the organization on how data will help define your credit union’s success and how it will help them in their own jobs.
With your strategy set and organization on board, you can begin the processes of analyzing your data, identifying trends and patterns, and working toward offering new products and services to meet your members’ needs.
CO-OP Drinks the Kool-Aid®
Several years ago, CO-OP began its journey toward becoming a data-centric organization by developing a Master Data Management Strategy.
Under the leadership of our CEO, Todd Clark, CO-OP has ingrained a data-informed culture throughout the organization, established a set of governance rules and normalized data sets across the domain for easy, meaningful access.
Now CO-OP is leveraging that foundational work and experience to offer transformational data insights to our credit union clients with the upcoming launch of the CO-OP Insights Center. CO-OP Insights Center will provide your credit union with quick, easy-to-access, analytical snapshots of your debit and credit portfolio data. Accordingly, you will be able to view how member payment behavior is changing across various life stages and across all merchant shopping categories.
Watch: Introducing CO-OP Insights Center
Through this cloud-based portal, all our clients will be able to access and download data and then merge it with other internal data points to create management and Board reports, produce portfolio summaries, perform forward analyses, and more.
We are excited to announce that CO-OP Insights Center will be available for CO-OP credit and debit processing clients soon, so stay tuned. The data revolution has arrived – get ready to jump on board!
Join us on October 8 at 11 a.m. PT / 2 p.m. PT for our THINK Power Lunch: “A Whole New Way to Utilize Data.” CO-OP’s data experts will show you how to collect, store and analyze your data and turn it into revenue-driving insights your members. Register now
Sources:
[i] https://www.pwc.com/us/en/industries/financial-services/research-institute/top-issues/data-analytics.html
The original article Building Your Data Foundation: Capturing Deep Member Insights During COVID-19 and Beyond can be found on Insight Vault.
