Top Four Reasons for Building a Data-driven Credit Union Culture

TIBCO Solutions for Credit Unions
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Credit unions have access to growing volumes of data which can be used to drive improvements in member experience, service, and revenue growth. However, credit unions are still lagging behind fintech and big bank competitors in the data arms race. According to The Financial Brand, 50 percent of financial institutions with over $50 billion in assets use advanced analytics; fewer than 9 percent of organizations under $1 billion, which includes 94 percent of all credit unions, do the same. A Best Innovation Group study revealed that 45 percent of credit unions do not have a data strategy or budget in place.

Credit unions face unique data management challenges, including a lack of skills, robust integration capabilities, and smaller budgets for technology and personnel investments than their big bank competitors. Nevertheless, credit unions can rise above these challenges with a data-driven culture that prioritizes data availability, accuracy, and security and promotes collaborative data governance.

This article discusses four compelling reasons every credit union needs to improve its data culture.

Solid Member Relationships

When compared to big banks, credit unions are often preferred for their personal touch. Unlike most banking customers, credit union members more often experience intimate, personal attention and products intended to meet their top financial interests.

Today, more consumers expect immediate personalized service preferably delivered digitally. When one of your members contacts your credit union with an inquiry, they expect to have their accounts, recent transactions, and customer service history at their fingertips. Increasingly, a strong relationship depends on these factors. 

Data is the window into the member’s needs, preferences, and behaviors. A data-driven culture helps to construct a deeper understanding of your members while providing the products and information they need when they need it. This is increasingly becoming a requirement for member satisfaction and retention.

Accurate Market Segmentation

A data-driven culture requires investments in resources and capabilities to get maximum value from your data. With advanced analytical tools, you can identify critical characteristics and trends in member behaviors like savings, spending, and financial needs, which leads to categorization based on age, gender, income, household, relationship status, and other relevant metrics. This information enables you to determine which segment would be most receptive to which financial product or service.

Effective Risk Management

Risk measurement and management is an important objective of data-fueled strategies. Today’s dynamic market requires a comprehensive inclusion of numerous internal and external factors that may conspire to prevent achieving business objectives.

A data-driven culture can transform your organization from one reliant on historical and transactional knowledge to an analytical, forward-looking institution continually learning from its data. For example, collecting data from member-teller interactions, account balances, and creditworthiness can help to uncover illegal transactions such as fraud and money laundering conducted on a potentially vulnerable platform.

Besides managing security risks, a data-driven culture can equip your team with the data, tools, and know-how necessary to create accurate risk profiles. This information can help minimize loss and punitive regulatory action, maintain a stronger balance sheet, and deliver maximum benefit to members.

Strategic Growth

Use your data to make better decisions for building operations efficiency, marketing effectiveness, penetration rates, employee productivity, and costs.  A data-driven culture provides the tools, resources, knowledge, and expertise necessary to identify and take advantage of growth opportunities.

Data analytics offers reliable support for strategic initiatives such as strengthening core competencies; reducing unnecessary costs; refining products, pricing, and brand messaging; or monitoring member survey responses. A data-driven culture rallies your team behind data management and governance practices to promote sustainable growth.

Begin Building Your Data-driven Culture

Credit unions that do not advance their data and analytics capabilities are increasingly falling behind those financial institutions that feature data to personalize and improve the member experience. Arm your organization with data and accessible analysis and advice. By making a concerted effort to become a data-driven organization, your credit union can remain competitive today and tomorrow.

Credit unions face unique data management challenges, including a lack of skills, robust integration capabilities, and smaller budgets for technology and personnel investments than their big bank competitors. Click To Tweet

Want to learn how you can transform your credit union with a data-driven culture? Download the ebook Six Steps to a Data-Driven Credit Union.