How Credit Unions Can Transform Data Into Strategic Insights

In an age where Netflix can predict what you’ll want to watch next, Amazon can suggest products you’d likely be interested in and Uber can foresee where you’d like to be dropped off, there’s no denying that companies are using the wealth of data available to better serve customers and anticipate needs. In fact, more data has been created in the past two years than in the entire previous history of the human race, something that service providers with advanced databases are quick to take advantage of.

Despite this wealth of information available at our fingertips, less than 0.5% of data is ever analyzed and 90% of it remains unstructured. Data is useless without proper analysis and organization.

While credit unions are data rich, possessing a level of information about their members that most service providers only dream about, they unfortunately are typically poor at making this information actionable. This presents a significant area of opportunity to better know and serve their members, as well as gain deeper insight into the inner workings of their own institutions.

It’s not difficult to understand why so few credit unions have successfully leveraged their data up until this point. Extracting and analyzing data takes a significant amount of expertise, resources and time. Though determining how to analyze data can be challenging, the potential benefits far outweigh the pain points.

Understand the Purpose

In addition to the many obstacles associated with effectively leveraging data, many credit unions aren’t sure where to begin the process. A good starting point is to understand why your institution is looking to turn data from an untapped to actionable resource. If key decision-makers aren’t on the same page in regard to what goal they’re looking to accomplish – such as to present more timely offers to members or better understand organizational performance – then the project is much less likely to succeed. An internal conversation with credit union leaders, including a discussion of areas of the organization that could benefit from better data insight, is a strong first step.

In addition to establishing the end goal, those involved in the initiative must work out basic questions about the process, such as what format of data they’ll be leveraging, how much data will be analyzed, how many people will be involved, who will maintain the data and the timeframe for which they’ll receive the data. Once a goal has been agreed upon and these details have been finalized, credit unions will have a much sturdier foundation on which to build and execute the project.

The Power of Organization

Credit unions have data pouring in from several different sources, including digital banking applications, online loan portals, in-branch interactions, online transfers and many, many more. Before institutions can hope to transform this information into actionable insights, they must first make it digestible. A best practice here is to house relevant data in a single, centralized location. This will allow employees to access and study the data more quickly and efficiently.

As an example, the Battle Creek, Mich.-based OMNI Community Credit Union recently aggregated its employee data across multiple fields into one centrally-located dashboard. This uniform organization and storage of information allows employees to easily view and sort data by date, department, individual, branch and overall credit union, making the data easier to understand and consequently act upon for the good of the entire organization.

Jason Cain, chief technology officer for OMNI Community, explained, “Big data isn’t just an IT initiative – it’s a culture initiative. Credit unions must be able to trust their data and run their institutions based off that data. Data has the power to unify your organization.”

Metro Credit Union in Omaha, Neb., has also centralized its data into one location – all of the credit union’s databases are now consolidated into a single platform, thus displaying a global view of the credit union. This has allowed the institution to show employees how they’re performing and share comparisons with coworkers to encourage friendly competition. Data can be shown in terms of person to person or branch to branch, allowing for comparisons from different vantage points.

This global view allows credit union management to more quickly identify any problems and take the necessary steps to address and correct issues in real time. Conversely, such insight allows credit union leaders to more easily recognize employees and branches for their great work, boosting overall morale.

Using Big Data to Identify Trends

When data has been properly organized and is available for analysis, credit unions are often able to identify broader trends that afford insights into their institutions and allow them to anticipate future behaviors. This is one of the most common initial use cases we see of big data today.

For example, Metro CU leveraged data to create a financial trending report for different timeframes and financial items for all major departments across its institution. This allows the credit union to better understand what’s been happening within each department from a historical perspective, as well as predict future trends.

Jeff Kelly, vice president of information systems at Metro CU, explained, “Reports have always been a significant part of what Metro Credit Union reviews to evaluate our business. It’s important for us to have the necessary information at our fingertips so we can make well-informed, strategic decisions.”

On Tap Credit Union in Golden, Colo., leverages its data to identify relevant trends specifically within its lending department. Organizing loan data has allowed the credit union to drill down to the specific loan level in various reports to better understand what may be driving particular behaviors. This ultimately allows the credit union to better serve its borrowers and cater offerings based on what’s discovered from those trends.

While transforming big data into actionable insights may seem like a daunting undertaking, there are steps credit unions can take to ease the process. Understanding the end goal, organizing the data and identifying trends are all steps credit unions can take to better leverage the wealth of information they have at their disposal – both about their members and employees. Data will continue to proliferate, and credit unions should work now to understand what this information can reveal about their organizations and members, and how it can help them with future strategic plans.

Matt Baaki is Chief Technology Officer for MDT. He can be reached at mbaaki@mdtmi.com.