Mining the Data Gold Mine Within Your Credit Union

Concerns around public spaces and shared surfaces are expected to linger long after the pandemic, permanently altering branch activity and solidifying digital as the leading touchpoint. For the first time, credit unions are spending advertising dollars to promote digital banking instead of offers like mortgages or auto loans. The industry is on the precipice of a critical shift, one that brings many challenges as well as opportunities. For example, how credit unions learn about their members’ financial goals, preferences and needs will have to evolve. Member information that was once learned through in-person conversations over the teller counter must now be collected in the digital domain.

Outside of face-to-face interactions, credit unions have traditionally relied on surface-level data like demographics, channel usage and transaction history to know their members. These data points fail to paint a complete picture of who a member is and the full scope of their financial needs. Exacerbating the issue, the move to online shopping and e-commerce makes purchases largely homogenous – consider how many Amazon and Uber Eats receipts will appear on card statements this month, divulging little to nothing about the purchaser. To remain relevant, it’s time for credit unions to dive below the water line to learn more meaningful information, such as member preferences, brand loyalties, life stages and timely financial needs.

This is where the power of data can provide a notable lift. Savvy credit unions are now thinking about their data as a gold mine: This “gold” can be used to understand their members on a deeper, more personal level, enabling stronger cross-sell opportunities that create revenue and build loyalty. The problem? Institutions are too often sitting idly on this data, struggling to find meaningful ways to mine, organize and leverage it. At the same time, popular brands outside of the financial services industry like Shopify and Wave are slowly but surely chipping away at these gold mines, using their (typically less rich) data to offer new products and services that directly compete with credit unions.

That’s why alternate, contextual data points are needed to fill in the blanks. For example, SKU-level data – information beyond just how much was spent and details about what was purchased – enables more personal, timely service and helps credit unions secure their relevance in members’ lives. Consider how much “gold” can be found within a single receipt, including purchase date and location, what was bought, the merchant and the form of payment. This can reveal major life stage events, psychographics such as values and lifestyles, and payment preferences such as patterns in off-card spending. Such information can indicate if that member is starting a business and needs a business account, if they’re going to college and need a student loan, or if they’re starting a family and might need a 529 account. This data can be used to proactively connect and engage with a member with targeted messaging and relevant product offerings, ultimately helping them make more informed purchases and healthier financial decisions.

Such detailed insights can also uncover patterns that help identify traditionally underserved segments, such as the gig economy and microbusinesses. For example, recurrent trips to the gas station might point to an Uber driver, or frequent large office supply orders might signal a self-employed entrepreneur. These groups are often camouflaged in consumer accounts, but their needs are much more complex. Deeper micro-segmentation opens the door for new, more narrow categories of member profiles, creating more relevant cross-sell opportunities. Such efforts are especially critical now, as these groups have been hit hard by the pandemic and depend on their local credit unions for catered financial tools and advice.

This data can also lead to stronger partnerships and loyalty programs, in addition to more targeted marketing spends. For example, a credit union might offer a co-branded card with an airline company and find those members generally also ride with Lyft and drink Dunkin’ coffee. Uncovering these correlations and partnership opportunities can lead to more tailored marketing, tighter reward programs and deeper, stickier relationships, ultimately yielding a win for the credit union, participating business and member alike.

The race to better know and understand members is on. As face-to-face interactions dwindle, credit unions must dig deep to find new ways to deliver value in the digital domain. Even if credit unions have previously struggled to make insights actionable, those that start to better leverage contextual, alternate data points today are likely to enjoy compounded returns in the years to come. But they must act now, especially as nontraditional competitors are desperately trying to break the competitive barrier. More accurately segmenting members results in stronger relationships, more effective partnerships and loyalty programs, and profitable cross-selling opportunities. The ROI is there – it’s time for institutions to start mining.

Amber Foucault Vice President of Product Sensibill Toronto, Ontario, Canada