5 Ways to Create More Meaningful Digital Experiences With SKU-level Data
CUs risk losing substantial market share if they don’t use data to translate the great service and support they’re known for.
Through technology, credit unions have expanded the accessibility of their financial services, providing members with options to bank virtually anywhere. But what differentiates these institutions from nontraditional competitors and neobanks, if they’ve traditionally been considered as a pipe for payments? Credit unions need to be more than a place to manage money, but right now, they’re often not. These institutions have largely won on people and community, but to succeed in a digital banking world, they need to translate the great service and support they’re known for, or they risk substantial market share. That’s where SKU-level data can help.
Financial institutions have an opportunity to leverage SKU-level data to make digital interactions more meaningful and personal. These deeper contextual-level insights allow the credit union to provide more relevant tools and resources to help their members create healthier financial habits. This level of insight is how credit unions can compete on the service and support that differentiates them. Without differentiated data sources, the credit union is no different than any competitor that uses transactional data as a way to profile its customers and deliver more value within the digital banking channel.
Consider why Amazon is more successful than other e-commerce players – it understands consumers’ preferences and uses that data to remove the stress from finding products while accelerating purchase time. It’s time for credit unions to follow suit and become smarter by taking advantage of the meaningful insights provided by SKU-level data. There’s an opportunity to fill in the details that are typically missing from purchase data, helping members make in-person and digital shopping easier and ultimately more beneficial to their financial health.
BigTechs like Google and Amazon, along with other financial companies like Amex, are leveraging SKU-level data to better understand consumers, posing threats to traditional banking relationships. If credit unions were equipped with deeper insights to effectively respond to their members’ evolving needs, they would be on equal ground and ultimately able to gain a competitive advantage due to their personal relationships.
Traditionally, credit unions have used transaction-level data as a solid baseline, to discover surface-level insights such as the merchant, total purchase amount and date purchased. But this information provides credit unions, as well as members, little to no value. When credit unions combine transaction-level data with SKU-level insights to identify items & SKUs, off-card spend, taxes and tips, and more, they have a more holistic view of their members and their timely financial needs. These deeper insights can reveal much about a member. Let’s start with five ways credit unions can use this information to make their digital experiences more meaningful.
1. Drive personalization. SKU-level data found on digital receipts reveal rich information including members’ life stages, psychographics such as values and lifestyles, and payment preferences like patterns in off-card spending. This information can indicate if a member may be in school and needs financial advice on how to maximize savings; if they are starting a family and need a 529 savings account; if they are embarking on a new business venture and could use business banking products; or if they are traveling and may benefit from a points-based credit card. Credit unions can then use this valuable data to offer personalized recommendations on relevant products and services that meet their members’ immediate needs, as well as where they’re headed.
2. Improve loyalty. Credit unions that leverage transaction-level data with SKU-level insights can reinforce their relevance by optimizing spend, helping members proactively save money and manage finances. For example, a credit union that surfaces discounts and retroactive price-matching based on their previous spend will gain the loyalty of its members. Credit unions that are providing easy-to-use tools to help members with budgeting, warranties, returns, taxes and more are especially important today as members are finding even more ways to make their hard-earned dollar go further.
3. Strengthen top-of-wallet strategies. A recent Cornerstone study revealed that $252 billion was displaced from traditional payment methods in 2020, plus an estimated 17 million Americans have a credit card that isn’t from a bank or credit union. The competition is widening as the fight to remain top-of-wallet continues, with many financial institutions already behind the curve. To get ahead, credit unions can strengthen their incentive programs. Consider a card that rewards members to spend money on their favorite brands – that will have them reaching for the card. Then, the credit union benefits from powerful data, stickier member relationships and increased engagement.
4. Boost member engagement. Members are more inclined to provide personal data and information, such as receipts if the credit union is transparent about how they plan to use it. In exchange for offering this type of information, members want to see value back like tips on how to save on everyday spend and proactively plan for a better financial future. According to Accenture, 63% of consumers say sharing data should result in personalized banking experiences and advice. Those who provide relevant insights are experiencing an increase in adoption rates, three times the transaction activity and 1.9 more products purchased, and 16 times the number of their customers are less likely to churn.
5. Create more targeted marketing campaigns. When credit unions understand their members’ needs and spending habits, they can create outreach and communication that resonates. Knowing where a consumer is in their buyer journey can prompt a credit union to send a member more specific messaging (like targeted push notifications or in-app insights), perhaps suggesting other features they may be able to benefit from, deepening the relationship and driving engagement. For example, a credit union might be fairly confident that a member, based on their spending patterns and others like them, is a small business owner. That credit union can then gear their communications around how to manage office expenses and prepare for the upcoming tax season.
Credit unions need to better understand their members if they hope to provide the most meaningful digital banking experience, a key differentiator to retain relevance and compete in today’s digital-first environment. Institutions that can make both transaction-level and SKU-level insights more actionable, delivering personalized insights members need to make smarter financial decisions, are leading the charge. It’s time credit unions leverage their established relationships, and trust and harness the power of SKU-level data to win back the 75% of Americans who are turning to BigTech to fulfill their banking needs.
Corey Gross is Co-founder & CEO of Sensibill, a Toronto, Ontario, Canada-based provider of AI-powered financial management tools for financial institutions.