7 Data Best Practices for CUs

As members go about their day to day lives, every card swipe, mobile banking app login, loan payment and recurring deposit leaves a digital paper trail, which over time accumulates into a giant pile of data that tells a story about their financial behaviors and how they’re engaging with their credit union. Some credit unions are simply sitting on this mountain of member data, while others are developing strategies to leverage it. The latter group has understood that within their data lies valuable insights that can help them understand their members’ needs and preferences, which in turn allows them to make decisions that can improve member experiences and grow credit union business.

Here are seven best practices from credit union industry leaders with data strategy expertise for credit unions looking to make the most of their member data.

1. Clean it up. Credit unions can easily acquire piles of disorganized, irrelevant data over time, especially following a merger or core system conversion, pointed out Amanda Emery, product manager for fintech ­organization Trellance, during a January webinar on data analytics. Running internal data quality campaigns that reward employees for completing tasks such as member address cleanups can help a credit union ensure the data it’s using in external member campaigns is accurate, she said. “You have to be able to trust the insights that you’re looking at for your actions to make a positive impact.”

Data cleanliness ties into the concept of data governance, which is the formal management of data access, quality and security throughout its lifecycle, according to THRIVE Strategic Services Founder Anne Legg. Practicing data governance is essential for every credit union with a data strategy, but Legg noted that because it’s unrealistic for credit unions to manage all of their data at once from a resource standpoint, a better plan is to govern data on a project by project basis until the practice becomes second nature.

“If you go use case by use case, you’ll do two things. First, you’ll build out this process that helps you make sure your data is clean and that you’ll be able to continue making that claim. Second, you’ll build this capability that you’ll add to over time. Then data governance is something that’s actually pretty easy, because it becomes part of how you look at all your data all the time,” Legg said.

2. Get educated. Participating in a formal learning program or working with a consultant can help credit unions pinpoint a data strategy that meets their specific needs. Last year, Aux teamed up with Legg to create CU Elevation, a one-year data education and coaching program available to all users of the CUSO’s data warehouse tool, Cuery. The interactive online program covers six areas of data proficiency and is designed to fit into a full-time executive’s schedule.

Another example of a data strategy development resource is SmartGrowth, a consultation service offered by the Rancho Cucamonga, Calif.-based Co-op Solutions, which pairs credit union clients with experts who analyze the credit union’s card portfolio and assist with the development of portfolio growth strategies and targeted marketing campaigns.

3. Formalize, then operationalize. Eric Valla, who is chief information officer for WyHy Federal Credit Union ($362 million, Cheyenne, Wyo.) and completed Legg’s program in 2021, said that like many credit unions, the relationship WyHy previously had with its data looked like “a hot mess.” One key step the credit union, which also implemented Aux’s Cuery, took to transform the chaos into order was create a “living, breathing” internal document to keep track of WyHy’s evolving data strategy and allow for executive review and feedback. WyHy now devotes one of the strategic initiatives in its annual business plan solely to data strategy, he noted.

Legg added: “It’s formalizing and operationalizing data usage and impact. You’ve got to start with that document so you can formalize it, because one of the big challenges credit unions have is that data is everywhere, but it’s not formalized. Once it’s formalized, then you can operationalize.”

4. Define use cases and set goals. What are you hoping to achieve by analyzing and applying your member data? The answer to that question will look different for every credit union, and whether it’s to increase member engagement, grow loans or something else, it’s important to determine specific data use cases and consider what the credit union’s end goals are.

While enrolled in Legg’s program, Valla said he and another WyHy participant were instructed to list about 10-20 potential use cases for their data, figure out which would lead to the biggest return from a ­member ­satisfaction standpoint, and sprinkle in a few “quick hit” use cases that would help get WyHy’s staff excited about using data to solve some of the initiatives that were underway. “I ended up assigning one use case to each of our executives, which forced them to go through and use data to solve that particular problem,” he said. “A lot of credit unions get overwhelmed because they have so much data from so many different systems, but if they try to tackle it all at once, they’re likely to give up or keep delaying it. We put it into more digestible chunks, and started to see the data was valid, see it in action and use it in our decision-making processes.”

Some of WyHy’s use cases included reviewing data around e-channel usage and reaching out to members with incentives to up their usage of e-channels; learning which members use payment apps like Venmo, PayPal and Cash App and encouraging them to switch to Zelle, which WyHy offers; and contacting members whose CDs are about to mature with the goal of convincing them to keep their money at the credit union, Valla explained.

Beth Phillips, director of strategic portfolio growth for Co-op Solutions, said credit unions working with SmartGrowth consultants are often looking to leverage their payment products to expand revenue streams, whether it’s through growing interchange, balances or transaction volume. “Right now, a lot of credit unions are looking for the low-hanging fruit in terms of how to execute strategies to drive portfolio growth,” Phillips said. “They want repeatable, effective strategies in terms of outstanding balances and the number of transactions.”

Trellance’s Emery pointed out that credit unions can use loan portfolio data to see which members are falling behind on their payments, or which types of loans are seeing the highest rates of delinquency, and targeting at-risk members with skip-a-payment campaigns.

5. Take a buildable, layered approach. Some credit unions are leveraging traditional demographics (gender, age, wealth tier, marital status, location, etc.) to segment out members as part of their current data strategy, while others are taking things a step further by building out a data environment that supports much more personalized offers, Phillips said. For credit unions that are still in the early stages of building a data strategy, Phillips recommended first strengthening the resources behind the data that they already have access to, such as demographic data, then building out new strategies. “You can take those who respond to your communication strategies and optimize your campaigns from there, and from that consistent optimization, that’s where you can grow out behavioral and relational data sets. It’s a layered approach,” she said, adding, “For example, if you’re very strong in your credit card acquisition efforts, and you understand that audience really well, then you have a sweet spot in your credit card program. So by identifying that sweet spot in your credit card program and then overlaying that with a sweet spot in your lending program, you can build out more personalized offers to acquire members who are tied to those sweet spots. And then from there you can optimize and continue to grow your portfolio.”

6. Make data everyone’s job. Experts agreed that for a credit union’s data strategy to succeed, efforts must be made across the entire organization.

Emery discussed the concept of building a “data tribe,” and centralizing data while ­decentralizing the management of data. This approach includes appointing a “data champion” in each department who can spread the word about the credit union’s data strategy and encourage team members to take action on the insights they have access to. “Not everyone needs to be a BI [business intelligence] expert to take action on data. You do need some people who understand the business and strategic objectives, and you also need some people who understand the in-depth data intricacies and how data is derived. But you also need people who can take action on it, who are talking to your members day in and day out, who are passionate about helping people,” she said. “It takes an emotionally intelligent team to get a data culture right. Everyone has to have buy-in. Having a centralized group with multiple stakeholders in multiple departments will really help this grassroots effort be as effective as possible for your credit union.”

7. Engage your vendors. What role should third-party vendors like core processors, mobile banking providers and fintechs play in a credit union’s data strategy? Phillips said that first, it’s important for credit unions to ensure their vendors provide access to the key data points needed to construct their data environment. When working with a core processor, these key data points might include transaction and balance details at a unique member level; with an online banking vendor, they may include logins, time spent on online banking activities and transfers. But, she added, “You want all the data you can get because anything that you know is a key attribute will help you determine, one, your sweet spot in terms of your membership, and it’ll help you understand what programs, products and services make a member stickier.”

She also advised credit unions to view vendors as data resources and communicate with transparency. “Say, ‘We’re working to build out data strategy, what else should we be looking for? Do you have best practices that you advise to your clients? Ask those questions and let them be the expert in that area, because they’re serving several hundred clients and should be able to give you a clean answer and provide that guidance.”