AUSTIN, Texas–When are your members most likely to be shopping for a home loan? Between 9-5 when your branches are open, or between 9 and midnight, when it’s easiest to shop mortgages using an app?
Likely the latter, which is why a CU needs to be in front of the member ahead of the game.
Most every credit union has all the data it needs to be out ahead of the member, but what is often lacking is the analytics to make sense of it all.
Critically, that means the ability to “understand” the member, often using the kinds of non-traditional criteria being employed by fintechs, according to one expert who spoke to the CUTomorrow Conference here.
“What fintechs do is what we do well. They ‘understand me,’” said Anne Legg, director of client strategy with CUNA Mutual AdvantEdge Analytics. “They coach and plan, engage, help me live a better life and be social. Those are all things credit unions do. This is your use case. This is where your members are going.”
Beating Amazon
It isn’t that credit unions are lacking in data, said Legg, who said the average credit union has between 60 and 100 data systems, much of it in Excel spreadsheets.
“It can seem overwhelming, but you know what you have? You have more data than Amazon. It’s how to harness it, big and small,” she said. “It’s all about how do I create what’s really important. What’s that member problem I really want to solve? How am I going to understand you and get ahead of your needs? How will I make it work for everyone, not just the member?
Three Buckets
According to Legg, successful companies think about data in three buckets:
- Boosting traditional P&L levers
- Delivering the digital bank and enhancing the member experience
- Developing new areas of growth
Legg said credit unions will need to build capabilities in these areas:
- Data-driven digital insights
- Integrated member experience
- Digital marketing
- Digitally enabled operations
- Next-generation technology
- Digital enablers
Where to Start
But with what appears to be a complex list of demands, where does a credit union start? The answer, said Legg, is to start with the member
“What is your member friction?” asked Legg. “ Members need shelter, transportation, travel and play and short-term and long-term deposits. Please don’t make it icky to get any of those.”
Not surprisingly, the road to using analytics begins with a map, said Legg, that should include both short-term items to tackle and then long-builds. She defined short-term as anything that can be gotten done in 90 days or fewer.
What can’t be overlooked, said Legg, is the importance of “data governance.”
“Next to loans, your data is the biggest asset you have,” she told the CUTomorrow meeting. “It’s all about having the same governance you do for your loans. You need data vision, data accountability, data prioritization, metadata and data lineage, data quality and data policies and standards.”
Five Pitfalls
Legg said there are five pitfalls to watch for on the patch to effectively using data analytics, including:
- Innovation for innovation’s sake. “Distinguish between hype, myth and reality.”
- Big/Bad Data vs. Smart data. “Data for data’s sake is no data.”
- “Failing to Prep for Surge. “Ninety percent of the data in the world was created in the last two years. When you’re thinking about this, you have to think about how you are going to scale.”
- Neglecting Governance From Day 1. “This is about understanding what’s coming into our environment and why, and how to know when it can no longer be trusted.”
- Culture Fail. This is all about setting expectations from the top down.
In summary, Legg advised credit unions to answer these questions before getting into analytics and big data:
- ID the problems you want to solve
- ID the data necessary to solve them
- Add contextual intelligence to the critical data
- Establish strong data governance from day one
- Build and nurture a nimble, iterative culture