COLUMBUS, Ohio—When it comes to leveraging Big Data, credit unions have an edge over banks, according to one analyst who is cautioning that if CUs don’t embrace that advantage they may soon lose it.
And even the best data in the world is useless if a credit union doesn’t have someone who can interpret it, that analyst added.
“I think credit unions have always had the advantage of knowing their members and being close to them,” said Robert Fite, with CRIF Lending Solutions, Atlanta. But now with the growth of mobile apps, many designed to capture consumers’ behaviors, Fite said banks will catch up quickly if CUs don’t leverage the data associated with their members via the new information channels.
During the Ohio CU League’s InVest48 Annual Meeting here, Fite emphasized that Big Data is primarily about accessing all the growing data channels to drive better business decisions. “So it’s not just getting your arms around all the data that is out there on your customers or your members, it’s about how do you use that data.”
No CU Info Silos
The big advantage CUs have over banks, outside of knowing their account holders better, is that information inside the credit union is not spread among a large number of areas and across many different systems.
“Credit unions have fewer issues than banks with disparate systems,” said Fite. “CUs generally have one to two systems and the information tends to be centralized. Banks have so many silos.”
To succeed with Big Data, Fite said credit unions have to embrace the concept as a way of doing business, and there has to be buy-in from all levels of the credit union.
“The commitment to Big Data has to be there. You can’t start and stop with this,” he said.
Fite acknowledged that being successful with Big Data means taking small steps, and that success does not come overnight.
“It’s a slow change in how the organization handles its business.”
Time To Transition
Fite said credit unions typically fall into three categories in how the use of data:
- Simply using internal data around the master file, and possibly using a little marketing and credit data.
- Branching out from the first category and also looking at transaction data, maybe using a CRM platform, and then conducting deeper analysis.
- “Then other credit unions take all this a step further and pull in all kinds of data, for example from mobile apps,” said Fite. “This, in some form, is testing the waters of Big Data.”
The idea, said Fite, is that all credit unions, no matter where they fit within the categories, should be transitioning. “If you stay in one spot you are falling behind.”
It’s important, Fite continued to emphasize, that the CU take baby steps. “And that may mean for some, simply optimizing first the data they have before branching out and pulling in other data sources. Maybe start with core info—name, address, Social Security number. Cleanse core data before moving forward.”
Fite also stressed that some companies “jump on Big Data” but fail to have a strong business case and clear purpose. “This is about ROI, if you go down the Big Data path make sure the business case is there. Dumb down the ROI to make it very clear to everyone what you want form the effort and what is expected. You have to do that or expect to fail.”
The key to any data dive are the interpretations, reminded Fite, who said the CU must have talented people on staff to “read the tea leaves” or contract with a vendor skilled in the area. He reminded, too, that experts in data analysis – those who know data and also understand how to apply the finding to the particular business, are not always easy to find.
“If you don’t have someone in-house and you want that, it may mean bringing someone up slowly within the organization,” added Fite. “You can have the best data in the world, but if you don’t have the skill to read it …”