Big data is exactly what it sounds like – a vast amount of structured and unstructured information, collected from an increasingly diverse set of digital and traditional sources. For credit unions, every interaction with members, every loan processed, fee collected, call center, or branch interaction is an opportunity to collect data which when aggregated, becomes “big data” that can then be mined to enhance your credit unions’ growth and value to members by better understanding members’ wants and needs.
What channel do your members use to interact with your credit union? What is the most popular service? The most profitable one? Big data analytics can help answer these questions and more. Here’s why credit unions need to leverage big data in 2019:
- Information is the new currency – Consumers are increasingly willing to share information in exchange for value. Think about how many “free” applications there are. While users do not pay any fees to use Facebook, Instagram or even Google, these tech companies are collecting large amounts of information on consumers and using analytics to interpret the data and develop their long-term strategies. For example, if demand for a particular product or service online has increased in a new location, that may signal a retailer that a new brick and mortar location is warranted or provide insights into the type of promotions that will resonate most with a particular demographic.
- Blockchain protects and empowers members – One of the major concerns about big data is storing it securely and who has access to it. Right now data is controlled by large companies, but blockchain, which is not centralized, but uses encryption and algorithms, will begin changing this landscape. With blockchain, members will have more control over their own data and who and how much they share, and organizations may even pay to access an individual’s information. Blockchain will enhance security and empower members. As cooperatives, credit unions have the responsibility to protect member data as well as the opportunity to use this data for good.
- Enhance member experience – Consumers today expect a “story of one,” a unique experience tailored to them. 60% of Millennials and Gen Z identify with this. The internet of things (IoT) includes devices like Amazon’s Alexa, Google Home, or smartwatches, which are all key gatherers of data points and opportunities to interact with your members. Big data can provide insights for credit unions to fully understand members in a sophisticated way and offer a customized experience across multiple platforms – digital, mobile, phone, in person, etc.
- Improve efficiencies – With appropriate analysis of big data, credit unions can track figures like loan portfolios or mobile payments, member wait times, etc. With real-time reporting, credit unions can make changes immediately to improve efficiency. For example, understanding when most members are calling with questions, so you can appropriately staff your call center. Without big data you may be missing out on opportunity costs from member service, employee training, or product development perspectives.
- Spark innovation – Predictive analytics are perhaps one of the most powerful ways to use big data. With big data tools you can have timely access to market research. Understanding member demand and powerful trends will become increasingly important as competition is only expected to grow as the financial services industry continues to consolidate. Big data could help you develop the right products and services based on demand and better position you to meet the needs of an everchanging membership base.
Making the Most out of Big Data Through Partnerships
To use big data effectively, credit unions will need to determine how best to aggregate and organize the data, the right metrics to track, how to track efficiently, and how best to interpret the data to make a strategic impact. Few credit unions today have the sophisticated data analytics in-house needed to understand all the information and put it into action. It’s not enough to track disparate data sets of information or report out reams of data.
The value of having a sophisticated partner that can attract, retain, and develop the right talent in data scientists is critical. This may mean partnering with a technology company or investing in a data analytics CUSO. An added bonus for credit unions is that some organizations, such as OnApproach, are working to pool together industry credit union data, so all organizations in the CU movement can improve, benchmark, and understand today’s trends to succeed tomorrow.
Big data may seem impersonal because information on your members become part of statistics or trends. Yet, big data allows you to know your members on a deeper, but different level than a personal face-to-face interaction. And in a world in which your future members prefer to engage via technology channels rather than building in person relationships with their CU tellers, investing in big data today is more imperative than ever to ensure tomorrow’s competitiveness. While personal interactions may never be fully replaced, the deep understanding from big data is what will help credit unions stay connected with members and further the collaborative spirit of people helping people, regardless of the means.