Credit unions faced a set of market realities in 2018 that sparked some strategic conversations. With pressures from shrinking margins to new competitors, high loan-to-share ratios to the rising cost of capital, CEOs and managers challenged their teams to think expansively.
Credit union leaders asked: How can we transform for the future while remaining true to our roots?
In 2019, we will begin to see the fruits of the strategic responses to this important question. Much of that fruit will center on the pursuit of data maturity. Many CU leaders now rightly view the development of an analytics culture as the best way to rediscover the value credit unions can deliver to modern-day members.
CUs Look Through the Eyes of Modern Members
Delivering exceptional experiences is the core objective of data analytics. The many options for banking, payments and lending has put member loyalty at greater risk today than ever before. Yet, credit unions have an incredible advantage, especially when you consider younger consumers. While they want to be seen, heard and recognized as individuals, they also want to feel part of something bigger.
Fulfilling the credit union promise in the future will require a hyper-personalized, predictive approach to the member’s overall financial wellness — at scale and in real time. Data are the key to achieving that level of intimate, actionable knowledge on a per-member basis.
More CUs Will Turn to the Cloud
Members are increasingly piecemealing their financial solutions. It’s not unusual for a consumer with a primary financial institution they love to also hold money in a PayPal account; or for a business owner to rely on Square for payment processing. The use of multiple providers for multiple needs makes it more critical for credit unions to pay attention to their own transaction data, but also pull in third party transaction data.
The pace with which data is being generated is increasing exponentially, placing significant pressure on credit unions to evolve their processing power. It simply isn’t feasible to pursue large, on-premise solutions considering the volume, variety and velocity of data coming our way. That’s why I expect we’ll see more credit unions move on migration to the cloud in 2019.
Barriers Continue to Fall
In 2018, fewer CU executives scoffed at the idea of competing with tech companies and retailers for the member relationship. It became real in July when the U.S. Department of Treasury recommended tech firms apply for special-purposes charters.
Google, Apple, Facebook and Amazon — GAFA — have already made tremendous in-roads to the consumer wallet. The seamless, convenient and often social ways they allow people to make and manage transactions is driven by their mastery of data and deployment of modeling and learning technologies they see ahead for the user.
This year will be the year more credit unions get serious about offering GAFA+ experiences for members — data-rich, intuitive and predictive tools layered with real, human appreciation for the member’s business. Smart, iterative, cloud-based data analytics will get them there.