How big data analysis can make a big impact on credit unions

If it seems like the whole world is talking about “big data,” it’s because everyone is. The rapid advancements in technology and data analysis afford us more and more actionable information every single day. This is true across all industries, and banking is no exception. How you access your core data and what you do with all of it can help set you apart from your competition.

How Big is Big Data?

It’s huge. It can help you get to know your member on a whole new level. From information on the members themselves, to the products and services they use, you can analyze this data to determine the value your institution derives from them.

Start by dividing your members into demographic groups. At the most basic level, that’s age and gender. Then, move on to differentiators like household income, credit rating and the products and services they use. Finally, include statistics that help determine account value. These can include information like total and monthly number of swipes and their value, numbers on non-interest income and income from the customer’s deposit accounts, loans and services.

Now What?

Now that you have all of this information, what do you do with it? You use it to take action. For example, you might segment your auto loan portfolio by age group, looking to see which group buys the most cars and in what price ranges. You can include interest rates in this calculation and see which group is the most profitable and target them specifically in your next promotion.

Another solution would be to analyze whether the loan recipient was an existing account holder or a new member. Which demographic group is most responsive to cross-selling? You could also look at which branches or employees are most successful at cross-selling.

Location, Location, Location!

Are you considering opening a new branch? Where should you put your new ATM machine or promotional billboard? The data to help you make these important decisions is there, you just need to access it! Look at where your cardholders are spending their money. Is it close to home? Close to where they work? If many cardholders shop at the same local grocery store, putting your next ATM machine there is a no-brainer.

Rewards Can Help Too

If you have a rewards program, it can provide even more valuable information. Look at the demographics of the enrollees and the rewards they are choosing. This can point you in the direction of strategic partnerships with local businesses. Perhaps that partnership could even lead to opening a business account or loan applications . . . the sky really is the limit!

Bottom Line

Current customer information can be extremely valuable and can help you understand which member groups are most profitable, or present greater opportunity. The costs of ignoring this data can be considerable either in actual wasted resources or missed opportunities, since the lack of analysis can lead to strategic missteps. Though it will likely take an investment in time and resources up front, the results can prove well worth the investment.