With fewer and fewer available resources, credit union staff often must depend on outside experts for help. As a representative of one such resource, I can tell you this is absolutely a good thing. Yet, when it comes to business intelligence, however, the data provided by these outside experts can be too far off the mark to really paint an accurate picture for an individual credit union.
This is particularly true in the case of payments industry data. Take a recent report finding fees had outpaced interest as a source of income for credit cards issuers in both 2010 and 2011. Upon closer examination of the report, one could see that while it’s true fees beat out interest income, it was by a pretty narrow margin. What’s more, the report misclassified interchange income as a fee, further altering the real picture of today’s credit card profitability picture.
I digress. The point I’m hoping to make is while inexpensive and readily accessible, industry reports, research and studies, have to be taken with a grain of salt – particularly for credit unions, which have a unique approach to nearly every financial product and service available today.
Don’t be discouraged by the prospect of having to dig a little deeper for business intelligence. Why? Because much of what you need to know about best serving your members already exists within your own information systems. Indeed, it’s right under your nose.
Purchase behavior is an excellent place to start, and if your credit union offers any sort of card program – be it credit, debit, ATM or prepaid – the transaction data from these portfolios can be extremely informative. And the deeper you can go, the better. At TMG, we have even begun to help financial institutions hone their data on at a cardholder level.
Credit unions increasingly need a targeted approach, whether it’s in marketing, pricing, risk management or any number of other initiatives. The ability to easily segment card portfolio performance on a cardholder-level can drive these strategic decisions and increase their chances of success, right from the outset.
Take person-to-person (P2P) payment solutions, for example. If you could identify all cardholders who were transacting with PayPal on a regular basis, or taking more frequent ATM withdrawals, these cardholders may be considered candidates for a P2P payments product, such as Dwolla or ZashPay, from your credit union. The likelihood of a P2P product succeeding with these cardholders becomes even greater when you combine this knowledge with demographic information from your marketing customer information file (MCIF) system.
This is just one example of how data mined from a credit union’s own systems can help your staff create solutions precisely tailored to their own unique membership. With the whole picture, you have the kind of information to turn average products and services into optimized, sustainable and strategic success stories. The possibilities are endless.
Brian Scott is vice president of sales at The Members Group (TMG). In his role, he leads a nationwide sales team that works with credit unions to create competitive card programs for their members. Since starting with the company in 1994, he has created profitability and portfolio growth modeling tools to help credit unions determine the impact of marketing campaigns and promotions. Brian routinely visits more 75 credit unions each year sharing insights on the competitive card marketplace. www.themembersgroup.com