Does your credit union need a strategic lifestyle change?

My family is from the region of the country known as the Mid-South, which includes portions of Arkansas, Kentucky, Mississippi and Tennessee and is distinguished mostly by its food in addition to its agriculture.  Pork barbeque, biscuits and gravy, and fried catfish are common menu favorites in the home and in local restaurants.  These are the types of food that I was raised on, and continue to be tempted to eat — when the opportunity arises.  However, I am well aware that a consistent diet containing high fat, fried foods is not healthy.

My dad suffered his first heart attack the year I graduated from high school.  The doctors told him at that time that the best way to prevent a future attack would be to change his lifestyle.  Now, at 67, he is relatively healthy and lean having fully adopted the life style change that supports a long life.

Why do we decide to get fit and improve our health?  There are a number of potential reasons: the doctor has told us we need to for health reasons; a New Year’s resolution or special event; we have determined that we want to strive to live a longer, healthy life.

What does this have to do with credit unions?  Credit unions must also undergo a strategic lifestyle change to remain competitive in a changing financial services industry.  The question is why will we make the change?  Will we change under the threat of regulators, to obtain a temporary goal, or because we want to create sustainable growth?

If food is the fuel that drives the body, data is the fuel that feeds good decision making.  Quality data equals better decisions.  Therefore, the first step in a strategic lifestyle change for a credit union is to focus on data, not as an afterthought, but as forethought.  Credit unions need to have a data strategy that includes data collection, data storage, and analytics.  Further, credit unions should create a data team that includes IT, credit, marketing and operations personnel.  Finally, just like a physical lifestyle change, you have to understand that results happen over a longer period of time.  Therefore it is important to be patient, knowing that the work you invest in today will payoff in the future, even if you don’t see the value immediately.  You should begin with the following strategic fitness plan.

Acquire Good Data

Businesses spend billions of dollars each year to acquire data to help them make better decisions.  The good news is that you already have data coming to you via member applications and transaction records.  But, you need to decide what data is valuable and what is not and make sure that it is being acquired in a way that it can be “digested” easily.  For example, make sure that those who are entering data are doing so accurately.  One credit union reported that when they studied their data, there were multiple spellings of the same city.  This needs to be prevented through training and system configuration.  Often, those entering the data are not aware of its significance at the time.  Good education can ensure that data is handled properly.

Manage and Process Data with Good Technology

My wife and I both run.  The difference is that she runs races (half marathons so far) and I run for fitness.  I’d rather not have to run; she runs for fun.  Because of that difference, we have different perspectives on the level of investment we need to make.  My running shoes probably cost $39.95; she has several pairs for different purposes that cost hundreds of dollars.  She tells me that I could run farther with less pain if I had better shoes.  Data management will be easier to employ in your credit union if you have the right tools.  But again, it requires long-term commitment.

Many of the credit unions I encounter today are trying to manage data with off-the-shelf software or even core technology.  These are the wrong “shoes” for a long-term, sustainable solution.

Execute Regularly

Like exercise, data management and analytics cannot be a once a year activity.  You may see some immediate results, but they will not be long lasting.  Part of this new lifestyle is committing to the process of data collection and analytics where the biggest benefits are experienced later, down the road, most likely in the next generation of loans and accounts as better decisions are made during the acquisition process.

Enjoy the Benefits

At the end of the day, what we want is the ability to make better decisions more efficiently.  The result of analytics, based on good data, is that you will be confident about your decisions and you will be able to make them faster.