Overcome the challenges of becoming a data-savvy credit union
It’s no secret that Big Data is more than just a buzzword these days. According to Jim Marous, CEO and Editor of The Financial Brand, customer data is the driving force behind almost every financial institution project and strategy today.1 According to his publication’s 2018 Digital Banking Report, enhancing the customer experience and using data to improve personalization and operations have been among the top three trends in banking for the past three years.
It’s clear: It is imperative to use account holder data to enhance the member experience, improve efficiency and drive product development.
The problem, Marous says, is that many institutions either cannot access their data or they use it primarily for reporting and not as a basis for developing digital or operational initiatives.1
Financial industry veteran and CEO of Velocity Solutions Christopher Leonard understands the power of data. His company focuses on helping community and regional financial institutions improve revenue, efficiency and account holder satisfaction with an emphasis on digitization and leveraging the institution’s data.
He shares his perspective on how to overcome the hurdles of “Big Data” below.
QUESTION: What is the biggest challenge today for community financial institutions as they attempt to use their data in meaningful ways?
LEONARD: Financial institutions tend to be conservative. As a result, they may be behind other industries in terms of technology. This is understandable, because getting all of the relevant data in one spot and then figuring out what to do with it can be a Herculean task.
According to industry experts and our own client feedback, a major impediment to financial institutions accessing their data is having too many data silos. Their data is restricted within separate departments or lines of business that do not communicate with each other. Another major issue is that many financial institutions simply do not know how to begin to put their data to work.
The easiest and most productive place to start is to get all of your account holder data in one easy-to-use platform that is accessible throughout your institution, from front line employees to marketing teams to management. Community institutions should aim to use the datasets they already have to drive actionable insights to improve profitability and manage risk.
QUESTION: What are ways credit unions can use data for immediate impact?
LEONARD: There are several areas where insight into data can be used in tangible, measurable ways. These areas include new account holder onboarding and communications, monitoring and increasing account activity, cross-selling, and retention to name a few.
With regard to onboarding, for example, research has shown that a sophisticated, digital onboarding process will increase revenues, decrease costs and maximize member satisfaction. According to J.D. Powers & Associates, account holders who are contacted by their financial institution within the first three days after opening an account are nearly twice as satisfied and more likely to remain a customer than account holders who are contacted after three days.
While many credit unions follow a formal onboarding process, the outbound communication could be infinitely more valuable if the credit union representative were equipped with a complete picture of the member’s transactions and additional relationships within the institution.
For instance, wouldn’t it be helpful to know if the member has activated and/or swiped her debit card? Has she signed up for online bill pay or direct deposit? If the credit union representative could see an overall onboarding score or view incomplete tasks, the representative could, for instance, enroll the member into online bill pay or direct deposit while on the phone. He could activate the member’s debit card and review other products and services that may be valuable to that member. The member would appreciate the personalized interaction and the institution would have strengthened the relationship.
QUESTION: What is your advice to financial institutions that want to harness their existing data, but don’t know where to start?
LEONARD: Don’t let “Big Data” scare you. Ignoring it will put revenue at risk, and your members may seek out a more engaged institution or even a non-financial institution competitor. Our client data tells us losing one account holder can negatively impact an institution’s bottom line by $1,828 per each lost account.2 Improving customer satisfaction by as little as 50 points can translate into a $2.4 million increase in revenue per 50,000 account holders.3
Luckily, 85% of consumers in the Financial Brand survey said they want their financial institution to know them, help them with financial goals and reward them. They will gladly share their data with their financial institution as long as they get something meaningful in return.
Our advice is to seek a technology partner that can empower your entire institution with the data and automated processes that drive these meaningful relationships without being overwhelming. At a minimum, the platform should:
- Centralize your data across lines of business (LOBs) and from different data sources
- Generate a 360-degree view of a member’s financial picture, available to front line staff, marketing teams and management
- Create automated, personalized marketing and communications campaigns that:
- Are triggered by account holder activity/inactivity
- Fulfill specific objectives (cross-sell, improve retention, increase transactions, account acquisition and new account activity, etc.)
- Assist in identifying future sales opportunities
- Be core-agnostic
- Create in-depth reporting to facilitate quick and efficient decision-making
For more information about centralizing your data and utilizing it to improve efficiency and member experience, contact Velocity Solutions at (954) 847-5800 or https://myvelocity.com/contact-us.
1 Webcast: “Will You Be the Disruptor or Disrupted in 2019? Data is the Answer,” The Financial Brand, November 13, 2018.
2 Velocity average client data
3. J.D. Power and Associates, “2017 Account Opening and Onboarding Benchmarking Study,” cited in The Financial Brand.