Is Your Credit Union 'Data Ready'?

 

Delivering personalized service through digital channels demands it

Digital transformation is not just a buzzword in the financial services industry. It's a strategic priority due to changing consumer expectations and the need for better and faster ways of providing relevant and personalized service. The organizations that are enabling meaningful and long lasting change have a clear underlying data strategy to facilitate this transformation. Unfortunately, a recent study from BIG (Best Innovation Group) and OnApproach (National Survey Findings: Credit Union Data Analytics and Decisioning Trends) highlighted that 45 percent of credit unions don’t currently have a data strategy in place and those that have will take another three to five years to implement it.

 

Digital Transformation (+ Data Strategy) = Engaged Consumer

It’s possible that many financial institutions (FIs) don’t have a clear understanding of how digital transformation and data strategy are tied together. Perhaps they don’t know how to enable it. Larger FIs (like banks and credit unions) who have started using data effectively to enhance customer experience through digital channels have been rewarded with increased growth in their consumer base and loan origination. They are also able to generate a positive brand image to create a healthy pipeline of potential customers especially attracting a younger demographic.

Traditionally, one of the distinct advantages the credit unions have over other financial services providers is their focus on building relationships through their service model. Members feel their branch understands their personal needs and motivations. Credit unions inherently understand that engaging and meaningful interactions foster trust and create reliance. That is the key differentiator which consumers appreciate and need.

But are credit unions and regional financial services providers truly leveraging this ‘branch level’ knowledge and scaling it to an omni-channel experience? Do they have effective means to capture customer interactions and derive insights on an ongoing basis to provide relevant advice and solutions? These are the questions I’m most concerned in addressing through my work with many financial institutions.

 

Scaling up: Moving from Proactive to Personalized

Until a few years ago, there was a lot of talk in FI circles in moving from ‘reactive to proactive’ service delivery. The dialogue, if not the execution, has definitely moved ahead. Now discussions centre on ‘proactive to personalized’. With the proliferation of ‘big data’ technologies and analytical tools, there are ways to truly scale up member engagement across multiple-channels by harnessing the power of data, to create rich and engaging contextual experience and dialogue. 

Financial institutions, particularly the larger ones facing competitive pressures, focused on transformation by deploying a ‘process oriented’ approach towards reducing operational experience friction. Bringing in process efficiencies resulted in a more convenient interaction. However, banks understand the ‘trust’ deficit over their smaller peers. To fill that gap, banks have embarked on a path of leveraging advancements in Artificial Intelligence (AI) and machine learning to bridge the gap from ‘customer convenience to engagement’. There is a realization that merely digitizing a brick and mortar experience goes only so far. For true engagement, a much deeper understanding is required at both an individual and a portfolio level.

 

Faster Time to Insights

Consumers and businesses are looking for customized solutions not generic product offers. Getting to these insights requires making connections on a broad set of variables derived from a member’s day-to-day, real life interactions. Merely having ‘data’ is not enough. To leverage the intelligence from computer systems and statistical tools like machine learning, an underlying data infrastructure is required that can ‘link’ vast amounts of data while maintaining its richness and quality. That needs investment in expertise around understanding of the data, the rules and regulations around compliance and data handling so that it is used in a fair and transparent manner. Not all institutions, especially those with limited regional presence are able to make that substantial dollar investment. So, how can regional FIs compete in a cost effective way?

 

Self-Service Analytical Tools for Sustainable Value Creation

FI’s need to look outside their four walls and explore new tools that will enable seamless integration and interaction with data from disparate sources. These tools should allow data analysts and decision makers alike to understand their member base at a granular level while at the same time comply with data privacy regulations. Furthermore, it should provide capabilities to get a full view of member’s relationship across different financial relationships so that FIs are able to offer relevant solutions to their members and are better prepared to face market competition. Whether the objective is growing the member base or providing enhanced value to existing members, various approaches are available for adopting a sound data analytics strategy to empower and drive the FI’s overall organizational strategy.

Given advancements in the fields of big data and the associated technology, credit unions and regional FIs have a tremendous opportunity. They can quickly deploy the data using cutting-edge analytical tools to run proof of concepts and test many different use cases across the customer lifecycle, from marketing, acquisition to cross-sell and retention. The time is right for regional FIs to experiment with data and tools to continuously add value to their member’s lives and thereby compete effectively with their larger peers and new Fintech entrants to the market. 

About the Author

Abhishek Bhasin

Abhishek Bhasin is Director of FI Strategy and Innovation at Equifax Canada, focused on enabling digital transformation for financial institutions. He has more than 12 years of experience in financial services, commercial lending, portfolio management, marketing and brand management. He holds a master’s degree in brand management as well as an MBA in Finance from the Schulich School of Business, York University.

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