The concept of using data-driven analytics isn’t new to businesses. The availability of meaningful data from multiple sources and the ability to interpret it has only recently led to the mass-adoption of data analysis for business. Social media and mobile devices have made it easy to acquire large amounts of data about individuals, and different organizations in the B2B and B2C spaces are increasingly using the data available to them inside and outside their organizations to make sound business decisions.

Banking, financial services and insurance (BFSI) is an industry gifted with limitless consumer data collected and available for use in-house. Despite this, many financial institutions (and especially credit unions) are not fully leveraging the customer insights available to them. In our experience, this is because the volume of data collected by the average credit union is so great, it’s difficult to know what to do with it, or where to start. That’s why we’ve identified four unique use-cases any credit union can benefit from to get more out of the data they already collect.

Business retention and growth

There are certain questions that any credit union leadership team wants answers to:

• • Which of my members are at the risk of abandoning me?
  • Which members are most valuable for me to retain and where should I focus my energies?
  • What are the main reasons members look for alternatives to my services?

Analytics tools provide insight and answers to these questions, enabling leadership teams to create action plans to address issues and create better member experiences before attrition rates increase.

Analytics tools also come in handy to identify next best products for members by anticipating their needs based on their demographics, transaction history and products they already have with your credit union.

For example, analytics can help you to recommend next best products for members who:

• • Are within the average age range for a first-time home buyer and whose other data indicates they may be looking for a mortgage soon.
  • Are using alternate credit cards based on payment data. These members can be approached with targeted campaigns to entice them to switch to your credit union’s card.
  • Are within a demographic set that indicates they may need access to a student line of credit for the upcoming year.
  • Are demonstrating purchase behaviours that indicate they may have just had a child, and will be looking to open an RESP.

Not only does this benefit the member, credit unions see a direct impact to their bottom-line and customer satisfaction index through targeted marketing efforts that rely on the insights gained from analytics. In addition, analytics tool can be used across members preferred channels of engagement, so you can focus on the right channel to reach members.

Operational efficiency

A data-driven approach to management of any kind – whether it’s inventory, raw material or human resources – can significantly improve the availability of resources and create operational efficiencies. With business analytics, credit unions can identify the need for particular resources and prioritize relationship building activities with members. Business analytics can be used broadly to plan for scheduling, capacity planning, ATM or branch coverage planning and more.

Our business analytics solution can also address human resource capacity issues to help you analyze and use your data in the first place. You likely have analysts in-house but they may not have the time to dedicate to diving into your member data and pulling out meaningful data points you can use to grow your membership and retain more members. This is another way we can help create operational efficiencies by supplementing your existing teams and creating more value for your credit union.

Risk assessment

The strength of a good analytics tool lies in its ability to pool data from across different streams of business, such as loans, savings, wealth, cards, personal accounts and commercial accounts. Credit unions can build a meaningful picture of their overall risk using analytics. Couple this with predictive models and the tool can anticipate loans that may become delinquent or members that are likely to attrite. With all of this risk information, the tool can be used to build a model that simulates the impact of the loss on the overall business if certain risks come to fruition.

Celero’s business analytics tool goes a step further by overlaying the macro-economic parameters on top of a given set of data-points to provide insight about the exposure a credit union may face based on external factors.

Strategic financial decisions

Analytical tools can provide aggregated financial performance data across multiple metrics, allowing credit unions to monitor and manage their businesses and run “what if” scenarios to help identify the right strategy to go forward with. With event-based analytics, credit unions can make strategic decisions based on external factors that are affecting their membership.

A compelling example is using data analysis to look at how member behavior has changed as a result of COVID-19. Using predictive modeling, you can plan scenarios for what you might expect from members in the second or third wave of COVID-19.

Using predictive modeling, you can plan scenarios for what you might expect from members in the second or third wave of COVID-19.

Another example could be analyzing what the impact might be of raising a fee, like everyday banking charges or mortgage rates. Using member data, you can predict how certain members will behave and react to increased fees, which members will be most price sensitive and what your attrition rates will be as a result. These “what if” scenarios can be developed to help inform strategic decisions to increase profitability, reduce costs, keep members happy and provide invaluable information across multiple areas of your business.

Hard data means a measurable investment

Any analytics product that can churn out this kind of precise and predictive information depends heavily on quality AI-based algorithms and comes with the ability to draw massive amounts of data from multiple data sources. Credit unions often compare the investment in analytics to their existing IT spend on the core banking systems, but it’s important to remember that unlike some IT investments (like your banking system), credit unions have the opportunity to take action on the insights gained through analytics. Through this action, credit unions will see return and value in the form of a more engaged membership, larger share of wallet, operationally efficient branches, more informed decision makers, the ability to use highly targeted marketing tactics, and so much more.

While everyone can agree that core banking is at the heart of any banking operation, given what analytics can do when used correctly, the ability to generate revenue and optimize costs more than justifies the investment.

Learn more about analytics

Business analytics can completely transform the way credit unions are making strategic and tactical decisions. Credit unions who can align their corporate goals with data driven insights to back up their objectives will be able to extract maximum value from the product.

To learn more about how business analytics can provide actionable insights for your credit union, talk to your Account Executive or visit www.celero.ca/solutions/analytics

Thanks to Ritesh Andley, Fintech and Client Solutions Development at Celero, for his contributions to this post. 

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