Credit unions must focus on business processes when implementing big data & analytics (BD/A) solutions
The goal of every BD/A solution is to improve the business. While this may seem like an obvious statement, it is a concept that has yet to be grasped by most credit unions. Leaders throughout the credit union industry are still in awe of BD/A tools and their ability to display data in fancy and beautiful ways. Although these features are impressive and give new insights to the human mind, they will be like a luxury car in your garage if there is no business purpose planned for it. BD/A tools, similar to a luxury car, might be something that you show off when your friends are in town, but not what you would use for work. However, with effective Business Process Management (BPM) mindsets and methodologies, credit union leaders can leverage BD/A tools as a master-builder to create innovative technologies that shape the future of the credit union industry.
There are four major business processes being revolutionized by BD/A tools at credit unions:
1.) Loan Origination
BD/A solutions are providing deeper intelligence into the loan origination decisions of credit unions. They are enabling managers to monitor all loan applications that enter the credit union. A loan origination decision begins (or ends) a long-term relationship with a member. Therefore, making strategic loan originations is crucial for the future of the credit union. Loan origination data is pouring into credit unions every day. Utilizing public, application, and various other data sources, credit unions will be able to gain a competitive advantage over competitors who do not have a deep relationship with members. These relationships have created a robust amount of historical member data throughout the credit union industry that has yet to be effectively leveraged.
2.) Regulatory Compliance
With the rise of regulatory burdens being placed on credit unions, BD/A will be strategic asset for credit unions to continue their excellent service to members while remaining in compliance with regulations. New regulations mean that more information must be tracked and communicated by the credit union employees. Historically, this would mean hiring more people to build and monitor this information. Now, credit unions will be able to leverage BD/A applications to automate the gathering, and reporting, of information to regulatory agencies. Through successfully complying with new regulations, without spending precious resources on non-value adding activities, credit unions will be able to continue fulfilling their mission of serving their members and communities.
With resources being stretched thin throughout credit unions, marketing budgets tend to be hit the hardest. When credit unions are focused on keeping up with compliance and managing risks, they tend to lose focus of their mission: serving their members and community with excellent financial products. Marketing is vital to maintain this focus. Therefore, marketing processes must be accurately tuned to effectively meet members’ needs and improve relationships. BD/A allows credit unions to customize their marketing messages and communication mediums to speak to members as individuals (i.e. smartphone applications alerting members of limited time deals via the credit union). Most credit unions are still stuck in the marketing campaigns that are unsuccessful because they are not leveraging the data to customize communications to members. Through BD/A solutions, credit unions will be able to tailor messages to the right members at the right time. Mining member data throughout the credit union, along with public information about certain demographics, is one way that credit unions can utilize BD/A to marry management’s strategic initiatives with the focused and unique service to members.
4.) Fraud Detection
Detecting and alerting members on potential fraudulent transactions will continue to be an essential credit union activity as member relationships move toward an increasingly digital platform. Alerts and other methods of flagging potentially fraudulent transactions are accomplished through BD/A solutions. By combing member data and their historical relationship with the credit union, BD/A solutions will become smarter and better able to fight cybercrime. Harnessing historical member information and aggregating data (i.e. average spending on certain categories of merchandise) will allow credit unions to implement BD/A solutions that keep members’ finances safe and sound.
Before Investing in any BD/A solution, credit union leaders must have a goal of improving certain business processes. Assessing the current business processes of the credit union is essential. This assessment will also give a clear justification for the investment in BD/A solutions. Building a BPM view of the entire credit union will allow management to more effectively decide which BD/A solution will provide the most value. At the end of the day, programs and solutions must support the mission of the credit union. In order to support their mission, credit unions have designed many different business processes. Leaders throughout the credit union industry must actively manage and seek innovations to increase their value. When leaders develop this vision for BD/A solutions, they will be able to drive the BD/A revolution of the credit union industry.