The Trellance Data Blog

The Death of the Branch: A Lesson About Credit Union Data

Posted by Austin Wentzlaff on Dec 14, 2018 12:01:00 PM


The way we think about credit union data these days doesn’t mesh with what’s actually happening in the industry. Credit unions now have access to more data than they ever have. Failure to leverage that data though? That’s where you should be concerned.

Let’s walk through an example: just over 20 years ago, Amazon entered the book retail market. Their mission was simple: deliver personalized experiences to its customers and make each interaction unique and customized to the individual.

At the time, Amazon was just one man, Jeff Bezos, selling books out of his home. For the book market retail giants, Amazon was hardly a threat, just some crazy guy trying to compete with very large and long-established institutions. Companies such as Barnes and Noble and Borders Books had well over a thousand retail locations and were selling books hand over fist.

Well, we all know how that story ends—Amazon is one of the top retailers in the world and Borders Books is now bankrupt and Barnes and Noble is struggling.

Failure to properly leverage credit union data may hurt as many branches as Amazon hurt bookstores. Basically, the outlook is grim. 

Declining Emphasis on Branches

In the past, credit union success was closely tied to the number of branches it could open. The more branches, the more members, the larger volumes of deposits and loans, and the greater the success of the credit union. All of this success is measured by credit union size rather than credit union data.

As we’ve seen in other industries such as Amazon versus the book market, this has started to change dramatically. The emphasis on the branch at credit unions has since gone away. Members are now looking to more convenient avenues to do their financial transactions.

Instead of coming in to branches to deposit checks, members are using remote deposit capture to take pictures of checks and make deposits instantaneously. Instead of visiting a loan officer at a branch, members are now filling out loan applications online.

2019 AXFI Conference, June 9-12, Minneapolis MN

A Lesson for Credit Unions

With this declining emphasis on the physical branch, how can credit unions continue to attract and retain members and improve their business?

What Amazon understood at its inception is that value can be derived from the data that it received from customer transactions, rather its conversations/physical interactions. Amazon quickly realized that the data each individual generates is where the true value lies. Every time a customer clicks on a page, stays on a page for any period of time, purchases a product, revisits a product, etc., Amazon learns more about the individual, and can treat him/her uniquely based on these interactions.

Credit unions should follow this example. Any information about credit union data, member preferences, etc., can be used to personalize each member’s experience.

An Action Plan for Credit Union Data

Fortunately for credit unions, member data is in high abundance. Credit union data is some of the richest data out there. Credit unions know everything about their members’ financial transactions. Everything from their mortgages and auto loans, to their debt and credit card transactions. Credit unions have a great opportunity to take advantage of their data to better serve their member base and attract new members.

Just as Amazon did in the book industry (and now every retail industry imaginable), credit unions are poised to leverage massive amounts of financial data, habits, tendencies, and events to provide meaningful, relevant opportunities for their members.

The biggest challenges for credit unions, however, is their ability to take full advantage of their data. The abundance of information is there, but the infrastructure and expertise at credit unions is typically lacking. Credit union data must be taken advantage of now, or branches face becoming the next Borders Books.

Credit union data must be a top strategic priority now, starting with getting the proper data infrastructure in place that will support complete data integration of all of its sources and the necessary analytics off of that infrastructure.

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Topics: Credit Unions, Branch, Data Analytics