2018 has been yet another exciting year in the credit union space as we continue to see the growing significance and adoption of digital and data strategies. As the year comes to a close, we like to reflect on the lessons we have learned and prepare for what is to come in 2019 and beyond. Through collaboration, the credit union movement has incredible unrealized potential. As we look back at 2018, we have compiled a list of some of the industry’s favorite articles regarding credit union big data/analytics (and some others you may have missed) featured on OnApproach’s blog, The Decision Maker. Enjoy!
The Top 5 Favorites:
At the Minnesota Credit Union Network (MnCUN) Annual Conference, Paul Ablack, CEO, OnApproach and Alisha Johnson, Executive Vice President of Operations for Ideal Credit Union, joined Mike Lawson, Host of CUbroadcast, to discuss data access, member profitability, member engagement, data lakes, timely and targeted marketing, chatbots, real-time analytics, and credit union collaboration.
Part of the conversation focuses on the success of Ideal Credit Union's VIP Program. As stated by Alisha, "... It means a lot to our members... The first [program] that we worked with Paul and OnApproach on, before we started accessing data directly, was our creation of our VIP program. So, we had paid back to our membership over the last couple of years $6 Million, and that is because we have been able to identify who brings money to our membership, how successful they make us, and then we return it to them based on a number of different criteria. Without OnApproach, we would never be able to access that criteria, and even be fair in the distribution of the funds that we give back to our members."2. Data “De-Identification”: The Stairway to Big Data Heaven
Credit union interest in Big Data is at an all-time high. The promise of predictive analytics and other Big Data opportunities will be a key part of helping the industry compete more effectively with traditional banks and fintech upstarts.
However, where does the data for Big Data come from? The answer is simple: from the credit unions themselves. For example, the loan loss forecasts required by CECL models will require data from many credit unions to increase their predictive accuracy.
While credit unions are eager to cash in on the Big Data boom, one of the costs is “contribution” of their own data to the Big Data “lake”. A data lake is a virtual “storehouse in the cloud” that holds a vast amount of data that can be used for Big Data analytics.
At this point, credit union decision makers often turn sour on Big Data. Why? The cost of “contribution” is too high. The credit union is obligated to protect the sensitive member data in its care. This data cannot simply leave the credit union’s firewall perimeter and be uploaded to the Data Lake.3. Millennials in the House: Leveraging Data about Your Young Members to Attract More
After the Great Recession of 2008, millennials were expected to flock to credit unions due to their well-documented distrust of banks. Yet, it hasn’t happened. There are estimated to be 71 million millennials but too few are becoming credit unions members. About a third of older age groups (Baby Boomers, Gen-X, etc.) are credit union members but only about 25% of millennials are.
This is a problem since the conventional wisdom is that once a young person becomes a member, he or she is liable to stay as a credit union member for a long time.
How then does a credit union go about attracting more of this group? One way is to study your existing millennial members.
At the 2018 NACUSO Network Conference, Paul Ablack, CEO, OnApproach and Andrew Bertrand, Data and Technology Manager, Our Community Credit Union (OCCU), caught up with Mike Lawson of CUbroadcast to talk about the New CUSO of the Year Award, application/report sharing, credit union collaboration, the 2018 AXFI Conference, and how Andrew Bertrand has been able to utilize analytics to add $2.6 Million to the bottom line at OCCU in just 3 years.
As Andrew states during the discussion, "We've invested into analytics for the last three years, and $2.6 Million is what we've gained bottom line as far as decreased costs and increased yield. We were able to react to the market fast... instead of looking at board reports at the end of the month, we were able to just have daily [analytics]... get management together, make a decision, and get going... We're a $370 Million credit union so that net effect to our bottom line was just great."
In the webinar, "Fueling a Bright Future for Credit Union Analytics", Austin Wentzlaff, VP Business Development, OnApproach, presents the challenges and opportunities for credit unions regarding topics including data analytics, digital transformation, and collaboration.
Credit unions are facing several unique challenges. As an industry, credit unions have fallen behind competing fintech startups and major retail banks. It is vital for financial institutions to understand the problems they are facing and how they are possible to overcome. In 2018, the credit union industry must work together to push past these challenges and remain relevant in the age of digital transformation.
Read the full blog: http://blog.onapproach.com/4-challenges-and-opportunity-for-credit-unions
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