Data Use Cases is an ongoing series showcasing real use cases of success that credit unions have had using data analytics to solve real world problems. Data analytics was once the sole domain of giant tech companies – Amazon’s suggestions “If you bought that you might like this”; Facebook’s algorithms that determine which of your friend’s posts you most want to see on your timeline; Google’s ability to propagate data about you so that when you search for something like “hotels in San Francisco” you start seeing ads for restaurants in San Francisco on other sites. With the proliferation of data across multiple systems, the increase in computing power at a decreasing price, and tools to extract and harness data, the science of data analytics to create solutions to business problems, also known as business intelligence, is being increasingly used by credit unions to make better decisions. And it’s not just the biggest credit unions introducing business intelligence through data analytics to their staff. Credit unions with under $500 million in assets are realizing that use cases for data analytics drive ROI, better member experiences, and increased product penetration across their member base. Almost ironically, it is the smaller credit unions that absolutely need to embrace the use of data analytics – they are the ones that need to remain competitive or be merged out of existence.
Data Just For Data’s Sake – NOT!
It’s important to keep in mind that no company, regardless of what industry, invests in data analytics just for the technology. The cost of the tools, the hardware (or more commonly, the cost of cloud storage), investment in staff such as business analysts and possibly a data scientist, consulting services to help get started, can represent not just a significant up-front investment, but an on-going cost that must be justified. The justification comes in the form of use cases – individual examples of data-driven decision-making that makes a difference in how members are rewarded, or sold-to, or what products are offered, or just making a member feel more connected to their credit union through targeted, meaningful campaigns. In fact, for a credit union that’s just embarking on the data analytics journey, the best way to start is with the end in mind. Pick a single use case, a single vexing problem to solve, ideally one that has a fairly high payback if solved correctly. There are many articles that talk about the intangible benefits of business intelligence. But credit unions, especially their CFOs, want to see a return on their investment. The following paragraphs are a few real use cases that credit unions have shown to prove out their investments.