Credit unions that use the right tools when analyzing big data are cutting down on fraud, attracting millennials and developing creative marketing campaigns, among other things.
"We've certainly seen more interest in trying to mine data for meaningful results," said Michelle Thornton, director of product development at CO-OP Financial Services in Rancho Cucamonga, Calif. "Having the right analytics tool should make getting most any analysis done quickly and easily."
But the downside to collecting big data is the inability to effectively analyze the information so that credit union operations—back room and member facing—run as efficiently as possible, say experts.
"If an executive spots a trend they were not expecting, then being able to quickly connect and balance the aggregated data to specific detail data points is key to establishing and maintaining trust in aggregated data," said Westerra Credit Union's Director of Business Intelligence and Data Bill Dodds. "Without a strong foundation, aggregated data will not be reliable enough to support the business decision making process."
In most cases, data missteps are less in the analysis phase than in the initial setup, explained Ben Rogers, senior research director for the Madison, Wis.-based Filene Research Institute.
"When you have data feeds that are missing information or where the quality is poor, you have to work first on cleaning the source before you can do anything with it," said Rogers. "For data to really work, you also have to give it a voice at the table. It's not enough to periodically ask a marketing of finance analyst for a report. Leaders have to articulate which data are needed for which decisions and then get used to updating the data when it's time to revisit."
Using Data the Right Way
By first thinking inside box, CU executives can use data in a manner that results in creative data uses outside the box. But simply employing tools to collect data points will not result in cohesive strategic initiatives.
"The key to maximizing the value of data is to condition the data so that it is accessible for business users," said PSCU's Manager of Enterprise Analytics & Business Intelligence Jeff Rosenbeck.
"This is accomplished by using common business terminology throughout, building connections in the background so users don't need to understand query languages or data structures to ask a question, and enhancing the connections so users can drill up or down through common relationships," said Rosenbeck.
One of PSCU's clients, the $1.3 billion Pensacola, Florida-based Pen Air Federal Credit Union, recently employed the firm's "Member Insight DataVue" solution.
"For credit cards, we only had access to DataChoice prior to working with PSCU," said Pen Air FCU's Vice President of Alternative Delivery Channels Michelle James. "Member Insight DataVue has given us access to debit card transaction information, which we did not have access to previously."
Prior to working with PSCU, James explained that the CU lacked a solution that allowed for simplified report writing.
One of the creative initiatives that was born from Pen Air FCU partnership with PSCU was "Swipe For A Grand Slam," which ran during the summer of 2015. James noted that all of the CU's 98,620 members could use their Pen Air MasterCard Debit Card or MasterCard Credit Card at the Pensacola Maritime Park for the purchase of tickets, food or merchandise. These members received one automatic entry into a sweepstakes per card swipe. The prize was four Blue Wahoo 2016 season tickets.
Data Partnering
The $1.36 billion Denver based Westerra CU, supporting 255 employees and 102,000 members at nine branches, employs a central data warehouse approach to capturing and retaining all membership transaction data needed for trending analysis.
Dodds said it's not reasonable to retain all data, rather it is more efficient and effective to access and integrate internal data with a third partner's external data, which better supports business goals.
"We build and balance our aggregate data from the transactional data provided by our strong operational partners and systems," said Dodds. "Each functional business area then integrates the central data warehouse data with their business partner's data. In marketing, we create analytics to integrate our internal data with external campaign intelligence from our big data and cloud partners."
Westerra CU deployed a data integrity accounting analytic solutions in recent years, which Dodds said has been a key foundational building block allowing the leveraging and creation of more advanced analytical processes, such as prediction models.
"We have learned in many cases, there are multiple uses for the same data," said Dodds. "Some data that can be used to understand member behaviors can also be used to improve service for members. Linking membership experiences across all member touch points can increase membership services."
Well Mined Data Reduces Fraud
Data by its very nature is subject to its intended use. To this end, collected information can be used for various initiatives in every credit union department. For the Boulder, CO-based Elevations Credit Union, managing data related to credit card fraud was an increasing concern.
"We were only capable of aggregating manually by comparing similar fraud instances, such as the same fraudulent transactions or similar locations," said Elevation CU's Fraud Specialist Jessie Haley. "Once a pattern of fraudulent transactions was discovered, we would then look though cardholder history to identify a common point of purchase. This process led to instances of human error and incorrect guesses about the card's compromise location."
In an effort to streamline operations, Elevations CU turned to CO-OP Financial Services and its Revelation solution.
Haley explained that Elevation CU, which supports 350 employees, 114,000 members and 11 branches, will convert its card processor to CO-OP in February 2016, and then we will develop new goals and procedures for tracking fraudulent activity.
"In early 2015, I attended an interactive webinar on CO-OP Revelations and was excited to learn that the service was already available for our institution," said Haley. "At that point, we began using Revelations for any correlated PIN-based fraud cases. After completing our card processor conversion, Elevations will be able to utilize CO-OP Revelations for all transaction type."
Recently several Elevation CU member cards were reported to have experienced fraudulent ATM withdrawals. After the CU obtained several card numbers, the data was imported into CO-OP Revelations. With the assistance of CO-OP staff, Haley was able to identify the common point of purchase as a local grocery store within a few hours. The impacted cardholders were issued new cards.
Multiple Data Use
Like many data analytics solution on the market, CO-OP's Revelation can be used for various initiatives. If, for example, a CU wants to drive more millennials to its mobile app, there are methodologies.
"To attract millennials, credit unions first need to be able to find the millennials in the current portfolio and marry that with actual behaviors of those members," said Thornton.
According to PSCU's Rosenbeck, there exists a greater diversity of behavior in the millennial segment than analysts "want" to believe.
"Debit usage tends to reinforce the notion that millennials are disciplined savers, with transactional patterns indicating a focus on non-discretionary spend and discretionary larger ticket spend skewed toward travel and technology," said Rosenbeck. "Focusing on just these points, a couple options offer themselves up: introducing a rewards program, especially cash or high value travel rewards, on cards or a mix of deposit and related cash products could be an effective start."
