Credit unions that use the right tools to analyze big data are reducing 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 CO-OP's Director of Product Development Michelle Thornton. "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-office 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 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 or 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."
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 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," he said.
One of PSCU's clients, the $1.3 billion Pensacola, Fla.-based Pen Air Federal Credit Union, recently employed the firm's Member Insight DataVue solution.
Prior to working with PSCU, Pen Air didn't have access to debit card transaction information and lacked simplified report writing, according to the CU's Vice President of Alternative Delivery Channels Michelle James.
One of the creative initiatives that was born of Pen Air's partnership with PSCU was "Swipe For A Grand Slam," which ran last summer. James noted 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 effective to integrate internal data with a third party'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," he said. "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 recently deployed a data integrity accounting analytic solution, which Dodds said has been the key to leveraging and creating 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
For the Boulder, Colo.-based Elevations CU, 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 Elevations Fraud Specialist Jessie Haley. "Once a pattern of fraudulent transactions was discovered, we would then look through 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 the Rancho Cucamonga, Calif.-based CO-OP Financial Services and its Revelation solution.
Elevations, which supports 350 employees, 114,000 members and 11 branches, will convert its card processor to CO-OP this month, and then it will develop new procedures for tracking fraudulent activity.
Recently, instances of fraudulent ATM withdrawals were reported on several Elevations members' cards. After the CU obtained the card numbers, the data was imported into CO-OP Revelations, and within hours, Haley was able to identify the common point of purchase as a local grocery store. The impacted cardholders were issued new cards.
Like many data analytics solutions on the market, CO-OP's Revelation can be used for various initiatives, such as driving more millennials to its mobile app. "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," she said. "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."
