For leaders in nearly every industry there is a temptation to "go with the gut" when forced to make tough decisions. For credit union executives, that pull can be even stronger because of the belief they have a deep understanding of their members. However, what today's consumers want is changing, and it's changing at a swift pace. How can those charged with making business decisions for their cooperatives keep up?
Simple — they ditch the gut, dig into the data.
Business intelligence is within the grasp of every CU. And that's because every CU owns large-and sometimes enormous-pools of data. Even small credit union card portfolios generate thousands of lines of useful data. Take, for example, a portfolio with 4,000 checking accounts. If the average member makes 10 transactions each month, that's over 40,000 rows of valuable information data each month. One year later, that credit union has access to nearly half a million data points, giving data analysts a lot to work with.
What about credit unions without an analyst, you might ask? Admittedly there are a large number of cooperatives that today do not have statisticians or scientists among their staff members. But that may be about to change. Between 2010 and 2020, the data scientist career path is projected to increase by almost 20%. The nation's top universities have equipped themselves to meet the demand by establishing degree programs like data mining, predictive analytics and data science. Financial institutions with more immediate need are sending managers to data literacy training. In the meantime, outside consultants with vast experience in financial services are out there, and they can be a great value-especially considering the potential return on investment capable from the right business intelligence tools and strategies.
Make More Informed Decisions
When leveraged properly, the business intelligence that comes from analyzing member data allows leaders to make more informed decisions; they develop new products, design promotional offers and make improvements for precisely the right members, at the right time and at the right price point. It is also a great conduit for increasing overall membership.
Data analytics usually seeps into the credit union culture through an opening made by one especially savvy department. Take Spokane Teachers CU, where Card Services Manager Russell Palmer and his team were able to get a better picture of the CU's card portfolio, which in turn led to other departments taking note of the results and getting on board to see what data analytics could for them, as well.
"Data analytics, and segmentation in particular, is making its way across the credit union," said Palmer. "In fact, it's something of a prerequisite now for all of our managers who are in the planning stages of their campaigns."
Gut instinct certainly has its place, and credit union managers do know their members extremely well. The member profile is changing, however. As consumer needs and desires evolve, more refined methods of decision making are critical for the sustainability of the credit union movement. Data analytics is precisely one of these methods.
Karan Bhalla is managing director of IQR Consulting. He can be reached at
