Credit union decision-makers know that data analytics is the way to better serve their members, but most aren't ready to harness big data the way other financial firms are - leaving to chance who will become their members' preferred financial partner. But new research findings reveal that without effective governance, credit unions can't begin to compete.
Data analytics refers to the process of using the information that your credit union or third parties have about your members to gain a better understanding of members' behaviors, empowering you to align members with services that meet their needs.
CUNA Mutual Group and AdvantEdge Analytics conducted research among 700 credit union executives and outlined their findings in a white paper, "Data Anaytics Toolkit: Practical Success Factors for Your Data Management Solution."
They discovered that:
Credit unions are lagging behind in data initiatives
- Almost three-quarters of executives said most of their member data is not easily accessible, although they know it could significantly transform how they serve members.
- Just over a quarter of them have business-driven analytic initiatives currently underway.
- Just nine percent have a comprehensive front-line adoption approach.
Common hurdles prevent progress
- Data is fragmented and IT infrastructure lagging. Big data is expensive to keep and hard to get at. Data needs to be organized into a data management system.
- Credit unions often have an unclear picture of operations to make business decisions. Data needs to be translated into a performance and management system.
- Credit unions have a lack of analytics capabilities in terms of talent and scale. Data needs to be actionable, and executed into advanced analytics solutions.
Effective governance removes these obstacles
- Your credit union's culture must recognize the business value of data and ensure that projects are driven and supported by senior executives
- Governance guides the actual practices of the data management system: extracting, assigning roles and responsibilities, gathering requirements, security, compliance, establishing best practices, and more.
- Strategic business initiatives must be set into motion by senior management, with the goal of prioritizing business value and planning for the overall organization. As the plans get more specific, the focus should be on business processes, rather than departments. This ensures the data sought is integrated across departments for greater data sharing and consistency across the entire organization.
- Adoption will be accelerated if staff can continue to use their favorite tools while enjoying access to data that helps them make better decisions, and frees them from the restraints of departmental silos. IT, too, will welcome the upgrade to their tools and processes, and will likely feel validated by the commitment to data from upper management.
The white paper notes that effective data management and integration offers credit unions significant cost savings, including
- a 30-40 percent savings in FTE work performance measures
- a 25-30 percent savings in IT data costs
- a 2-4% increase in return on capital
- Much more: growth in member base, increased wallet share, improved credit assessment
A credit union that used data analytics to address when members were leaving, for example - turned the situation around, saving $1.5 million from successful member retention.
Visit AdvantEdge Analytics to sign up for additional research and insights.
Or, contact Tara Krejcarek, League VP of Strategic Partnerships.