4 Ways Credit Unions Can Use Analytics To Improve Financial Performance



Introduction

How do the promises of data become real business results?


Data, undeniably, is everywhere – and day after day, as the digital world transforms more human actions into data-generating experiences, its volume continues to grow. In fact, by 2025, data-driven interactions will reach 4,785 per person per day, as the global "datasphere" grows to 163 zettabytes (that's a 1 with 1000 zeroes behind it).


All that data represents a massive opportunity for credit unions. Intelligence. Optimization. Innovation. Revenue. Expansion. Risk Management. And the competitive edge. So where do data-driven insights have the most impact for credit unions? And what types of benefits can your credit union expect to see?


In 2018, when IDG.com asked executives to name their top objectives for their digital business strategy, the majority of organizations expected to see big results:


Digital Business Strategy Goals

How is data impacting credit unions?

Every company is now a data company.


Forbes’ David Kirkpatrick famously claimed, “Now every company is a software company.” And the same thing has become true of data: Every company is now a data company, too. That’s because insights from analytics have become an essential driver of innovation, optimization, and competitive edge.


And while the financial services industry at large has embraced the opportunity, credit unions sometimes lag behind. Across the globe, retail banks, investment banks, brokers, exchanges, wealth managers, insurers, fintech companies – even central banks and regulators – are using data analytics to radically transform their organizations. And the gains they’re seeing are remarkable and within reach of every credit union committed to achieving them.


The impact of data-driven transformation for credit unions tend to fall within four main categories:




Customer Intelligence

Improve customer experiences and drive increased lifetime value.


In the digital era, credit union members expect personalized, convenient experiences designed to suit their unique needs – or the needs of their particular business. Fortunately, digital transactions give you valuable information- and plenty of it. You can capture which messages customers respond to; where, when, and how customers engage with your brand, products, or services; where they drop off, and more. When you apply analytics to this information, you gain the insights you need to enrich experiences, tailor offerings, and secure longer lifetime member loyalty.


Credit unions are leveraging customer intelligence from data analytics to:


Foster trusted relationships

  • Getting a holistic view of individual customers before or during any interaction

  • Using visibility of life-stage, transaction history, and product holdings to quickly identify opportunities to educate customers on investment, insurance, and financial planning products

  • Deepening trust by demonstrating an intimate knowledge of customers

Personalize customer interactions

  • Surfacing prospect lists of existing clients with the potential for up-sell, cross-sell, and product fit

  • Exploring lists of relevant client facts on which to base a conversation

  • Providing the right products at the right time based on the lifetime profitability of each customer



Reimagined Processes

Optimize every aspect of business for efficiency and productivity.


Using data-driven insights to streamline business processes isn’t new, but two major factors have transformed the landscape. The first is the explosion in the availability, volume, and velocity of data. The second is the increased accessibility and sophistication of analytics solutions.

Credit union employees in any line of business can now tap into massive sets of data about members, partners, markets, and even external factors like location and weather, getting insights to inform in-the-moment decision-making at every turn. This bold new world of data introduces the opportunity to revolutionize nearly every aspect of any credit union's operations, from sales and marketing to HR, customer service, and IT.


Credit unions are using analytics to reimagine processes across operations, including:


Improving sales performance

  • Empowering sales managers and reps with detailed data during their reviews, enabling them to quickly make changes when a strategy isn’t working.

  • Using transparent sales leaderboards, instituting healthy competition across your credit union.

Improving product performance

  • Granularly monitoring the size and credit quality of new-business volume.

  • Tracking customer response to product offerings, marketing campaigns, and pricing strategies.

  • Getting an accurate, complete, and timely view of loan and leasing portfolio performance.

  • Monitoring the delta between forecasted and actual profitability to gain a better understanding of pricing model performance.

Increasing retention

  • Measuring sales, agent, and call center performance against internal credit policies, profitability, and external market factors, and correcting imbalances in territory strength in near-real time




New Business Opportunities

Develop new products, services, and revenue streams with insights gleaned from data – or monetize the data itself.


What do your members actually want? What are their unmet needs? And where should you take your products and services next? Data can give you the answers. From there, you can vastly improve what you offer, add compelling features, or build something entirely new.


That’s not the only way data opens up opportunities. You can embed analytics into existing workflow apps so your employees are better informed wherever they make decisions. You can embed analytics in your member-facing apps to increase loyalty and gain advantage over competitors. You can even develop an entirely new product category by creatively merging and analyzing data streams – and then monetizing them.


Credit unions are leveraging analytics to create new business opportunities, including:


Identifying prospects

  • Combining external data from business information companies with internal data to surface new business opportunities, identify prospects, and target them more effectively

Attributing profitability

  • Viewing and attributing profitability to regions, business regions, sales managers, product groups, or individual products/salespeople to surface and replicate best practices

Attracting new business

  • Identifying new data to improve underwriting and pricing models, going beyond industry stereotypes to offer your members more relevant products, terms, and prices

Increasing conversion

  • Giving marketing teams the performance, customer, and market data to make strategic decisions about which products should be marketed to which customers

Developing new products and features

  • Extending data and analytics to client reporting, giving your members more value, and gaining an edge over competitors



Balanced Risk and Reward

Get insight into internal and external factors to make faster, smarter decisions around risk.


Thanks to data, you can see more deeply into your credit union – and even into external influences on your credit union's business. With that visibility, you gain the power to more effectively balance risk and profitability.


For example, you can much more quickly, easily, and granularly monitor key metrics like credit quality and exposures. You can simulate future scenarios to predict member responses to changing prices and market conditions. And if you’re in a trading environment where instant decisions matter, you can perform lightning-fast risk analyses to better understand the impact.


Credit unions are leveraging analytics to balance risk and reward, including:


Dynamically analyzing credit quality

  • Granularly monitoring and actively tracking credit quality over time, surfacing downward trends, and identifying their root causes

Managing limits and exposures

  • Keeping a close watch over trading and credit books to manage limits and exposures

  • Modeling counterparty exposure to a number of emerging threats, either on a single name or portfolio basis

Responding appropriately to market news and events

  • Combining historical supplier data with geo-analytics capabilities, running what-if scenarios to get a holistic understanding of fluctuations in risk

  • Simulating future market scenarios and overlaying the likely impact on current products, profitability, and future decisions

Staying compliant

  • Improving transparency into the connection between industry-specific regulations and individual contributor performance

  • Dramatically reducing the time it takes to define, build, and run stress tests

  • Aggregating risk data, interrogating it and presenting the results consistently throughout the firm to support the ever-changing regulatory environment




Conclusion

Reaping the Rewards of Data Analytics: Get Set Up for Success


In most organizations undergoing Digital Transformation, technology is changing faster than culture. Data literacy is at the heart of the issue. In Gartner’s 3rd annual CDO survey, “poor data literacy” was cited as the second-highest internal roadblock (35%) to success, second only to “cultural challenges to accepting change” (40%). Clearly, a top priority for CDOs everywhere is creating a culture of data fluency, where workers understand data and use analytics to drive Digital Transformation.


What’s the next step in your credit union's journey toward realizing the rewards of data-driven Digital Transformation? Whether it involves expanding data literacy, extending your use of analytics into new business areas, or driving toward any of the outcomes covered in this report, IPC Global and Qlik can help. For more information or to schedule a Qlik Data Analytics demo, get in touch with us today.


Data Analytics Results Infographic


About IPC Global

IPC Global is a diverse, nationwide team of experienced, engaging, and effective data analytics experts. We provide advisory, consulting and managed services to solve your organization's Enterprise Intelligence challenges.


For more than 20 years we have been the go-to source for Business intelligence & data visualization, Big data analytics, Data Integration & ETL, and Data warehousing design and implementation services.


We are an Elite Partner for the Qlik Data Analytics & Integration Platform and are the only firm to have been awarded "Qlik Partner of the Year" twice.



About Qlik

Qlik’s vision is a data-literate world, one where everyone can use data to improve decision-making and solve their most challenging problems. Only Qlik offers end-to-end, real-time data integration and analytics solutions that help organizations access and transform all their data into value.


Qlik helps companies lead with data to see more deeply into customer behavior, reinvent business processes, discover new revenue streams, and balance risk and reward. Qlik does business in more than 100 countries and serves over 50,000 customers around the world.

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