The Decision Maker

3 Ways Community Spurs Advancement within the Credit Union Industry

Posted by Nate Wentzlaff on Dec 15, 2014 1:12:45 PM

Sharing ideas and analytics solutions allows credit unions to thrive in the ever-changing financial marketplace


Recently, I attended the Credit Union Big Data/Analytics Conference hosted by OnApproach.  During the conference, many presentations discussed how credit unions should leverage their progress in data and analytics solutions.  As the marketplace of financial solutions continues to become more chaotic, credit unions must stick together to prosper in the waves of disruption that are sweeping the globe.  Big Data and Analytics solutions are providing credit unions the opportunity to expand their cooperative philosophy throughout their industry as a whole.  Learning how to collaborate around data and analytics will be the next step for the credit union industry. 

There are three steps that credit unions must take to effectively collaborate with their data:

  1. Big Data/Analytics User Community

Using Big Data/Analytics tools and solutions will be extremely difficult for individual credit unions.  By forming a user community around this subject, the credit union industry will be able to communicate and leverage the experiences of employees that are in the midst of taming their respective data beasts.  User communities allow ideas and experiences to be shared with a group of people tackling the same business problems.  Instead of solving business problems on their own, a user community allows each credit union to learn from each other’s experiences.  OnApproach is currently cultivating a user community, and it will be a catalyst for cooperation throughout the industry.

  1. Shared Data Pool

The amount of data stored within each credit union is insignificant compared to the big banks.  However, credit unions can pool their data together for the good of all participants.  Through data pooling, credit unions can develop much stronger Big Data/Analytics insights and predictions of the future.  The larger the data pool, the higher the accuracy of predictive analytics.  Big banks are already combing through petabytes of data which empower them to make better decisions.  If the credit union industry wants to compete with this amount of data, individual credit unions must share a common data pool to develop better insights to benefit the group.  With data masking techniques to remove member-sensitive data, credit unions should begin forming a data pool to enable better decision making as an industry and within each data pool participant.

  1. Application Market

OnApproach is also developing an application marketplace that the credit union industry will be able to leverage.  This application market will be a place for all participating credit unions to buy and sell Big Data/Analytics applications.  Building an application is hard work and drains the resources of a credit union.  The time and effort required to develop applications (e.g. reporting/analytics) are beyond reach of most credit unions making it difficult to compete in a marketplace where large banks can spend millions of dollars (and resource hours) on application development.  Credit unions will be able to utilize this marketplace to choose the right combination of applications to meet their unique business needs.  For example, if one credit union spent a considerable amount of time developing a loan analytics application, while another credit union developed a fraud prevention application at the same time, each credit union could buy each other’s application within the marketplace.

Strategic Cooperation

Rapidly changing business needs and a chaotic regulatory environment are causing disruptions throughout the financial services industry.  Credit Unions are being pressured by the NCUA and other regulatory bodies to provide better information and make data-driven decisions.  At the same time, competitive threats, such as lending clubs, are further disrupting the market by working out ways to provide exceptional service to customers using data and analytics for improved underwriting.  With all of the competition brewing, credit unions still have an essential competitive advantage which is “community”.  The philosophy of cooperation within a community, and how it is implemented, has been displayed by the credit union movement.  Extrapolating this philosophy into the Big Data/Analytics applications realm will enable credit unions to serve members in ways that big banks and retailers can only dream of.

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Topics: Big Data, Big data/analytics, community, Cooperation

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