“Midsize banks are falling behind in meeting the needs of the fastest growing demographic groups, millennials and minorities, especially in online, mobile and problem resolution,” –Jim Miller, Director of Banking Services at J.D. Power
Mobile banking is top-of-mind for most credit unions in 2014 as they begin to realize the power it has on member interaction and satisfaction. Mobile Banking apps give members the ability to conduct several transactions that in certain ways replace the need for brick-and-mortar branch locations. Most recent advancements provide mobile app enabled credit unions with the ability to promote other banking products and services, attract millennials with perks and incentives, allow members to make mobile payments (also known as mobile Peer-to-Peer (P2P) payments), and even deposit checks through their mobile device. The benefits of mobile banking are undeniable but many midsize banks are not making it a top priority because they don’t have a way of justifying the investment. Measuring return on investment (ROI) for mobile banking apps, or an advancements to apps, can be extremely difficult as there is no real cash flow or revenue numbers associated. With big data reporting and analytics; however, credit unions can observe the effectiveness of an app on its members with ease and as a result be able to measure its ROI.
In late 2013, a Minnesota Credit Union did just that. It used its big data reporting and analytics platform to measure the effectiveness of its new mobile app advancement. Affinity Plus Federal Credit Union (Affinity Plus) released Remote Deposit Capture (RDC) in late October 2013. RDC is a mobile application addition that allows members to make a deposit by simply taking a picture of a check and uploading it to their mobile app. Like all businesses, Affinity Plus felt the need to measure whether the investment in their mobile app was paying dividends or not. They did this through the use of their data. Without data visualization, this would have been a grueling, time intensive process that would require compiling data manually or require member surveys to see if the new improvement is beneficial. Fortunately for Affinity Plus, they have the capability to visualize their data which enabled them to observe their ROI in a matter of minutes with little to no man hours.
Affinity Plus was able to visualize and compare two trend lines (Mobile Banking Activity and Brick-and-Mortar Activity) using their data which allowed them to measure the effectiveness (or return) of their investment from RDC. The correlation between brick-and-mortar branch activity and mobile application activity begins to change at the end of October when RDC was introduced. The two trend lines were highly correlated before the RDC initiative was introduced, but quickly switched to have an inverse correlation that continues for several months. Mobile banking activity began to trend upward as the physical branch activity began to trend downward. Indicating that members began to visit their physical branch less and instead used the handheld branch found on their mobile device. This shows Affinity Plus that they are in fact receiving a return on their investment which will affect the way they make future decisions.
This provides powerful information to Affinity Plus about their future growth. As they expand, the company will think differently about investing in a new physical branch. Instead of building another branch to attract more members, Affinity Plus may look to invest more into enhancing their mobile app. Building a new branch will only improve the member experience in that area but by enhancing a mobile app, all members (current and future) will benefit. This decision could save credit unions such as Affinity Plus several millions of dollars. Without the use of business intelligence, making investment decisions is difficult and at times unjustifiable because the data necessary for precise decision making is not accessible. Big Data now allows credit unions to effortlessly review and analyze data on strategic investment initiatives of their company to guarantee continued success in the future.