More than a few folks in recent months have pushed back a bit on one of our 6 Big Ideas for 2016, “Disruptive Collaboration.” The gist of the critique is that the CUSO model works just fine as it is. And it does, to a point. It’s one of the great wonders of the credit union movement, one of our greatest assets, and the source of immense potential competitive advantage.
In the last few FOMC meetings, the Federal Reserve has emphasized it will only act according with economic data. The same data that the Federal Reserve utilizes to make data-driven decisions are available to every credit union.
Over 150 years ago, oil was pulled from the ground and thus began a shift in the way Americans functioned. With the advent of the internal combustion engine (that solely operates on oil), people could travel outside of the range of trains and horses, could consume goods from other places more quickly, could experience new products /services and new labor forces were created, suffice it to say society changed.
At the October 2015 Credit Union Big Data/Analytics Conference (now Analytics and Financial Innovation Conference) in Minneapolis, John Best, CEO of Best Innovation Group and a well-known technology innovator in the credit union industry, presented a compelling vision about the disruptive threat facing banks and credit unions right now:
Millennials are living in a vastly different world than their Baby Boomer parents. They live in a time in which a phone isn’t just a piece of plastic used for making calls, it’s now “smart” and acts as an extension of oneself. A time in which “going shopping” or “depositing a check” no longer requires you to leave home. We are living in a world dominated by the rise of online/mobile and the demise of brick-and-mortar. This changing consumer landscape is being primarily driven by Millennials as they demand more personalized experiences.
“Everything negative - pressure, challenges - is all an opportunity … to rise.” – Kobe Bryant
Getting ahead of the new CECL requirements is a strategic initiative for all credit union executives in 2016. Being compliant will be no easy task, however. The new CECL requirements require life-of-loan loss forecasting capabilities. In most cases, this means the credit union will need to collect data, A LOT OF DATA. Unfortunately for most credit unions, collecting, storing, and analyzing data has not been a priority and most do not have the proper infrastructure in place to do so.
In recent years we’ve experienced a phenomena in business – the transformation from physical, brick-and-mortar retailers to online/mobile retailers. This transformation has shaken up the way people interact with businesses and consequently how business operations have changed to accommodate. Online/mobile has created a whole new definition of the word convenient by making payments more simplistic and by giving users unique experiences by recommending products and services they unknowingly love. Online/mobile retailers are becoming integral parts of many consumers’ day-to-day lives by creating a new type of relationship, unrivaled by their brick-and-mortar counterparts. But how have companies such as Amazon and Uber taken so much market share with so little in physical assets? The short answer, data.
If you are the one responsible for report writing at your credit union or have ever requested a report, your pain is not unheard. The old way of reporting is broken, and it has been for years. Business intelligence failed to deliver on its promise. IT departments are overloaded and users are frustrated. Becoming an analytic driven organization is often unobtainable because the majority of the time is spent gathering and organizing the data.
Last week, the 2nd annual Credit Union Big Data Analytics Conference took place in Minneapolis. There were 100 attendees which represented a 250% increase over attendance at last year’s conference. For those who attended, it was an opportunity to network with their industry peers who recognize the disruptive threat and opportunity created by Big Data and Analytics. A couple of attendees commented on how they felt that they had finally found their “tribe” as they networked with others who understand that their world is changing and credit unions need to quickly make the transformation to becoming Analytic Competitors.
Here is an all too common scenario in today’s credit union: It’s month end and the IT department is scrambling to meet the demand from business units for scheduled reports and ad hoc information requests. All long-term project work is put on hold as the staff works overtime providing information to support the organization’s critical strategic and tactical decision making.