Ask executives at the money center banks how they plan to win, against both fintechs and smaller institutions like credit unions, and they smirk as they say two words, big data.
Big data is today’s magic. How does Amazon knows what book you want to read next, or what music you want to buy, or when you are about to run out of cat treats? Those are simple examples but the answer is big data. Amazon crunches a lot of data, in a blink of an eye, and it knows what you want, maybe before you know.
The race now is on inside financial institutions to crunch lots of data and to achieve similar predictive intimacy about their customers and members.
Paul Ablack, CEO, OnApproach, had the chance to catch up with Mike Lawson of CUbroadcast last week at the NAFCU 51st Annual Conference & Solutions Expo. The conversation covers topics from evolution of A.I., digital transformation, a collaborative data lake for the credit union industry, platform analytics, data encryption, cyber security, peer benchmarking, and shared applications on the CU App Store community.
As a part of the discussion, Paul Ablack explained the progress of the collaborative online analytics marketplace, the CU App Store. In the conversation, Paul explains that, "[OnApproach is] going to build a community around the CU App Store, where credit unions can come in, they can contribute content, and they can comment on the content. Let's say someone puts a really good marketing segmentation report [on the CU App Store], others can build on it, can make it better, they can comment, and place reviews.
At the 2018 NACUSO Network Conference, Paul Ablack, CEO, OnApproach and Andrew Bertrand, Data and Technology Manager, Our Community Credit Union (OCCU), caught up with Mike Lawson of CUbroadcast to talk about the New CUSO of the Year Award, application/report sharing, credit union collaboration, the 2018 AXFI Conference, and how Andrew Bertrand has been able to utilize analytics to add $2.6 Million to the bottom line at OCCU in just 3 years.
As Andrew states during the discussion, "We've invested into analytics for the last three years, and $2.6 Million is what we've gained bottom line as far as decreased costs and increased yield. We were able to react to the market fast... instead of looking at board reports at the end of the month, we were able to just have daily [analytics]... get management together, make a decision, and get going... We're a $370 Million credit union so that net effect to our bottom line was just great."
As collaborative community-based institutions, credit unions are very unique organizations. For many that have not been exposed to credit unions, it is difficult to see what makes this community so special, or even how a credit union differs from a bank, for that matter.
Since my time as an undergraduate at the University of Minnesota, I have been highly involved in another industry, or “community” – that of local craft beer. In fact, discovering the parallels between these two unique industries sparked my initial interest in the credit union movement, and is ultimately what has led me to my current role at a collaborative credit union service organization (CUSO).
In very recent years, the nation has witnessed the craft brewing community explode. In fact, according to the Brewers Association, the craft beer industry has been experiencing years of steady 10-15 percent growth, and now boasts over 6,000 U.S. craft breweries, for the first time in history. Despite the parallels between these communities outlined below, we are all aware of the declining number of U.S. credit unions, shrinking from over 7,200 in 2011, to less than 6,000 today. For community-based institutions focused on quality service, why do these trends differ?
Credit union interest in Big Data is at an all-time high. The promise of predictive analytics and other Big Data opportunities will be a key part of helping the industry compete more effectively with traditional banks and fintech upstarts.
In the webinar, "Fueling a Bright Future for Credit Union Analytics", Austin Wentzlaff, VP Business Development, OnApproach, presents the challenges and opportunities for credit unions regarding topics including data analytics, digital transformation, and collaboration.
Credit unions are facing several unique challenges. As an industry, credit unions have fallen behind competing fintech startups and major retail banks. It is vital for financial institutions to understand the problems they are facing and how they are possible to overcome. In 2018, the credit union industry must work together to push past these challenges and remain relevant in the age of digital transformation.
Paul Ablack, CEO, OnApproach, joined Mike Lawson of CUbroadcast to discuss the state of the credit union industry, and why digital transformation is imperative. Credit unions have tremedous opportunities now with analytics and collaboration, but cannot afford to wait until banks and fintech disruptors get even further ahead in their analytics and member experience initiatives. As Paul states in the video, "If you don't start engaging with your members digitally, and giving them information that's very useful to them and helping them in their daily lives, you're not going to be able to compete, because there's lots of other people trying to think about that right now.... Now's the time to be really accelerating this strategy."
The term “digital transformation” has been a very hot topic recently, creating new conversations and products across a wide range of industries. This chart below, via Google Trends, displays the worldwide popularity of the phrase “Digital Transformation” in web searches since 2004. As shown in the graph, after remaining stagnant for over a decade, the term’s popularity has exploded in just the last year or so, raising questions about what this means, and how it will impact your organization.
An accepted definition for digital transformation is, “the application of digital technologies to fundamentally impact all aspects of business and society”. The important part of this definition is to realize that digital transformation does not mean just building a website, a mobile app, or obtaining a data warehouse. It means using your digital technology to transform your business processes. It means shifting your company culture to take advantage of your digital data to make informed data-driven decision and stay ahead of the ever-changing expectations of your members or customers.