Data is rising at an incredible pace, covering all aspects of a consumer’s life. In the past two years, more data has been created than in the entire previous history of the human race. (1)
2017 has certainly been the year that data and analytics has redefined the financial services industry. For those financial institutions leading the way in data analytics initiatives, a survey reported that 48% of organizations are achieving measurable results from their data analytics investments – the first time the survey has found a near majority since it began in 2012. (2)
As we look back on data analytics maturity in 2017, here are a few highlights of use cases shared by financial institutions that are experiencing real value—and a substantial return on investment from their analytics initiatives.
Effective Marketing and Segmentation:
Suncoast National Bank, based in Stuart, FL realized that it needed to find a better way to target customers and promote to them more effectively to reduce customer acquisition costs. Combining data analytics and marketing automation software, the end goal was to gain insights into their customers’ future financial needs and behavioral trends. Using customer data analytics, their marketing staff was able to run dozens of targeted marketing campaigns that, in some cases, generated returns on investment in excess of 100 percent. (3)
Ohio Health Care Federal Credit Union has capitalized on using data analytics. Deploying big data initiatives, the credit union has transformed their member data into actionable goals that allow Ohio Health to remain competitive and relevant, discover trends in member behavior, and enrich member relationships. With the proper data in place, Ohio Healthcare was able to automate the on-boarding process for both direct and indirect loans. (4)
Prior to relying on data analytics, the process of on-boarding was entirely manual. After organizing the data and automating the process of sending emails and letters, the processes were evaluated on a daily basis and executed automatically to the appropriate audiences. They were able to set up a process to automatically identify and target members with upcoming home equity line of credits expiring, and send them a timely informational letter about renewal.
Enhanced Member Experience:
Affinity Plus Federal Credit Union tapped into its large data warehouse from a CUSO, OnApproach M360, to identify members who could benefit from refinancing their mortgages. The goal: to enhance service through the use of data analytics. The St. Paul-based credit union used information from their data warehouse to identify 1,400 members who would benefit from refinancing into short-term mortgages. To date, members who refinanced will save more than $2.6 million and the credit union has written $28 million in new loans. Affinity Plus recognized an opportunity to look at the data in a way that they could proactively reach out to members and save them money. The refinancing campaign was the first outreach initiative to come out of the change. (5)
Addressing Regulatory Compliance Constraints:
Regulatory compliance is a major concern for most financial institution executives. Many of the Dodd-Frank and Consumer Protection Act rules took effect in the last few years—adding even more regulatory burden to financial institutions. Data analytics is helping both banks and credit unions gather, organize and analyze data, compile reports and comply with requirements. (6)
In 2017, more and more banks and credit unions relied on data initiatives to make their compliance management operations easier, more efficient, and less costly. The vast expanse of information now available can help financial institutions remain in compliance by providing information about lenders and customers. Examples include using predictive analytics to detect suspicious activity before it happens and leveraging personal information that helps with the “Know Your Customer” regulations.
Data is the Foundation for the Future of Banking
As we’ve seen in these examples, data and analytics has and will continue to be a tremendous asset for financial institutions to remain competitive, profitable, and operate efficiently in 2018 and beyond. Your insights are only as good as your data, so be sure you have the right people and tools in place to collect and analyze your data assets in the coming year. The results can be transformative not only for your financial institution but, most importantly, your members and customers.
ABOUT THE AUTHOR
Brewster Knowlton is the Founder and Principal Consultant of The Knowlton Group. Dedicated to enabling each and every organization to become data-driven, Brewster brings a wealth of both technical and business knowledge and experience. Combining strategy with execution, Brewster and The Knowlton Group assists credit unions in maximizing their data and analytics efforts.
1. Source: McKinsey & Company Report: Straight Talk About Big Data http://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/straight-talk-about-big-data 1
2. Big Data Executive Survey
3. Small Banks Using Data https://www.bankdirector.com/index.php/magazine/archives/fintech-issue/small-banks-using-big-data
4.Big Data and Small Credit Union
5. Affinity Plus Enhances Service through Data
6. Big Data Addresses Credit Union Compliance Mandates