Data analytics is a long-term strategy and results can often take many months to appear. Yet the credit union leaders who have recently tapped into the power of data analytics will tell you there’s value even in the preparation and practice of business intelligence strategies.
These leaders report it’s an eye-opening experience that has the potential to change a credit union’s entire culture of decision making.
They are learning new truths about their members. They’re also absorbing the value of mining data from new sources, practicing solid segmentation strategies and holding back control groups.
And, they say, there’s a powerful affirmation from having hard numbers to support the extra investment – and sometimes the added risk – required by their marketing campaigns.
Uncovering Truths to Save Money
Curt Johnson, assistant vice president of mortgage and card services for IH Mississippi Valley Credit Union in Illinois, recently set an aggressive goal to grow the $840 million credit union’s credit card portfolio by 25% within one year. Data analytics, he knew, would play a critical role in achieving that goal. To provide the analysis, Johnson called in analysts to provide an in-depth assessment of and recommendations for growth of the portfolio.
When building IHMVCU’s candidate model, analysts considered these factors among others.
- Number & Order of Loans
- Number of Accounts
- Total Service Balance
- Level of Engagement
- Presence of Children
Some of the findings were a surprise to Johnson. Others were not. But, advised Johnson, “You have to be humble when you work with data analysts. For every affirmed suspicion, there’s a new truth that will save you a ton of money in marketing. And even those findings that confirm something you already suspected provide important, data-backed reinforcement.”
Turning Weakness to Strength
Hailing from a national bank where data was king, Russell Palmer was no stranger to the value of business intelligence. Coming from the merchant processing side of credit cards, however, issuance was an entirely new adventure for the newly minted Spokane Teachers Credit Union card services manager.
“I wanted to guide our team to make the best possible decisions, but there was a lot I didn’t know,” admitted Palmer. “Data analytics was my answer to getting up to speed quickly and sufficiently, and it has worked extremely well. Because I didn’t have the background and was open to asking questions, we’ve learned a great deal more about our cardholders and our portfolio than we’ve ever known. In a way, my biggest weakness became my biggest strength.”
One of the questions Palmer asked was why the credit union only considered FICO scores when extending credit line increases. Additionally, why was the same amount extended to every cardholder? Were there some cardholders who were offended by the small-dollar extension? Were there others who received the extension and used it in a way that put themselves or the credit union at risk?
“Working more closely with segmentation and analysis, we have come to see the opportunity that’s out there for not only our credit and checking accounts, but across the cooperative,” said Johnson. “For programs that have plateaued, this kind of approach will bump them up to whole new levels. We know we are just at the very tip of working with data analytics.”
Making Data Analytics Work For You
Data analytics allows for successful segmentation and is quickly becoming the magic word in credit card marketing. Getting the right offer to the right cardholder at the right time in a manner that is most profitable for the portfolio makes long-term loyalty possible among cardholders.
Often data analytics strategies simply boost the results of programs a card team is already familiar with, like balance transfers, holiday promotions or line increases. Similarly, much of the data is already there; it just needs to be mined.
Things like previous purchases, current balances, payments and utilization rates, when analyzed over even just a few months, can reveal valuable behavior patterns.
Combine that information with external data, such as credit bureau scores and competitive analyses, and you have an entirely new perspective on even successful portfolios.
Consumers, too, will begin to feel more personalized attention as their credit unions begin to deliver the kind of high-caliber, competitive and tailored products they love.