Focusing on Data Analytics Next Year

By CUToday.info12.03.2018

While credit union budget needs for 2019 are varied, at the top of many lists is money for data analytics, says Trellance.

“We surveyed several of our member credit unions to inquire, as they are finalizing 2019 budgets, what areas are they increasing their investments in, and what areas might be de-focused,” explained Tom Davis, president and CEO of Trellance. “As expected, each credit union has different priorities, and this shows in the differing budget strategies. However, a few specific themes emerged in the responses we received. One item that threads through the responses was investing in some form of data analytics to improve the member experience and improve operating costs.”

Davis said the use cases for justifying the need for data analytics to realize actionable results vary. Some of the common answers were:

  • Using data analytics to predict member behavior and identify the most profitable members
  • Targeted marketing programs to reach members where, when and how they want to be contacted—using data analytics to improve member acquisition programs
  • Using data consultants for card penetration, activation, and utilization programs
  • Testing data analytics for automating loan decisioning

Where Assets Don’t Matter

“Interestingly, there is no correlation between the size of the credit union and the size of investment in data analytics,” said Davis. “Big and small credit unions alike see the need to make better use of data from their core, debit and credit processors, loan origination systems and external data sources. Several credit unions did note that the budget for data analytics is not a one-time item but represents a three-to-five-year commitment of building out systems, software, data warehouse, and staffing.”

Closely behind data analytics as a budget priority is an investment in technology, said Davis.

“And the common theme seems to be spending on technology to improve the online and mobile channels,” he said. “E-signature for loan applications was the most commonly cited area of investment in new technology, with other forms of loan application process improvement also mentioned.”

Other Priorities

About a quarter of the credit unions surveyed have branch expansion, modernization or renovation as one of their 2019 budget priorities, reflecting the specific markets those credit unions are located in, said Davis.

“Some markets have seen cutbacks in branches by the mega-banks, and credit unions in those markets are countering that trend to be more competitive while remaining firmly rooted in the community,” he said. “The credit unions that are expanding the number of branches also included staffing increases in their budgets. Budgeted items for branch renovations also include the addition of new technology, such as smart tellers, and interactive ATMs.”

Budget Cuts

As for areas that credit unions are cutting back, neither decreasing the credit union’s footprint in the community nor cutting back on staffing were noted as priorities, emphasized Davis.

“A more common theme was reallocating resources by using consultants and technology. We expect to see greater use of RFP consulting services as credit unions examine existing partner relationships and look for efficiencies,” he said.

Davis noted that several credit unions mentioned training and investment in staff as areas of budget increases.

“This is reflective of the increasing difficulty and importance of staff retention,” he said. “A few CUs have budget increases in both technology and training tied to automating some manual back-office tasks and reallocating those staff to new member acquisition programs.”


Reprinted with permission from CUToday.info, a leading source of news and resources for credit union decision-makers.