MADISON, Wis. (3/2/16)--The nature of the not-for-profit, member-owned cooperative financial system already carries with it a close relationship between credit union and member, but what happens when a credit union starts leveraging data to serve those members better? The answer, and future of the credit union movement, may lie in a business intelligence unit, which credit unions are increasingly using to serve their members more efficiently than ever.
For Oregon Community CU, switching to a new core system in 2009 resulted in access to a huge amount of member data. Casey Foltz, business intelligence manager at the Eugene, Ore., credit union, told News Now that it quickly became clear that Oregon Community CU didn’t just want the reported data, it needed an analysis of the data to see how it could best be used.
Oregon Community formed its business intelligence unit in 2012.
“Once you start analyzing this data, you start finding meaningful patterns. Soon you start to see things about different segments of our membership, the profit/loss information for a certain household, the amount of engagement a group has with the credit union, or even segments that aren’t interested in an IRA, but maybe a student loan or a home equity line of credit,” he told News Now. “Then we can turn to marketing to see what the groups are most likely to need or want.”
In Oregon Community CU’s case, using data has helped it roll out products that have a cost-per-acquisition far less than industry standards. For example, one credit card mailing targeted at members who would be more likely to need it, resulted in a cost-per-acquisition of roughly $67, when it was in the triple digits before.
This enhanced focus on groups within a membership is helping credit unions not only finely tailor their products and services, but find the group most likely to need them.
Once it started maintaining a data warehouse, Affinity Plus FCU, St. Paul, Minn. started to realize that there were ways to use that data to better serve its members. Its first foray into business intelligence was a major success.
“We started looking at the information, and soon we identified 1,400 members who would be well served with a mortgage refinance,” Dave Larson, president/CEO at Affinity Plus, told News Now. “So we reached out to them--the members who responded saved more than $2.6 million and those efforts brought in just shy of $30 million in new loans to our credit union.”
Of those 1,400 members Affinity Plus reached out to, 200 members responded, a rate that Larson said is unlike anything he’s seen in his 14 years at the credit union.
“We got this amazing response rate by targeting a smaller group, not by spending a lot to promote our brand through TV or billboard advertisements, but through our credit union’s hard work so that our members know exactly who we are,” Larson said.
And unlike banks or other financial companies, whose seemingly generous offers are usually thinly veiled sales pitches, the relationship built between a credit union and its members make these offers the real deal.
“We work hard to get to know our members, and the relationship building pays off with something like this, where we’re in a relationship and we’re trusted to look out for our members,” Larson said. “We’re not sending out some generic postcard saying ‘call us and we’ll try and help you out.’ We sent the members a communication with information specific to them, and we didn’t get a single complaint about bringing this to them. Instead, we got a lot of ‘this sounds too good to be true.’”
Both Oregon Community CU and Affinity Plus FCU see analytics as a major part of the future of credit unions, and are currently looking at ways to apply their models to other products and services for other segments of their membership.
“We’re now assigning people to connect with members, and letting the members drive the conversation about what they need or want,” Foltz said. “Going forward, we’re using the same statistical model to make sure our assumptions stay current.”
Dave Schiffer, director of finance at Oregon Community, says the next step for his credit union is to get the information into the hands of credit union leaders who want it.
“Our management has a real thirst to see the information we’re getting. For example, our marketing department wants to know what’s effective, that way they can turn general mass mailers into something laser focused,” he said.
Members of Oregon Community’s business intelligence unit belong to a group for credit unions that are seeking help getting into business intelligence. Foltz says the approach can be scalable for smaller institutions as well.
“I’ve talked to some people who want to get started but just get overwhelmed by the possibilities, which is natural,” he said. “But there’s not a cookie-cutter approach--you can start small. I would encourage smaller credit unions just to start with the low-hanging fruit. These types of analytics are reproducible as long as you’ve got data coming in.”
During Affinity Plus FCU’s recent employee appreciation day, held on the President’s Day holiday, a number of their 540 employees were wowed by a presentation on how successful Affinity Plus’s initial use of analytics turned out.
“People listened to what we were doing and I think they felt really good that we’re finding ways to efficiently reach out to our members with products and services that they can actually use,” Larson said. “People working together and sharing the success, that’s how you feel the pride in the credit union movement, and that’s how you see the credit union difference.”
The Credit Union National Association launched its #CUdifference campaign to highlight credit union's good works and positive impact on consumers. Credit union members, staff and volunteers can post short videos of themselves touting the credit union difference on social media.
Editor's note: The CU Effect Series will now appear on a monthly basis, the first Wednesday of the month, at news.cuna.org.