John Best

Use Big Data to Thwart the Zombie Apocalypse

Opportunity moves fast—what’s here today may not be tomorrow.

March 22, 2016

Credit unions face the equivalent of a zombie horde seeking to suck the lifeblood from their business and leave them wandering aimlessly across a barren landscape, John Best, president of Best Innovation Group, told CUNA Marketing & Business Development Conference attendees Monday.

This “death by 6,000 cuts” comes in the form of:

  • Continuing interchange income compression;
  • Merchant steering to lower-cost payment alternatives;
  • A persistent low net interest margin environment;
  • Nonbank entrants aiming to disintermediate the credit union-member relationship; and
  • Regulatory overreach, including Consumer Financial Protection Bureau damage awards.

Credit unions’ saving grace: the ability to mine member data for valuable insights that will lead to new sources of revenue, deeper member engagement, and lower costs.

Best offers five lessons that can help credit unions navigate this frightening new landscape:

1. Decide who’s on your team

Pick your survival mates wisely by focusing on chief analytics officers and data scientists. “The stock has gone way up for the technically oriented folks you want with you in the bunker,” he said.

Strong programmers will continue to be worth their weight in gold, but consider augmenting their ranks with “scrum masters” conversant in agile development methodologies.

But don’t overlook the “team.” Along with their insight and ability to hunt, fight, and break the status quo, these technicians will need to collaborate.

2. Travel light: Jettison what you don’t need

After eight years of the post-financial crisis gauntlet, most credit unions have already learned to run a lean shop.

But amassing critical supplies may require difficult tradeoffs. Explore areas where outsourcing and/or partnering is an option.

3. Be prepared to move out of your house—bricks and mortar

The looming obsolescence of the branch is likely overstated. But the fact remains that millennials are less connected to teller transactions and show increased willingness to not only research loans but also execute them via handheld devices, Best said.

Successful credit unions need a mobile strategy, while simultaneously preserving member relationships.

4. Learn to identify risk quickly

“A purely defensive ‘hunker down’ strategy is a sure-fire recipe for being overrun,” Best said. Success requires some bold, well-informed moves.

But whether it’s pursuing a new product idea or assessing the creditworthiness of a nontraditional lending opportunity, speed is of the essence.

5. Opportunity moves fast—what’s here today may not be tomorrow

Given the wide array of financial startups and countless competing internal priorities, becoming overwhelmed into inaction is understandable.

But not making a decision is in effect a decision to do nothing—which will probably won’t end well.

A “fast follower” strategy can be just as powerful as “first mover advantage” for credit unions with limited resources. “Just keep the focus on fast –or you’re likely to get snared from behind.”

Best Innovation Group is a CUNA consulting partner supporting CUNA's efforts in advocacy, compliance, and keeping credit unions informed.