6 Ways Credit Unions Can Leverage Data and Analytics for Strategic Advantage

Today, many credit unions (CU) are infamous for their slow rate of technology adoption and lack of innovation prowess. Unlike CUs, large or new-age digital banks have adapted to the latest tech stack, machine learning, and remote process automation technologies for an excellent consumer experience. On the other hand, credit unions lack the strategic vision that slows down their technology adoption rate. As per the recent Credit Union Journal, ~45 percent of credit unions do not have a strategy for implementing data analytics and analyzing patterns in their customer data.

This is perhaps prevalent because most CUs are not aware of the benefits of business intelligence solutions and how they can be a game-changer for their business. Even in the age of increasing cyber security concerns and an ever-evolving economy, credit unions can benefit greatly from BI solutions and get actionable insights from their current and historical business data. These solutions can empower them to make sound predictions and tweak their business strategy accordingly. By helping them know how their loans and products are performing, BI solutions can also help CUs take small steps to digitally transform their business. Let’s learn how.

1. Turning Customer Data into Profitable Insights

Business Intelligence can allow CUs to have a 360-degree view of all data in one place by pulling data from their present system of records and other solutions they are using. This can, in turn, help them achieve certain crucial to-dos. For instance, an advanced analytics tool can help with achieving customer segmentation to identify the members who are more likely to churn. You can further segment to differentiate the most profitable members and define the most effective member communication channels that bring leads. Not to forget, you can also analyze the most popular and valuable services used by customers with the help of the same Business Intelligence Solution.

2. Streamlining Internal Reporting

If done right, a centralized reporting platform can help you with increasing the speed of document processing and reducing issues like typos and duplicates. This way, decision-makers across your organization would be able to make informed decisions and improve the performance of their respective departments.

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3. Improving Lending Assessment Accuracy

If credit unions systematically apply BI solutions to underwriting decisions, they can enhance the value of “soft information” in judging borrowers’ creditworthiness. Traditionally, lenders review a limited number of factors (debt, income, repayment history, etc.) to make strategic decisions. While critical, these factors don’t always provide enough information to help CUs with understanding the real debt-servicing capacity of the borrower. With machine learning facilitated by a BI solution, lenders can analyze “soft information” and judge borrowers’ creditworthiness more accurately.

4. Making Smaller Loans More Viable

In many cases, credit unions pass on small-size loans to avoid spending a lot of time conducting a credit review. With a machine learning assessment tool like business intelligence, they can do so within much shorter timeframes, therefore do more business with fewer resources.

5. Identifying More Risk Indicators

BI analytical tools can detect relationships between different indicators and credit risk outcomes. With increased control over the lending process, analytics can reduce operating costs and produce more competitive and accurate risk premiums. This data intelligence can further be used to mitigate risk in several areas.

6. Assessing Loan Performance of Individual Officers and Branches

Loans by a branch or individual loan officer are one of the most useful data for performance evaluation. Being able to view it in a summary dashboard of a BI solution can be much easier compared to skimming through traditional reports and presentations.

In a Nutshell

Many credit unions are already behind the curve on data analytics which gives them a competitive advantage. To update their operations such as internal reporting and to increase their membership growth, CUs need to invest in business intelligence technologies.

Using our data visualization dashboards and analytics solutions, IPERFORM Analytics (IPA), CUs can identify and monitor loan risks, analyze loan applications, streamline reporting, find trends, and do many other things to advance. To learn more about IPA and how various businesses have benefited from using it, click here.