By John San Filippo
Big data refers to data sets that are too large or complex to be dealt with by traditional data-processing software. The term has been around for decades and for nearly as long, credit unions have been made aware that each one sits atop a treasure trove of big data. Yet, many credit unions still struggle with how to turn all that data into actionable intelligence. Flint, Mich.-based Financial Plus Credit Union is not one such institution.
The $1.2 billion, 83,000-member credit union had a sophisticated data warehouse, but Chief Financial Officer Wade Decker knew that wasn’t enough. That’s when he turned to White Clay, a company that he had known years earlier when he worked at a large regional bank. Finopotamus spoke with Decker and White Clay’s Director of Community Solutions Scott Earwood to learn more about the credit union’s data successes.
To set the stage, Earwood described White Clay’s purpose. “We help financial institutions put together their data, find opportunity or add intelligence to that data, like profitability, pricing, and then help them find opportunities through their front-line staff using a dashboard to see where they have full relationships, where they don't, where their winners and losers are,” he told Finopotamus.
“I'm a data analytics guy,” added Decker. “We had a ton of data here that just wasn't in a usable format. We had an initiative to put a data warehouse in place with good clean data. We got that in place, which was awesome, but you could only play in it if you could do some decent SQL (structured query language) queries.” What was missing, he noted, was a front-end that would make the data accessible and usable for front-line staff in the branches and in various departments. That’s when he turned to White Clay.
Starting the Right Way
Having now worked in both the bank and credit union industries, Decker said that both continue to struggle with how to leverage data. Regarding credit unions, he stated, “We still want to maintain that small family member-centric focus. And sometimes I think that gets misconstrued as we can't think about profitability or efficiency or spend time working on those things because those are the things banks focus on.”
He cautioned that this is a misinformed take on the situation. “We need to recognize we can still be very member centric, we can still do the right thing for the member,” he continued. “In fact, maybe doing the right thing for the member means looking at our efficiency and making sure that we understand our relationships, especially through the data, so we're providing the right service at the right time in the right format. We need to invest in things like a data warehouse and other tools that help us understand profitability and segmentation and member behavior.”
Earwood added that many credit unions he meets with suffer from the same mindset. “Financial Plus is the exception to the rule of having all their data put together,” he noted. “Most institutions we go into, we have to build extracts out of the core system to then start building the data we need.”
“At many institutions, a data initiative starts out as a single project to achieve a single objective,” he explained. “One project then builds on another and that ends up turning into a data warehouse. The problem is that when you start out that way, all of a sudden, you'll find later you missed something. There’re holes in the data because it wasn't thought of in a holistic manner or with a larger purpose in mind.” He added that the Financial Plus team took this holistic approach and focused on how to bring all the credit union’s data together in its entirety.
A Different Perspective
According to Earwood, some credit unions aren’t ready culturally to fully embrace their data. “Where we typically find customers now are credit unions that aren't afraid to learn about revenue, aren't afraid to ask about revenue,” he said. “They want to do something different with their data. I would even argue that profitability isn't a bad word at their credit union. They want to use their data to take better care of their members, to provide a better return so they can do more for their members.”
“Everybody knows to look at their balance sheet,” noted Decker, who next offered hypothetical questions. “So are my loans increasing or decreasing, or are my deposits increasing or decreasing, but what does that mean?” He said that the tools provided by White Clay allow the credit union to drill down several layers to examine the true cause of any situation. For example, he addressed the topic of growing membership.
“Everybody wants to grow membership, but things are tough,” said Decker. “We're going to try and at least hold membership flat, but we're in a declining population. We can look one level under that and say, okay, we had 1% membership growth, but we had attrition of 8% and new acquisition of 9% and that netted us to that 1%. Maybe if we just knocked attrition down a little bit, we could grow membership more. Or maybe we can’t do any better than 8% attrition and need to focus on member acquisition.”
A Better Member Experience
Asked by Finopotamus how this approach to data affects the member experience, Decker pointed to staffing as one key area. “We're looking at transactions, we're looking at activity through White Clay at a branch level or from a channel level,” he explained. “We just implemented a digital branch where we've assigned members that have no in-person branch activity in the last year. Using White Clay, we can say, here's all our members that are assigned to the digital branch and the activity that's going on there. And we can say, wow, look at the volume of members that are in that digital-only footprint and look at the activity that's going on.” He said that this analysis led to assigning two additional FTEs (full-time equivalents) to the digital branch, resulting in better service for the members who use the digital branch.
“I don't know of any of our clients where the customer or member sees our application, but we do provide a bunch of information that has an impact on the member experience,” added Earwood. “For example, at Financial Plus, we've been able to separate out all the indirect customers, meaning the customers who have an indirect loan but don't have the other parts of the relationship. We can put those in a separate bucket so that way you can start to engage your members accordingly to build a stronger relationship.”
“We’re not just trying to make the credit union the most efficient,” noted Decker “We need to make sure we’re meeting the members’ needs. When they come in through one of our channels, whether that's contact center, online or in person, are we giving them the best experience and are we making the most use of that interaction with them? That's our opportunity to solidify and deepen the relationship and just make sure it's the best experience possible. Having visibility and transparency to the data really helps us do that.”