For years, the idea that “big data” could somehow create real business opportunities for banks and credit unions lurked in the background. How could analyzing statistics and volumes of data replace historical information, gut instincts, and industry experience?
Consider this scenario: In 2013, the executive management team at a community financial institution embarked on an ambitious project to answer a simple question: What percentage of all the products and services they offered were actually profitable? Now imagine after extensive research coming to the gut-wrenching conclusion that only 48% of the products were generating a profit!
Fortunately, the management team eventually figured out how to make their products more valuable and profitable on their own and then complementary to business relationships. How? Through an aggressive use of data analytics.
Balancing Instinct with Data
When making critical decisions, sound business experience should certainly weigh into the equation, but, today there is simply too much at stake to discount factual data-backed information. This is especially true with the increased accessibility of data analytics tools and business intelligence software that helps credit unions quickly and easily compile and analyze data through comprehensive dashboards and analytical reports. This gives the credit union powerful data-driven answers, encouraging decision makers to take these insights into account before embarking on a new business venture.
Data analytics tools are extremely valuable in their ability to gather the tremendous volumes of disparate data types from various sources, process them at record speeds, and analyze and use that data for vital knowledge. With new and more powerful tools to harness today’s data explosion, a credit union can use data analytics to control expenses, boost revenue, and provide better member service all while competing locally and nationally.
Consider these basic advantages of relying on data analytics for business decision making:
Better risk management: Data analytics tools provide the credit union with new insights into their systems, transactions, customers and environments to help avoid certain risks and to quickly detect pattern changes that are potential risk indicators.
Cost-effective marketing: Using data analytics helps the credit union develop more effective marketing programs and lead generation campaigns that can target the right member with the right product at the right time through the right channel. (Learn more about The 4 R’s of Analytics-Driven Digital Marketing) Having a system that allows the credit union to segment, manage, and track activity will enhance the marketing ROI.
Improved Member Service: With the volumes of member data available, the credit union can analyze timely information about purchasing decisions, behaviors and product needs about each of their members—proactively. This translates into improved member relationships and member loyalty.
Greater Efficiency: Data analytics can be used not only for member-facing activities but also for internal efforts. For example, data can be used to analyze and assess internal processes. By measuring key processes, the credit union can reduce inefficiencies and, therefore, streamline operations. This often allows credit unions to achieve greater throughput and performance without requiring additional staff.
Many CEOs and business leaders will admit they rely on intuition to make business decisions. History shows that some tremendous wins have been gained by doing so. However, we are fortunate to be in a data-driven era where advanced data analytic tools are readily available to help us make more-informed business decisions. And, with the expertise of data scientists, we no longer need to rely solely on instinct. Perhaps the harmonious balanced approach works best: making data-informed gut decisions!
To learn more about how data analytics can help drive your business practices, contact The Knowlton Group today.