Why credit unions should embrace the next frontier in advanced analytics to predict and prescribe outcomes.

Advances in data analytics are providing credit unions with powerful new tools to gain insights into their members’ needs and purchasing trends. From using data to assess the past (descriptive analytics) to analyzing data to understand the future (predictive analytics) the data analytics landscape continues to evolve into a new frontier of analytics and business analysis.

Enter prescriptive analytics; which helps organizations not only anticipate what will happen and when it will happen, but it can identify a business issue, prescribe a solution, and then monitor the results.

Have you worked with prescriptive analytics software? Is it something your credit union is considering? Here’s what you need to know:

Prescriptive analytics is the most advanced form of analytics in the sense that it has the greatest impact on business objectives and outcomes like profitability, cost of services, risk management, problem resolution and real-time decision-making. Prescriptive analytics incorporates both structured and unstructured data and uses a combination of advanced analytic techniques and disciplines to predict, prescribe, and the learn from the results of that prescription.

Think of prescriptive analytics similar to weather warnings and watches that alert us on how to prepare for a storm or other significant weather events. For credit unions that want to apply prescriptive analytics into their business model, it can provide a similar warning or alert for future business issues, trends or even economic changes. Prescriptive analytics can provide management teams with the ability to alter expected outcomes and make the necessary changes in strategy, policies, and procedures.

Real-World Examples

Using data and machine learning techniques, prescriptive analytics seeks to determine the best solution or outcome among various choices, given the known parameters. One popular use case of prescriptive analytics is route optimization for the logistics industry. UPS is a great example of how organizations utilize prescriptive analytics. By analyzing and combining hundreds of data sources, UPS can push thousands of route optimizations per minute to all of their trucks. This saves the company millions of dollars on fuel a year.

Google’s driverless cars are a good example of prescriptive analytics at work. The self-driving car knows exactly what the best route is based on infinite data points and calculations. When turning, the car must anticipate everything that a normal driver anticipates, such as pedestrians and traffic, and take the action based on the impact of that decision.

Prescriptive Analytics Applied:

Prescriptive analytics improves decision-making across the organization and seeks to understand how to respond to the changing environment. It’s basically a navigation system to help find the best route for business improvement. Here are a few examples of how prescriptive analytics can add tremendous value to the credit union:

Improved member loyalty: To help reduce member attrition while boosting loyalty, prescriptive analytics can proactively identify those members that are most likely to leave, allowing the credit union to take steps to intervene and prevent churn.  Prescriptive analytics helps organizations construct retention campaigns that prioritize the most valuable members and offer them targeted service offerings.

Greater Marketing ROI: For marketers, prescriptive analytics can determine the type of content to provide to a member or prospect as well as determining the best communication or offer based on a variety of factors that include channel, position in the sales funnel, cross-organizational campaign objectives and likelihood to purchase. These models help credit unions use the best marketing channels to attract, retain and grow their membership.

Enhanced Fraud Detection: Prescriptive analytics can help better detect fraud by improving suspicious behavior monitoring and fraudulent pattern detection. In real-time, credit unions can spot abnormalities that may indicate fraud, cyber threats, and other vulnerabilities.

Increased Productivity: With prescriptive analytics, you can feed your credit union with a steady supply of daily improvement to every outcome: attrition, cost to serve, and what products to recommend to efficiently maximize revenue. It can guide the credit union on what steps to take now to create a better future and beyond–in every department.

Gartner estimates the prescriptive analytics software market will reach $1.1 billion by 2019.  Although prescriptive analytics has exceptionally high business-impact potential, it can become overwhelming and complex rather quickly. At The Knowlton Group, we believe that every organization – no matter their size – can become data-driven and benefit from the power of data and analytics. Our personalized approach to each engagement ensures that the specific needs and goals of your financial institution are captured for maximum results. Want to know how to best incorporate prescriptive analytics into your business model? Let’s talk.

Contact me today at [email protected] or call 860-593-7842.


Article Resources:

1.Why UPS spends over $1B on Big Data Annually

2.How Self Driving Cars Work

3. How Can Prescriptive Analytics Retain Your Customers?

4. Beyond Predictive: 4 Reasons for B2B Marketers to Consider Prescriptive Analytics in 2018

5. Gartner Snapshot Prescriptive Analytics worldwide