How Credit Unions Can Quickly Improve their Analytics Maturity   (Part 1)

Is credit union leadership still moving cautiously and slowly when it comes to adopting data analytics technology?  Yes, according to The National Survey on Credit Union Data Analytics and Decisioning Trends that examined the adoption rates of analytics, priorities, budgets, and implementation timelines. The recent study reveals that nearly half (45%) of all respondent credit unions are lacking a data analytics strategy, and those that do have a strategy still say it will take three to five years to implement.

For most credit unions, the concept of implementing a data analytics strategy to better meet member’s needs is not a new concept.  From more accurate decision-making to reducing member attrition and acquiring new members, data analytics is a winning formula for most organizations.  But for the nearly half of all CUs that are still lagging in this key area of digital transformation, what’s holding them back? After talking with many credit union executives, it boils down to: devising a BI strategic plan, effective budgeting, recruiting talent, leadership buy-in, and lack of data quality.

Let’s dive in with some remedies to these very fixable challenges.

Devising a strategy that is owned and followed is a major stumbling block for many credit unions wanting to be more data-driven. Many financial institutions know they can do more with their data, but they don’t quite know how or where to start.  For many credit unions, it is common not to have the in-house expertise and skills to define and execute a successful data analytics strategy.

I see many organizations with partial strategies nestled within different areas of the business, such as marketing or lending. However, few organizations have figured out the antidote to close the gap between creating a plan and acting on the plan.

For those credit unions ready to implement analytics initiatives, success requires a top-down approach. You should focus first strategically, from a higher level, before you start focusing only on the operational challenges, the technology and some of the tactical components that analytics requires. Here are a few steps when devising your BI strategic plans:

  • Determine your business objectives
  • Create a long-term budget
  • Build awareness and buy-in among all key players
  • Appoint a committee who is held accountable to keep the plan in motion
  • Bridge the talent gap and hire in house talent or outsource an expert
  • Assess and upgrade technology capabilities
  • Ensure data quality, governance and controls
  • Identify analytics success measures
  • Create an analytics workplace culture

Budgeting for data analytics programs is a top challenge for many credit unions. Just over half of the credit unions who responded to the survey revealed they have budgets in place for data analytics, and 45 percent of those CUs plan to spend less than $100,000 on such tools this year. Roughly,15 percent will spend more than $500,000. For many, it may appear daunting when viewing these numbers.  Certainly, the cost of data warehousing, data visualization tools, staffing, and more is no small effort.

Pull resources from one of your existing business areas that have the talent needed to implement, oversee, and sustain the data initiatives. Find vendor partners that can help your organization achieve their data objectives within your organization’s allowed budget. When devising your budget, keep in mind some critical items that will need to be funded:

  • Data warehouse/analytics platform
  • Staff time in implementation, maintenance, and analyzing and preparing reports
    • Try to quantify how much time staff currently spend producing reports
  • Consultants and partners to manage various aspects of the project from strategy to implementation to ongoing data utilization.
  • Training staff on using data analytics tools, platforms, dashboards and report generation.
  • License fees and hosting subscription fees.

Stay tuned for Part 2 as we provide additional solutions to some of the top challenges CUs face with their data analytics programs.

Does your credit union face some of these challenges?   Data analytics can be complex especially if you don’t have a roadmap in place to guide your strategy. But, if executed well, analytics systems can have an enormously positive impact on your business outcomes.

 The Knowlton Group can help. Our expertise, years of working with FIs on assessing and implementing a proven data analytics strategy can work for you.

Contact us today to learn how!