The State of the Credit Union: Analytics Adoption – Part I

Jon M. Deutsch
May 31, 2018

Large Banks, Regionals, and Fintechs continue to invest heavily in data management, analytics and decisioning.  They have devised strategies, revised their staffing models, implemented infrastructure, and are deploying analytical applications to maximize their use of data throughout all aspects of their business.  Increasingly, these data-driven institutions are growing market share, lowering operating costs and improving customer service through new analytical insights.  Credit Unions that have not articulated a strategy and begun to act upon it are likely falling further behind the curve.

In December 2017, industry experts Best Innovation Group (BIG) and OnApproach polled 85 credit unions from across the country to determine the state of data analytics and digital transformation within the movement. The National Survey on Credit Union Data Analytics and Decisioning Trends examined the adoption rates of analytics, priorities, budgets, implementation timelines and associated challenges. It revealed that, even though two-thirds of the credit unions surveyed have invested in some type of analytics tools in the past 12 months, nearly half (45%) of all respondent institutions do not have a data strategy in place.

Credit Unions that have established a data strategy report two principal goals: boost marketing/segmentation to attract new members and expand existing relationships, and improve member service.  Survey participants also gave priority to loan decisioning and operations efficiency.

In 2017, Credit Union analytics budgets were focused primarily on building fundamental skills and implementing foundational technology to enhance their use of data.  Advanced functions such as predictive analytics and decisioning (e.g., machine learning, artificial intelligence), fraud detection and risk assessment realized markedly lower budgeting and spend – further indication that analytics implementation is in the early stages for many credit unions while competitors continue to move ahead.

Survey respondents indicate they are taking steps to move in the right direction, however. They are applying initial analytics investments to drive growth (marketing), generate income (lending) and lower expenses (operational efficiencies)— critical requirements in the highly competitive financial services market.

The national survey, to be conducted on semi-annual basis, provides interesting insights into how credit unions’ data strategies compare. While most survey participants are just getting started, many credit unions, including Information Builders’ customers, are making bigger leaps forward in digital transformation.  

Next week, in Part II of this series, we’ll reveal credit union 2018 analytics spending plans, associated timelines and the common implementation hurdles impacting the rate of adoption.