I have to admit; it becomes quite confusing when discussing predictive analytics or business intelligence. With the credit union market gaining strength today, many institutions are seeking ways of an unparalled competitive edge. I’m sure you have heard of a buzz word called “BI and everyone is doing it - but does one actually understand what it means? BI is a set of methodologies, processes, and architecture that takes raw data, from a data warehouse, into meaningful and useful information. This enables credit unions to execute on tactical, strategic and effective decision making. There are many companies in the market today, that promise effective BI, however this is just the top layer of the BI architectural stack, in which dashboards, reports and advanced visualizations can be achieved. If we look further down the architectural stack we come across a term called predictive analytics, and this is where the ‘magic’ happens. By dissecting the word Predictive, all one does is ‘predict’ an outcome. This means it’s NOT absolute and does not guarantee an outcome. With technology advancing Data Scientists, Artificial Intelligence (AI), machine learning (IBM Watson) and advanced mathematicians are able to extract information from datasets and determine patterns which aides in the prediction of future outcomes and trends. By combining BI and Predictive Analytics, credit unions are then able to rapidly predict insights, in real-time.
Role of Big Data in building BI Strategies:
Big Data takes the lead role in establishing sound BI strategies. The more data you have, the more you can understand the demands of your customers. The more you understand the customer demand, the more value you can deliver to them and consequently you can generate greater revenue. Big Data is becoming a crucial way for leading companies to outperform their peers. All credit unions have the right data but are unable to extract useful information from it. Time investment, funding and empowering staff that understand the business are needed for data mining. A challenge is the mountains of data many credit unions have amassed over the years. Many credit unions suffer from their own failure to share data among diverse lines of business’, such as financial markets, money management and lending. By prying open these departmental enclaves, it opens up collaboration among formerly walled off functional units.
Do you know where your members are?
Member retention and defection analysis also plays a pivotal role in developing a strong BI strategy. Retention analysis helps you understand the percentage of your users who stay with a credit union and pay you over different periods of time. This data can be helpful in understanding which of your services and products did you benefit more from and then execute your strategies accordingly. Defection analysis measures why a membership ends and can we look backwards in time and assess what lead up to the event of a member leaving. Some scenarios could be moving to another credit union, members only having one loan (paid off moved on) or even has a member been declined a loan, and leaves due to emotional reasons. All this data, is buried deep within a credit unions raw data – it’s how to find it and analyze it with the right partner. With the right execution of these strategies helps in the proactive management of member accounts, which gives a credit union a huge competitive edge. The most significant point in creating sustainable BI strategies is to realize the importance of customer engagement. It is the customer engagement that determines the better ROI given in a marketing budget. By better understanding the importance and impact of BI with your credit union you can form better risk management, the ability to unearth insights that would otherwise remain hidden. United Solutions CUSO can empower a credit union and execute on useful analysis and data mining, which aides in legitimate business forecasts, member retention and provide member defection management. Give us a call today!
