The topic of advanced analytics has propelled to the top of agendas, industry conferences and trade publications this past year. Data initiatives are quickly becoming strategic priorities for many credit unions. It’s no longer a question of, “Are you ready to leverage data analytics”? The time to prepare for the advanced analytics imperative is right now. A solid plan will be your best guide.
As automated analytics takes flight, credit union leaders know that using key metrics on member data will become an increasingly important point of competitive differentiation. Credit Unions hold massive amounts of data on their members—a gold mine of insights— and mining this data strategically will provide transforming impacts to member services, operations, compliance, revenue generation and much more.
Even with many credit unions data-ready, my observation is that some are leery and simply unsure how to proceed with implementation, how to align big data with their institution’s mission and vision, and who will manage the entire process. With year-end approaching, now is the time to make a plan to be data-ready in 2016. It may sound obvious, but too often the missing first step in deploying any new innovation or technology initiative is developing a strategic plan first. Embarking on an advanced analytics program is a critical component of your credit union’s future. Therefore it’s necessary to determine your priorities, establish goals, assess your budget, technological capabilities and talent to formulate an effective, clearly defined road map that your team can follow and track. Starting this systematic process now enforces leadership and management to ask and answer the most critical questions. And it will empower the credit union to pinpoint and plot the right course and end destination—so you can maximize your data analytics investment payoff right away.
THE BIG QUESTION: WHERE ARE YOU, WHERE DO YOU WANT TO BE?
As you dive into your strategic planning process, take a step back to appraise your readiness for an advanced analytics imperative. Key questions:
- Does the credit union currently use a system that enables your team to take prescribed action based on identified data segments that are statistically evaluated to create recurring best practices?
- Does the credit union currently have a process in place to identify untapped potential and uncover meaningful insights from related, integrated, and cleansed data from many systems and external sources?
- Does the credit union have a process to assess internal resources and capabilities and has begun gathering data into a centralized data storage to develop an advanced analytics platform?
- Does your management and leadership understand the value of an analytics solution and is diligently working to prioritize and align an analytics investment with the credit union’s future goals?
ESTABLISH A CLEAR ROAD MAP
Your credit union’s strategic plan for 2016 and beyond will naturally outline how you will offer new and different products and services, engage in a greater portfolio diversity, mitigate threats and cyber security concerns and increase member business loan portfolios, just to name a few. As you meet with your management team this fall, make sure part of the strategic planning process around an advanced analytics imperative includes the following key elements:
Determine Priorities, Set Goals
Assess your credit union’s top priorities for an analytics imperative. What are your future goals beyond 2016 and how will you get there? In this process you need to establish a plan to collect and organize data and a way to measure how data analytics can create long-term member value. When you align your business goals with your credit union’s internal culture, vision and mission, you will maximize your ROI and improve franchise value. Make sure everyone is on board with the plan and the process from the C-suite to management – all should be able to access, share and see data on any aspect of the institution. Do your research and make all key players part of this vital first step.
Assess Current Talent & In House Capabilities
Do you have the staff and budget to hire, train, retain and manage data-savvy personnel? Do you have analytically-minded leaders in your own credit union? Professionals who can deliver data-backed insights that create business value are hard to find. During the planning process, assess your data analytic needs and look internally for talent that has experience with business analytics, data technology and visualization and data-driven decision making. Once you appraise your internal resources you will discover gaps. Figure out who can be trained and cross-trained. This step may lead you to discover that outsourcing is the best path. Consider external resources like a data scientist, consultant or proven data analytics partner. Similar to how data scientists at larger banks have been trained to turn mountains of information into quick insights, a virtual data scientist will advise your decision makers to take action on immediate opportunities, track success, and improve cross-sell opportunities that enhance your competitive advantage.
Assemble and Integrate Data
Do you have the technological capabilities to collect, cleanse, access, refine and transcend a data warehouse? What data analytic tools are needed to prepare and present data in an actionable way that guides decision-making?
Your planning process for an advanced analytics imperative must incorporate a game plan for assembling and integrating the credit union’s data. The infrastructure needs to maximize long term franchise value. This includes a process to collect the data from multiple sources, both internal and external. You need the ability to cleanse the data to maximize accuracy so your uncovered insights are correct. Successful integration of the data includes computing endless advanced analytics algorithms from your data to identify trends and extract actionable information – enabling your credit union to drive tangible results. The phase is consuming the data, which enables the end-user to make data-driven decisions, leading to improved business and increased revenue.
Making your data a useful and an actionable asset will often require an investment in new data capabilities. Your strategic planning process may uncover the need for new data architecture and staff. A better solution may be to outsource data specialists who offers sophisticated, ready-to-use software customized for your credit union’s needs and goals.
Take Prescriptive Action
Meaningful and sustainable marketing and sales requires accurate consumer information and an action plan. Once the data is collected, cleansed, computed and consumed, now it’s time for the pay-off and a solid plan to take and measure that action. You need real-time insight into how your credit union is performing, what risks you can mitigate, what marketing campaigns are not pulling, shifts in member demographics, and new product mixes that are consistent with the needs of current and future members. Plans should include building upon descriptive and predictive analytics. Predict what will happen, when it will happen, why it will happen and what the best course of action is to optimize outcomes and manage risk. Assign the right talent to focus their efforts on the most promising opportunities resulting in an immediate and sustainable boost to revenue or business goals. Create a game plan of how the credit union will segment customers, predict behaviors, identify and target tailored messages for effective marketing. A plan to track and improve results received by these data-driven decisions and campaigns is also vital to your planning process. This will help you plan for the future and get better at seeing what was once invisible.
WHAT’S YOUR PLAN?
The era of data analytics is alive and well. Leading credit unions are already using data analytics prospectively by anticipating behavior and automating prescriptive decision-making that uncovers opportunities while minimizing risk and loss. Mining of data for predictive insights creates information assets that you can leverage to be more competitive and efficient. Don’t dive in head first. Make planning for your big data initiative an integral part of your strategic planning process. The essence of a good game plan around advanced analytics imperative will highlight the critical decisions, trade-offs, expenses, next steps and it will keep everyone in the organization accountable and aligned, working together toward a more successful outcome.
About the Author
Kapil Kalokhe has spent over 13 years in investment banking and corporate finance. As a finance leader at PepsiCo and Orbitz, Kapil developed processes and analytical models that helped business unit leaders make prudent financial decisions. At Robert W. Baird, Kapil assisted in sell-side M&A transactions totaling over $800M, primarily focused in the consumer and industrial sectors. Kapil has an entrepreneurial mindset and is passionate about helping bring clarity to business performance and improving processes.
Saggezza is a proven technology and consulting partner that delivers personalized, high-value solutions to accelerate business growth.