How Credit Unions Can Use Transactional Data For Growth?

In today’s credit union world, transactional data is taken for granted. As a credit union, you simply don’t view the data moving through your systems as useful for much more than compliance and reporting. But that’s about to change. Why?

Because transactional data—information about every financial transaction—offers endless untapped opportunities for growth and value creation.

Transactional data is not just about transactions. It’s about each member as an individual with unique interactions, concerns and interests, which are all recorded and analyzed to best solve their problems and meet their needs. Whether you’re talking about loans, investments, bill payments, check cashing, etc., your credit union will have a whole lot of transactions. And this data can be used in a variety of powerful ways that members will start to notice, even without them knowing what’s happening behind the scenes because the results speak for themselves.

But surprisingly a recent survey that we conducted among the credit union professionals indicates that transactional data is an underused resource in credit unions. Most CU don’t know how much transactional data they have or how they can use it more effectively to gain more members, grow faster and increase efficiency.

If you are one of them and want to know “How can you start using transactional data for your CU growth?” Here are some of the most popular use cases where you can leverage transactional data and improve products and services, as well as enhanced member experiences that foster stronger, more trusted relationships.

Transactional Data Use Cases for Credit Union Growth

Credit unions have long been known for their ability to build relationships with members and provide a superior customer experience, which has helped to drive market share in recent years. In today’s world of big data, however, cultivating these relationships becomes more challenging, as there are often so many different ways to interact with your members — online or offline — and various tools and channels to use when doing so.

There are also many ways to analyze your members’ behavior and preferences across all these different channels and touchpoints, but how can you ensure that you’re making the most of them? The answer lies in leveraging transactional data.

But what exactly is transactional data? It’s simply the details of a purchase made by a consumer — where they shopped, what they bought, and how much they spent. For example, if I use my credit card at Starbucks, the data stream shows that I paid $5 at Starbucks in Chicago on Feb. 14 at 2:02 p.m.

The key difference between transactional data and other types of customer data is its timeliness. Because consumers make purchases every day, this information can be used to create very timely marketing campaigns that will be seen by your members as relevant to their lives.

Here are just some of the ways Credit Unions can use Transactional Data to Drive Growth:

2. Understand how members are using your products and services

Your members are actively engaging with your products and services, which means you have a wealth of transactional data at your fingertips. You can use that data to understand how members are using your products and services and what they want from their credit union.

For example, you could use transactional data to identify members who regularly use mobile banking and could benefit from a mobile payment solution. Adding mobile payments to their lineup of existing services would help them better manage their finances and keep them engaged with your credit union.

Once you identify these types of opportunities, you can reach out to these members directly with personalized offers for new products and services that help further their financial goals.

4. Predict evolving member behavior with data modeling

With the advent of advanced data analytics and predictive modeling in finance and banking, credit unions have access to more information about members than ever before. However, as with most industries, it’s not so much about having access to the data as it is being able to make sense of it. With all this data available, credit unions can use predictive data modeling to get a better idea of where members may be headed and what they’ll want next — and how they can adapt to provide those services in a way that ultimately increases revenue while delivering an outstanding experience.

The use of predictive modeling enables credit unions to look beyond their current member base to reflect back how those members have evolved over time. This helps you to create a portrait of who your current members are; what they’ve done in the past; how they’ve behaved; and how that behavior could evolve in the future.

7. Reduce risk and fraud

Credit unions are always looking for more efficient ways to reduce risk and fraud in their organizations. In the past, many institutions have relied on consumers’ credit scores, which may seem obvious but also has its downsides.

The problem with using credit scores as a measure of risk is that it takes into account all types of consumer spending, not just relevant spending categories or types. Many consumers who have healthy financial habits may still have poor credit due to factors outside their control, such as medical bills or even student loans.

The better metric for measuring risk is transactional data, which shows how much money a person spends each month (and on what) and how often the individual pays his or her bills on time. Most importantly, transactional data allows credit unions to help reduce risk and fraud.

Zuci’s Credit Underwriting Solution – HALO helps credit unions reduce credit risk and minimize the overall credit cost by improving the quality of loan disbursals. HALO can also enhance the underwriting processd efficiency byd reducing the time lost on bad clients, thus increasing thed number ofd right approvals.

How your credit union can get started with a data strategy?

Credit unions lag behind other financial institutions when it comes to the use of data analytics. For instance, a recent report from the Credit Union National Association stated that only a tiny percentage of credit unions currently use advanced analytics, compared to banks.

Credit unions have been slower to adopt advanced analytics for several reasons. First, credit unions often struggle with data integration and management. Second, credit union executives tend to be more conservative than their banking counterparts and are less likely to embrace big changes in technology at an enterprise level. Finally, some credit unions lack the talent needed to drive growth through analytics and data science initiatives.

For these same reasons (particularly the first two), credit unions also lag behind in their adoption of data-driven marketing techniques. And this is a loss because it’s a missed opportunity for growth that can be addressed relatively quickly by leveraging existing customer data assets.

In fact, several credit union marketing leaders have already successfully implemented micro-segmentation and triggered messaging programs that leverage member transaction data to drive increased engagement and loyalty among members as well as new account acquisition efforts.

Benefits of a good data strategy for your credit union

Credit unions face many challenges. They must satisfy the needs of members, provide quality customer service, and maintain profitability. In order to achieve these goals, credit unions must adopt new technologies and transform the way they operate.