How data management can improve member service

In 2019, the holy grail of banking is providing consumers with information to help them make smart financial decisions, such as a sound savings strategy and debt reduction. Credit union members — many of whom are facing record-breaking household debt — are eager to embrace such insight, as evidenced by the growth of tech-driven personal finance companies.

Unfortunately, credit unions are often stymied by the high cost of innovation and a lack of access to clean, actionable data. To engage with and empower members, credit unions need a data-management system that puts their data to work and offers those they serve the benefits of data-driven insights.

The PwC 2018 Digital Banking Consumer Survey found that the majority of financial consumers are not only goal-oriented, but want help reaching those goals. And those consumers are increasingly turning to mobile for their banking needs: 15 percent of customers are now mobile-dominant, an increase from 10 percent just a year ago, according to the study. Most financial institutions have now accepted that a cutting-edge mobile app is a requisite to stay competitive, but using a digital platform to help guide a user’s choices has proven more challenging. This is largely because data is siloed or otherwise rendered less-than-optimally useful, both for institutions and those who do business with them.

A good data management system needs to focus on three key areas. First, collecting data — not merely internally held data but external financial data, and social and geographical information. Second, enriching data by de-siloing it so financial institutions can leverage that informatoin. Finally, presenting and acting on data, so credit unions can use it in their business intelligence or automated marketing systems, and members can use it to engage their finances and interact holistically with their budgets.

Customers of financial institutions are demanding more transparent and actionable data than ever before. Here are three ways to meet those demands, while simultaneously strengthening the customer relationship.

Clean data: Replace the incomprehensible transaction string with a simple transaction detail, even featuring a corporate logo for easy readability. For example, something like “TEX15736297” now becomes the easily legible “Texaco,” a welcome relief for customers trying to keep track of their spending.

Categorized data: Ensure accuracy when sorting spending into categories (such as shipping, entertainment or a recurring bill). According to Don Parker, executive vice president of partnerships for data analytics company MX, “If you're categorizing transactions incorrectly or they're not categorized in a way that can be easily interpreted, that translates all the way through the entire system as it relates to budgets and to the financial institution really understanding that consumer.”

Aggregated data: To get a complete picture of a member’s financial situation and needs, aggregate member accounts, even from external financial institutions. A single login portal for all their financial institutions and credit cards lets members better navigate their finances, avoid fees, see upcoming bills and keep tabs on possibly fraudulent activity. The institution offering this service can more effectively market financial products to the consumer, bringing the bank or credit union that much closer to primary financial institution status by operating as the command center for all banking activity.

This approach delivers value to financial institutions in several ways. It allows them to reduce costs by decreasing overall engagement costs and support calls related to suspicious transactions. Clean data also has the power to increase revenue. In the words of Don Parker, “Client acquisition is very expensive, so maintaining and retaining an existing customer is a very important component, and any time you engage that customer in a healthy way, then you're able to maintain a customer base and potentially increase your shared wallet inside of that household.”

The idea that consumers fundamentally own their own data has already taken hold in much of the world, through legislation like the EU’s General Data Protection Regulation (GDPR), and it’s now being regarded as inevitable that similar laws will be passed in the U.S. Embracing open banking demands the highest level of security so that customer data is protected, never sold to outside investment interests and understood as a tool to advocate for customers.

The user-driven approach is the only way forward that allows credit unions to harness the power of data while keeping member trust. Presenting members with clean, categorized and actionable data will enable credit unions to make good on the promises of personal financial management and place themselves on the cutting edge of innovation.