Data Mining: The Key to Personalized Banking
Credit unions have a plethora of information at their fingertips that can help them provide the tailored services their members need.
Every day, people produce 2.5 quintillion bytes of data (that’s 2,500,000,000,000,000,000, if you’re curious how many zeroes that includes). A large portion of that isn’t the usual emails, tweets, and YouTube uploads — it’s data collected in the background as we go about our lives, such as location information, transactions, credit card usage, cookies, search histories, and much more.
As useless as this data might seem to the average person, it offers financial institutions unique and valuable insight into the products and services their members use, helping them to better predict and meet their needs.
According to FIS, the world’s largest global provider dedicated to financial technology solutions, credit unions can leverage the data that they have on hand to offer members tailored services. They can also use “big data” to better assess loan risks and personalize lending rates. This helps them make better-informed decisions on lending processes, rather than having to rely on general metrics, such as credit scores.
Data comes from everywhere, and the amount of available information on consumer habits is staggering. By using data and analytics as a tool for foresight, credit unions have the ability to measure a member’s ability to pay different loans down the line and rework the loan through consolidations, monthly payments, etc. This can make all the difference in the world for a member’s financial health.
This data also informs many of the ways credit unions approach marketing. In the past, financial institutions waited for members to approach them when they needed help with their finances. Today, credit unions are getting ahead of the game, reaching out to consumers they know will soon need their services based on data collected from various channels. Providing this hyper-personalized banking experience is critical to keeping members engaged.
However, a big question remains: How do members feel about their data being used in this way?
Thanks to years — if not decades — of building trust with their credit union, members are willing to share more of their data in exchange for better banking services and solutions. They know this data is intended to help them, not hurt them. Rather than a transactional relationship such as banker and customer, not-for-profit cooperative credit unions have cemented their role as a trusted partner, willing and ready to guide their members into brighter financial futures.