Activating first-party data

The Challenges Facing CUs

Credit unions (CUs) are faced with a new urgency in today’s climate, not only to know and understand their members’ financial needs, but also understand how they prefer to engage. However, accessing actionable insights within core data has long been a problem for CUs of all sizes. Difficult to aggregate data sources, cumbersome core systems, lack of time and internal resources all contribute to this problem. Even when results can be mined internally, the data is often slow or static and gets siloed within individual departments, limiting its strategic value. It is critical that CUs use their first-party transaction data to increase actionability and anchor relationships to stay top-of-mind and top-of-wallet to their members.

The boom in online banking adoption accelerated by the pandemic means fewer members visiting brick-and-mortar branches. This eliminated one of the primary member engagement opportunities for many CUs. At the same time, the industry as a whole has become fragmented because consumers have more choices than ever. With trial and experimentation of other institutions, attrition rates need to be watched closely.

• Globally, 64% of consumers have used one or more fintech platforms
• Financial institutions (FIs) see an average 25% share-of-wallet
• 65% of consumers hold only one product at an institution currently
• Overall attrition rates in the banking industry are around 15%
• Attrition can be up to 200% higher in a member’s first three to six months after opening an account

By better understanding member behavior and intent, CUs can differentiate themselves in the market and identify these challenges to get out ahead, with targeted offers and helpful resources that strengthen relationships with members.

Getting on board with organization, security and automation to activate first-party data can give CUs an edge over the competition. The following will provide tactical milestones for developing a strategy featuring activated data.

Cleanse Transaction Data

CUs sit on a mountain of merchant payment data, all full of insights and behavior spend patterns. Actionability starts by making sense of and analyzing a member’s transaction data in order to reveal their current life stage, as well as understand likely actions to come. The problem is that unstructured, uncategorized transaction data often looks like a jumble of random numbers and letters because it gets truncated and changed as it moves throughout the financial ecosystem.

A merchant payment cleansing service takes unintelligible data from complex to clean, adding value to an CU in a number of ways. For starters, easy-to-read transaction descriptions help free up call center resources and deliver an enhanced member experience within online and mobile banking portals. AI and chatbot functions, with more accurately tagged and categorized data, can significantly improve performance to respond faster and more consistently. Business segments throughout a CU can deliver more relevant member interactions that drive product utilization and engagement.

Taking it one step further, CUs can use transaction data to build predictive models for nearly any member behavior. Financial Wellness Modeling for example, can be utilized to identify members who may be experiencing financial stress, before it’s too late. Knowing which members may be struggling will allow for efficient and targeted outreach, leading to an increase in trust between the institution and the member, as well as lower attrition and a more financially well off community. Custom models can be leveraged, with the help of the right vendor, to identify the behavior CUs want to predict, or the outcome stakeholders want to achieve. The opportunities are nearly endless for CUs when catapulting their member transaction data to be intelligible.

Process Data Securely

Credit unions of all sizes collect information on millions, if not hundreds of millions, of transactions every month. But transferring large volumes of data outside the organization adds time, labor costs and security concerns. Using a cloud-share application, specifically for a merchant payment cleansing solution, can help remedy many of these challenges, making transaction enrichment simple, fast, granular and accurate, while maintaining a seamless collaboration with the processor.

The cloud-share environment allows data to be processed without being moved between the vendor’s platform and then back to the CU. The data remains in the CU’s ecosystem, mitigating security concerns around member data and personally identifiable information (PII). With this type of system setup, CU leaders can gain seamless access to transaction enrichment solutions, yield significant time and cost savings and take action on the data by making informed strategic business decisions for the institution.

Share Data Securely

Once the data has been cleansed and is in a usable state, best practice dictates that it is time to automate. Automating marketing and operational campaigns, such as member onboarding, can extend the welcome feeling into the crucial first months. During all instances of accessing member data protecting PII is vital, tokenization can be one of the most useful data security tools.

Tokenization is a process that assigns a data value, or token, as a placeholder for sensitive data. Once created, these tokens can be passed across platforms to any authorized party for operations.

Using tokenization provides a CU the flexibility to pick and choose vendors, even multiple, extending the value of member data. When used as part of a comprehensive data governance and security strategy, tokenization can help expand business opportunities while minimizing risk.

Deploy Multichannel Campaigns

Once member data is cleansed and secure, CUs can be confident moving forward with marketing automation and integrating with various platforms to optimize key operations. For example, having a turnkey email delivery channel that is powered by insights from member transaction data enables a CU to deliver the highest level of targeting efficiency and relevant messaging. Most importantly, the digital use cases can accelerate revenue generation for both current members and acquisition campaigns.

Automating delivery to this channel increases the capability for on-demand quick campaign building, closing the time gap for most marketers while delivering a conversion-rich form of digital marketing.

For example, after mining transaction data, member spend analysis could reveal a particular individual is showing intentions to purchase a mortgage. That member would be entered into a “likely to buy a mortgage” marketing campaign. Technology integrations push CU data into action by seamlessly routing insights through to the email platform, targeting an audience that will receive a relevant, timely and compelling message.

Adopt an Agile Business Playbook

Credit unions need to recognize that the old playbook for engaging and retaining members isn’t going to cut it anymore. Leaders need to find new ways to build meaningful relationships through highly relevant experiences. Mining the rich transaction data already in-house, CUs can better understand their members holistically as they live out their unique financial journey.

Adopting agility moving forward means developing new strategies for supporting members of the community, increasing revenue, growing wallet share and outwitting the competition – all based on ongoing data insights.

In the end, a credit union’s commitment to setting data into action and being able to pivot with on-demand intelligence will ultimately determine their fate in an aggressive and disruptive marketplace.

Segmint, Inc, is a provider of an industry-leading data insights platform and marketing automation platform, best known for the speed, scale and accuracy of our Merchant Payment Cleansing solution.