Predictive analytics empowers credit unions to “think globally, act locally”

by OnApproach

In order to continue thriving, the credit union industry must launch predictive analytics solutions to impact local initiatives

by: Nate Wentzlaff

In his 2007 book, Competing on Analytics, Thomas Davenport explains how analytics solutions have been implemented to give competitive advantage to companies throughout various industries.  The astronomical amount of data being collected and analyzed by large companies (financial and non-financial) threatens individual credit unions who currently rely on rearview reporting of historical data.  Therefore, a holistic approach to data that leverages predictive analytics is the key to the success of credit unions.  With predictive analytics, credit unions will be able to effectively cultivate the abundance of data available (from a variety of sources) to create innovate solutions that capture opportunities within their local community.  By utilizing public data (e.g. IMF statistics) along with their private data (e.g. core systems), credit unions will truly be able to “think globally, act locally”.

Think Globally: Interconnected Financial Systems

Credit Unions are being impacted by global events now, more than ever before.  With the world’s widespread adoption of the internet, trade is traveling in seconds rather than days.  The world’s finances are more interconnected than ever.  A college student with a $1,000 online brokerage account in the United States can invest in a palm oil factory in Malaysia with the click of a mouse.  Political unrest in Hong Kong can cause the capital markets in London to destabilize with one governmental decision.  Like it or not, we are truly becoming the global village once envisioned in sci-fi novels.  With the amount of data being produced daily by world events, how does a credit union capture new opportunities out of this chaos?

Credit unions, like people, will follow the crowd when they do not feel confident in their ability to predict the future.  An ability to build predictive analytics on pooled global data will give credit unions the ability to rise above the crowds to capture opportunities that others simply do not see.

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