By John San Filippo
At the recent CUNA Operations & Member Experience Council and CUNA Technology Council joint conference in Las Vegas, Finopotamus had the opportunity to talk with Raddon’s Program Manager of Research Caroline Vahrenkamp to discuss current and future trends. According to Vahrenkamp, Raddon provides “research and analytics for the credit union industry in effort to promote strategic thinking and the advancement of the movement. We're pretty open to banks, too, but we just do so much with credit unions – everything from strategic planning to marketing software and anything in between.”
Getting It Right
Vahrenkamp has experience as the chief financial officer of one credit union and the senior vice president of marketing at another. Given her background, Finopotamus asked: What is biggest mistake credit union executives make when managing their data? “My experience is that most credit unions get really bogged down in sort of the day-to-day operations and see things at the overall level,” she replied. “They see their 5300 report [a system used to collect the quarterly financial information of credit unions], they see their income statement, their balance sheet. What they don't often do is to break it down into a member-oriented perspective.”
She claimed that there’s much to be gained from taking a deeper look at the aggregated data. “There are certain members who have everything with you and there are certain members who don't have much at all,” she noted. “What makes the one group different from the other? How can we encourage more members to do things with you? How can we leverage the relationships that they have to become deeper and broader and use that [data] to bring the institution forward?”
According to Vahrenkamp, there are two ways to better understand your members: You can either ask them for the information you want or you can analyze their transaction and account data to extrapolate the information you want. She said the goal is to “find the right product to talk to them about or find the right message to send them.”
Marketing Evolution
“Back in the old days, we talked about one-to-one marketing [as a separate thing], but today it's all we do,” observed Vahrenkamp. “It's just become kind of standard, but at the time it was like, the right message to the right member at the right time. Now we try to practice that in a way to make it more effective.”
She said that while technology has made this sort of marketing easier in one sense, it’s also made marketing more challenging. “A lot of credit unions have spent a lot of money on data warehouses. Great. It’s fantastic to have all that data, but you have to know what to do with it.”
Vahrenkamp told of one credit union she worked with recently that had invested considerable time and money in its data warehouse. “They spent a lot of time in their data warehouse, but had no real understanding of how to access or how to use that data to drive the institution forward,” she said. “That's the challenge. What we hope that we can accomplish is to help credit unions leverage that data in a way that provides better value for their members.”
Real Time Can Lead to Real Confusion
Vahrenkamp explained that while data warehouses are being updated more and more frequently, creeping toward true real time, frequent updates can sometimes obscure the truth. “The challenge, again, is that you get caught up in noise and lose the signal,” she said. “A lot of times when you get data and you're seeing data change on a daily basis, if you look at that person's checking account balance day by day over the course of a month, you're going to see a peak and then a slide and a peak and a slide. And depending on what day you're looking at, you may have a completely different perception of that person's relationship with you.”
This approach places an additional burden on the credit union to determine whether an anomaly represents a true problem or is just a “blip on the radar.” The key, said Vahrenkamp, is “getting into averages and looking over a longer term and getting into the transactions and seeing whether there are trends visible in their transaction behavior that says you should do something about it that you're missing.”
Vahrenkamp noted that categorizing and classifying transaction data can also be a challenge. “An Amazon transaction can show up in one of something like 75 different formats,” she said. “You need the diligence and know-how to understand that those are all Amazon transactions.”
Current Challenges
According to Vahrenkamp, credit unions are faced with two diametrically opposed challenges. “First, we have an employee base that's becoming harder to attract and retain. That really has nothing to do with the credit union industry specifically. It’s the economy as a whole. Then we have members who have higher expectations than ever when it comes to interactions with the credit union.”
Vahrenkamp said the industry-wide assumption was that the pandemic would push everyone toward digital. She explained that while this held true for older members, younger members are moving away from digital in favor of face-to-face interactions. “We're finding they want to go back to a branch to be able to have conversations with their credit union with questions like, how am I saving? How do I get a mortgage now? How do I buy this house? How do I fund college for my kids? Or how do I save for retirement? They want to have those deeper conversations.”
Credit unions must do a better job of differentiating themselves from banks, according to Vahrenkamp. “Credit unions did such a great job convincing people we’re just like a bank, just a little different. We could do everything you could do at a bank, but we went too far. And nowthe younger people just think credit unions are banks, just banks with a different name.” She noted that if a consumer can’t get anything different from a credit union than they get from Bank of America or Wells Fargo, why not just go to Bank of America or Well Fargo and get nationwide branch and ATM networks, she posited?
“Credit unions have to figure out what makes them distinctive and what makes them valuable in their community. They have to come up with that strategic plan and they have to stick to it. And that needs to include getting the 30-somethings onboard,” she concluded.
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