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Having recently completed my CTO leadership program at Wharton and following some thoughtful discussions and product reviews in my advisory role with Vertice AI, I have been reflecting on what I have learned and my many years in credit union leadership.  And, I want to share some thoughts on the power and opportunities of data and predictive analytics for credit unions.  Over my 25+ years in credit union sales, marketing, operations, and IT leadership roles, I have come to believe that we as a community are missing opportunities to fully serve our members.  So, I am going to publish a few posts in the coming weeks, and I hope they will spark some discussion that might help the community, or at least make us think a bit more critically about how we make investments of our time and financial resources in 2023.  These musings may be controversial to some of my peers, but I would ask that we all be open minded and start a dialogue that might help lift up the credit union movement together.  So here is my first thought piece.  I look forward to hearing from you all.

Clive Humby said, “Data is the new oil!” Newsweek made it a headline.  Need proof that data is now the world’s most valuable commodity?  Look no further than Elon Musk’s acquisition of Twitter and his stated goal to transform the social media icon into “the people’s financial institution.” Because, make no mistake, he’s in it for the data.

Wait just a tick… Aren’t we (credit unions) already the people’s financial institution?!?

The answer, unfortunately, is both yes and no.  Credit unions serve a percentage of the population very well.  Even though the number of credit unions providing service has declined to just around 5,000, more members are being served than ever before (~133 MM).  Our ability to deliver service to more members is being enhanced by technology.

But banks are leveraging the same tech opportunities as credit unions.  The two largest U.S. based banks—JPMorgan Chase and Bank of America—each individually hold more assets than the whole of the credit union industry combined.  Wells Fargo & Co, the third largest bank, is closing in on that $2 Trillion+ number.  They leverage a program with the service mark “Wells Fargo at Work” as a major component of their growth strategy.  And this offering looks an awful lot like SEG development.

So, the question becomes:  Are credit unions keeping up…. getting our fair share?

According to data pulled from CUNA’s “Credit Union Trends by Asset Size” report, in the 30-year period between 1991 and 2021, the number of credit unions decreased by 63% while the number of members increased by 114%.  The average annual growth rate of total assets and savings for credit unions is just over 7% for the period with loans growing at an average of about 8% per year since 1991.  How can we do more?

For the credit union industry to capture more of the marketplace, we each need to win more of our member’s individual business.  The Pareto principle, also known as the 80/20 rule, is the theory that 80 percent of the output from a given situation or system is determined by 20 percent of the input.  In my experience leading credit unions, I have found it to be more like 14-17% of the members “carrying” the rest.

Too harsh?  Well particularly for credit unions—as cooperatives—this is a very important concept.  Without alternative forms of capital, our ability to “do good” for our membership as a whole is funded by a proportionately small number of active members. Which is why it is so important for us to identify which members are “fully participating” in our economic cooperative and those with whom we must do more business.

Credit unions must take the time and make the investment to know their membership even more intimately.  We already have (in house) the data needed to quantify every member’s economic participation with our cooperative.  But what we cannot do is let this goal become an overwhelming initiative and never get done.  Progress not perfection, right?

Get started by using the data at hand to know your members’ level of engagement today.  Then, with your Member’s Economic Participation (MEP) established, you can begin to predict their path into the future.

Remember, it is far easier and cost-effective to grow our share-of-wallet (SOW) of current members than it is to acquire market share from banks (and other CUs) by acquiring new members externally.


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