By Emily Engstrom, Director of Client Success, CUNA Mutual Group/AdvantEdge Analytics
In times of chaos, few things are more valuable than information. Understanding who, what, when, where and why – particularly during an unprecedented event – gives people a greater sense of control. It’s one of the reasons local news sites have experienced huge increases in web traffic since the coronavirus pandemic took hold.
Credit union leaders, too, are clamoring for information. However, their desire to know all they can about members is not so much about achieving control. For these purpose-driven leaders, member intelligence is more about directing the cooperative’s resources toward the most acute needs.
Several data sources, accessible to most credit unions, are well-suited to deliver actionable member intelligence for identifying and helping members challenged by pandemic-related disruptions. The key is to leverage sources that can provide both snapshot and trending analysis. You want to choose data that is capable of telling the most complete story possible; in other words, data that describes how a member’s current behavior compares to that of the recent past.
And, as the long-tail impact of COVID-19 comes into view, that same data can serve as a basis for predictive modeling of members’ future needs. Although many of a credit union’s data sources are well-positioned to provide both snapshot and trending analysis, three stand out as most accessible and insight-rich.
ACH direct deposits. Looking into recent changes in members’ accounts is an excellent option for snapshot and trending data. Using accessible core data, credit unions can quickly identify those members who may have experienced a change in income, and also, to what degree that change is impacting their overall financial health. Armed with those lists, credit union teams can begin to proactively reach out to members with education, advice and potentially even specialized credit products or modifications to existing loans.
Business intelligence. Direct deposit payroll that has suddenly stopped or decreased may indicate a lost job or furlough. Sudden or new 401K or IRA disbursements may be an early indicator of an impending financial emergency and cash flow needs. Segmenting by members who receive stimulus checks and others who are receiving new unemployment benefits is another easy way to quickly assess changes to income that can trigger proactive educational or lending offer outreach.
Data activation. This can be beneficial especially for lenders and underwriters who are working with new or adjusted debt-to-income standards. Not only does the data show how much assistance the member is likely to need based on most recent income, it can also help lenders access projected DTI to better make decisions on appropriate limits, terms and fees.
ACH direct payments. As the CARES Act and other forms of relief come into effect, many members will be given the option to hold off on debt repayment. Historical and snapshot ACH direct payment transactions can help credit union teams identify members who may need the most help and prioritize outreach and education.
Business intelligence. Student loan forbearance is likely to impact several of a credit union’s members. Credit unions should look to see how many of these members are exercising the option to pause not only these loans, but others, such as mortgages, auto loans and credit cards. Change in payments is not the only thing that can trigger credit union outreach. Comparing the total number of payments leaving the account to the total coming in can provide an opportunity to offer any number of products and services to assist members most at risk of negative COVID-19 impact.
Data activation. Various stimulus and relief programs may look like “free money” to some members, especially if they have not lost jobs or experienced other negative economic consequences. In reality, they could be the start of a slippery, debt-producing slope. Credit unions can communicate alternatives, such as setting aside the cash they would have put toward debt into a money market or savings account for a rainy-day event that may occur down the road. Other guidance credit unions may offer includes encouraging members to continue making payments to save interest, or to put the funds towards higher interest debt.
As credit unions make the difficult decisions to reduce hours, cut back services and even close some branches, it will be important to maintain a line of sight into how those decisions are impacting the membership.
Business intelligence. In normal circumstances, members have a tendency to transact in branches closest to work, not home. That behavior will be flipped on its head during the COVID-19 response, as more people work out of their houses. Zip codes compared with transaction totals can be a good way to keep a pulse on the adjusted branch strategy.
Data activation. Because the “opening up” of the state economies will happen in different phases and at different times, credit unions can leverage data to make more informed branch operations decisions.
Branch data. Branch data can help leaders make better data-driven decisions on updating hours, expanding services and re-deploying staff.
Acquiring insights from the above sources is a fast, effective way to help credit union leaders understand which members are most at risk for economic impact from COVID-19. Decision makers may also benefit from the layering of additional intelligence over the top of those insights. When time and data accessibility allow, credit unions can drill down even further by pulling in data from credit and debit portfolios, contact centers / CRM systems and even member credit reports. This will provide an even richer level of intelligence, allowing credit unions to strategize highly relevant, hyper-personalized assistance to its most vulnerable members.
If our data science team can provide support with finding the most important data among the sources you already have, please don’t hesitate to reach out.