The Fast Track to Actionable Insights: How Credit Unions and Banks Can Find Immediate Value in Their Data

Banks and credit unions operate in an increasingly competitive environment where customers have more options than ever, and loyalty is dwindling. Yet many financial institutions may not realize the full impact of attrition and often focus on acquiring new customers as current ones leave out the back door.

Most banks already have the data they need to spot trends and unlock opportunities but struggle to turn it into actionable insights. The traditional data maturity model of implementing a data warehouse and customer data platform can cost more than a million dollars and take years to produce a return on investment. This puts many in the tough position of either embarking on an expensive, time-consuming upgrade to yield results or weaving together point solutions with subpar results.

Fortunately, an innovative CRM solution can meet banks and credit unions wherever they are in their data maturity journey and put them on a fast track to success. By unifying data, surfacing insights, and making them actionable on one platform, banks and credit unions can immediately realize value.

Declining Loyalty and Customer Attrition

The banking industry has undergone tremendous changes in the past decade. Technology and online banking capabilities have created new competition, forcing community banks to compete with neobanks nationwide. This comes at a time when changing economic conditions are pressuring balance sheets and margins at many financial institutions.

Meanwhile, customer loyalty is declining. An increasingly competitive environment, rising consumer expectations, and the ease of changing banks mean it’s no longer a given that customers will stay glued to the same institutions for decades. Across the industry, many banks and credit unions are losing customers through “silent attrition,” a trend in which customers retain their accounts but open new ones at other institutions.

Banks and credit unions often aren’t even aware of the extent to which challengers and fintechs are eating away at their potential loans and deposit growth. For example, a customer in the market for a new vehicle may opt for a well-known auto finance alternative without consulting their primary bank. Other customers may move money to a fintech for services they didn’t know were available at their bank. While these customers may not present any red flags on paper, they are slowly migrating to other providers, representing a significant source of foregone opportunities.

Many banks and credit unions primarily focus on gaining new customers while failing to fully optimize relationships with the ones they have. This leaves the financial institution operating like a leaking bucket, where one or more lost opportunities offset every new customer. Even in a best-case scenario, the bank’s customer base and deposit balances may only hold steady with little or no growth.

Yet banks and credit unions are often losing more than they realize. With an average churn rate of 6-8% and a member base of 80,000 to 120,000 customers who produce an annual $300-$500 in revenues, a bank could lose between $2.6 and $9 million annually. When considering the opportunity costs of lost cross-sell capabilities, they could lose up to $40 million annually in untapped potential.
Even more important is that it’s far easier and more cost-effective to salvage and expand relationships with existing customers than to acquire new ones. By adopting a growth automation strategy, banks and credit unions can find a faster road to value by boosting profits and reducing attrition by focusing on existing customers.

Core Upgrades are a Long Road to Value

The traditional path of upgrading legacy infrastructure and re-working the entire ecosystem can be expensive, time-consuming, and take years to yield a return on investment. In a typical data maturity model, banks may start by adopting a data warehouse to pull everything together. From there, they will then tie it to marketing automation and a CRM to begin extracting and acting upon insights. Yet this journey can cost over a million dollars and take years to implement.

Facing multiyear projects with high costs and a slow return on investment, some banks and credit unions forgo the process and instead rely on antiquated solutions to try to address complex modern problems. Others adopt dozens of point solutions that yield marginal benefits but still leave siloed systems that cannot identify the actionable insights they need. Both approaches are temporary band-aids that do not fully address customer needs and solve the underlying problem.

Meanwhile, banks and credit unions that sit on the fence continue to lose customers to the competition and silent attrition. It is no longer good enough to offer a solid banking experience; banks must actively engage customers, deepen relationships, and predict their needs to target them with valuable and relevant offers. One survey found that nearly 60% of consumers expect their financial institution to help them improve their financial health. By taking an active approach with their customers, banks can prevent attrition and cultivate “stickier” and more profitable relationships.

Whatever path a bank and credit union takes, data is the primary foundation to better know and understand customers. Banks need a 360-degree view of accounts, transaction information, and other data to identify behaviors, trends, and actionable insights. More importantly, they need a solution that offers a fast road to value by enabling them to act on insights now.

Immediate Insights and a Fast Return on Investment

Before striving to transform the entire data landscape and doubling down on the core with a million-dollar data warehouse or CDP, banks need a means to immediately draw some insights and begin acting on what they already have.

Fortunately, an innovative solution now enables banks to obtain insights with minimal friction to start making an impact today. The Core Model Platform approach enables a financial institution to tap into its existing data, draw insights, and immediately execute on it with the adjoining CRM and marketing automation platform. As the cycle completes, information is fed back into the system to create more insights.

CRM Next is the only software solution that can unify data, surface the insights, and make it actionable, all in one platform. This is enabled by two decades in the market and vertical expertise in integrating with banks and credit unions. Whereas the traditional model can take years to break even, we can get to value in as little as six to eight weeks.

The Core Model Platform also works with banks wherever they are in their evolution, even those who have already invested in a data warehouse or CDP. Banks and credit unions can immediately gain insights to cross-sell and improve their conversion rates, building loyalty and reducing attrition in the process:

• Right segment: Financial institutions gain access to demographics to find purchase behavior and overlay segments on new leads.
• Right Product: With pre-qualification, they can identify the next best product to be sold to the segment and generate ideal customer profiles by product.
• Right Conversation: Offers information access, coach texting, and playbooks.

Actionable insights can help improve the customer experience, reduce the risk of attrition, and increase profitability. One way it can do this is to help identify warning signs, as there are often triggers in the data that enable banks to act. For example, a customer who turned off their auto pay and recently visited a payday lender may soon have trouble paying their auto loan. The bank can now pre-empt this by offering a skip-a-pay option. Actionable insights can also help banks pitch a “next best offer,” such as a mortgage, lower interest rate card, auto loan, or high-yield savings account.å

Conclusion

Banks and credit unions can no longer afford to spend years upgrading their core or fumbling with point solutions and spreadsheets to find the right opportunities in this competitive environment. The most viable path forward is to adopt a single solution offering immediate value with a growth automation plan that includes strategy, process, and technology. Our data strategy prioritizes fast time to value so banks can use their return on investment to scale and drive future initiatives.