Let's Talk Credit Unions: 360-Degree View of a Member

One of the key steps of a credit union’s digital transformation journey is to enhance member and employee experience across online and offline channels. Providing a complete 360-degree view of members is the starting point; most of the CRM platforms have capabilities to deliver this feature.

Let’s begin with understanding why credit unions as financial institutions need to have a 360-degree view of a member and why they need to collect all the information at the beginning.

There are three major reasons for credit unions to have a comprehensive profile of a member. The first one is the nature of the industry. Financial institutions are often required to have certain information about their clients/members in order to offer financial services. There are many regulations around KYC that were initially designed to prevent illegal financial activities. Money laundering is a major issue that led to the strict regulation of financial services. According to the United Nations Office on Drugs and Crime statistics, in one year, 2-5% of global GDP (or $800 billion-$2 trillion) is being laundered. In order to minimize such activity, financial institutions are required to compile complex profiles.

The second reason is risk management. B2C financial services are naturally associated with risks, which leads to a necessity to forecast that risk in order to diminish it. For a financial institution to decide whether it can provide a particular service or not, it has to access the return on providing that service. It only makes sense for a financial institution to provide a service if it is financially feasible and the benefits overweigh the risks.

Last but not the least: cross-selling opportunity. The ability to understand the history of the interaction of credit unions with members can help with future offerings. Suitable offerings have a higher chance to convert into profit rather than irrelevant ones.

The comprehensive view of a member is a major factor in efficiency. The Credit Unions Times shared statistics from Callahan & Associates, Inc. on credit union efficiency by asset size. The ratio measures how much money it takes a credit union to earn $1 of revenue. The less a credit union spends earning each dollar, the more efficient its operation and the better its use of resources. In order to operate effectively, credit unions need to have a comprehensive understanding of the members and their needs.

Credit unions with assets of $2 billion and more (Merck Employees FCU and APCO Employees) have lower efficiency than the ones with $30 million assets (Nephi Western Employees FCU). Overall, efficiency rates are roughly between 25% and 40%.

Other interesting results published by the CU Times stated that the largest credit union on the list, the $6.7-billion Star One Credit Union based in Sunnyvale, California, came in at 13th with an efficiency ratio of 41.3%. The smallest institution, the $23.8-million Consumers Cooperative Federal Credit Union in Alliance, Nebraska, ranked 19th with a ratio of 44.2%. To compare, the efficiency ratio provided for 100 US banks with assets between $500 million and $2.5 billion by BankRegData varies between 33% and 88%.

Given that 50% is an optimal maximum efficiency rate, some credit unions are better off in terms of utilizing their resources. However, there is a room for improvement for credit unions that are close to the optimal efficiency ratio maximum. Credit unions represented in the chart have assets over 20 million, but there is a variety of credit unions with smaller assets and higher ratios; these are the credit unions feeling the urgency of CRM transformation.

Now, we can move from the reasons to the operations and granulated pieces of information to collect about the members. Before the employees can access the 360-degree view, they must search the members and authenticate them. It is important to make this experience easy and seamless for the call center and branch employees. This can be achieved using out-of-the-box search features from CRM platforms or by building a custom search functionality, which will allow employees to search members by their member number, first name, last name and the last four digits of their SSN combination.

Once the member is identified and authenticated, the employee will be taken to a single 360-degree view of that member so that at one glance, the employee can know everything about the member to serve them.

Key components of the 360-degree view:

  1. Member Profile: name, SSN, birthday, credit score,
  2. Membership Accounts: membership account number, member since
  3. Authentication Parameters: passcode, maiden name or other authentication parameters
  4. Contact Information: address, phone numbers, email address
  5. Employment Information: employer, employed since
  6. Income: income details
  7. Risk Indicators: bankruptcy, fraud, charge-off, collections, security, overdrawn
  8. Relationship Indicators: investment, insurance, bill pay, online banking, mobile banking, e-statements, P2P, rewards, wires, etc.
  9. Accounts: list of accounts, relationship type, current balance, amount due, next payment
  10. Service: recent case submitted across all channels
  11. Sales: recent leads, opportunities, and applications submitted across all channels along with the lead nurture score
  12. Notes and Attachments: notes and comments across all channels
  13. Online and Offline Activities: recent activities from analytics, phone calls, and branch visits
  14. Transactions: recent transactions across all channels like ATM, online, branch and call center
  15. NPS Score and Feedback: net promoter score and online and offline feedback
  16. Offers: next best product and next best action offers for members based on business intelligence.

Having a 360-degree view of the members not only provides a clear snapshot of member profiles but also allows the employees to identify fraud activities that can prevent financial and reputation impact on the credit union. One of the technology credit unions in Bay Area was able to avoid $1M worth of fraud activities on the first year of the implementation, which signifies the effect of optimized and integrated member relationship management.