The proliferation of financial technology and mobile platforms are making it easier for the approximately 125 million credit union (CU) members in the U.S. to engage with their institution. In fact, these fast-evolving technologies are becoming a critical piece to their over-all customer satisfaction. According to the American Bankers Association, around 73 percent of Americans access their bank accounts via mobile platforms or online.
The continued growth in memberships, and new customer touchpoints are creating a perfect storm for credit unions who have become awash in data. This has led to missed opportunities not only for sales and marketing but also for customer satisfaction. And it has impacted their ability to create a better customer experience, an area where credit unions have always excelled. For example, the department managing checking and savings accounts might know John Doe, but the mortgage department might not because they have different information on John Doe or cannot easily see which products John Doe has enrolled in at the CU. John Doe might be married to Jane Smith, but because Jane chose not to take John’s last name, they may be defined as two different households in the CU database.
These disconnections are causing a ripple effect that can significantly impact a credit unions’ ability to cross-sell, up-sell, or even scale. It can also hinder their ability to perform critical growth initiatives like “Customer 360.” Search online for the phrase Customer 360, and you’ll see thousands of products, articles, and research on how companies can achieve a complete, holistic view of their customers across the disparate systems that store such data. In these articles and white papers, authors make huge promises about how an organization can dramatically improving revenue by deepening the customer experience. As such, Customer 360 can at times be reduced to a cliché.
But as with any cliché, there is usually a grain of truth. Building a Customer 360 program can indeed transform the customer relationship for credit unions, leading to higher revenues through cross-sell and up-sell opportunities while improving customer retention. With all the software, applications and expertise at their fingertips, why do so many credit unions and banks fail to deliver on their customer-centric objectives? It almost always boils down to data; and, by that, I mean low-quality, fragmented, and ungoverned data.
Why Data Accuracy is Key to Helping CUs Implement a Customer 360 View
Let’s talk about Mr. John Doe as an example. If a credit union or bank does not know who the proverbial John Doe is, there is no way to effectively achieve a Customer 360 view. Because most banking institutions have multiple back-end systems to manage their business operations — and heavily use third-party vendors to manage transactions — golden records management and the creation of a unique record as an index is even more important. This is because there is no way to connect and enrich data without an index, so simply throwing customer relationship management (CRM) systems and databases on top of sloppy data will not fix the underlying issues.
Without golden records management, the struggle to identify and understand John Doe will persist, which limits loan underwriting effectiveness and other line of credit decisions. Underwriting loses visibility, and it becomes difficult to systematically determine not just what the John Doe in question has purchased but also his credit risk. This is because the underwriting databases and risk models populated from third-party data sources and internal company data cannot easily be linked together or to the “core” transactional systems. Had these systems been connected, if John Doe has a mortgage and is a good risk for another loan, the financial institution could offer him a promotion for a home equity line of credit, a checking account, insurance, or a wealth management product. The ability to truly perform Customer 360 is particularly important for multi-line financial institutions because it only makes sense to extend the product portfolio to as many customers as possible, particularly those with the highest value. It also helps with processes around Anti-Money Laundering (AML) and Know-Your-Customer (KYC) standards because these regulations involve customer attributes also linked to Customer 360.
Reaping the Benefits of Customer 360 Efforts — How MDM Can Help Maintain that Personal Touch
Because banking is such a competitive industry, taking care of the customer (or member for a credit union) is not optional if a credit union or bank wants to grow profitably. Competition simply does not stop, particularly when the playing field is being leveled with the rapid adoption of new technologies. However, many of these solutions only reinforce barriers to Customer 360 because of disconnected siloes of data. But what constitutes master data and how can the credit union leverage it to achieve the golden record of the customer?
Master data is the static or slow-moving data referenced by business processes to carry out transactions. Customer, loan type, loan officer, program and other dimensional data elements that rarely change are examples of master data and are used to issue a loan, process loan payments, open accounts, enroll in promotions, pay commissions, and conduct the business of a banking institution. Master Data Management (MDM) is more than a specific technology; it is also a function and discipline around technology to ensure the uniformity, accuracy, availability and governance of data. In fact, a central aim for any MDM solution is the creation and management of golden records, manifesting a single view of an organization’s master data. A less understood, but equally beneficial, capacity for MDM is its ability to help credit unions set up custom hierarchies to relate and associate data across products, location and even households.
By having unique identifiers, a lender can connect and enrich data, efficiently and cost-effectively in ways that were previously not thought possible. Reference data, the data used to categorize and classify information, can be brought in from third-party data providers, internal banking data like payment history or both to better reflect the business landscape, such as who makes up the household. Using the John Doe example, a well- integrated MDM solution, enables the credit union or bank to optimize both the channel and cross-selling in one campaign.
This capability to structure and relate accurate and trusted data is why MDM is so important to enabling Customer 360. Banking has always been a data-intensive operation. Traditionally, the focus has been on product-level detail and not an aggregated customer-account view. Efficiently and effectively managing master data is the critical step needed to build a foundation for Customer 360. Correcting, connecting and unifying data is the path to achieve the true view of the customer. The goal with MDM is to make sense of the huge amounts of data being collected — and if a credit union or bank cannot see who John Doe is at the personal level, then it cannot relate all the data about John Doe from all the CU’s disparate systems. Core transactional systems do not do a good job of locating and defining John Doe and without the golden record, a credit union or bank cannot achieve a complete view of the customer
Mastering data is critical for credit unions and banks to take full advantage of market opportunities, create stellar customer experiences and to stay agile in an ever-changing business landscape. MDM also connects all this data to help credit unions build competitive advantages. The financial benefits are real, and they can be substantial to not only improving growth but also creating the friendly and engaging relationships credit unions are known for.
About the Author:
Harbert Bernard is the Global Director of Value Management at Profisee, a pioneer in master data management (MDM) solutions. To learn more, visit www.profisee.com or follow the company on Twitter @Profisee.