Credit unions need big data insights

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The Members Group, a card processing Credit Union Services Organization, and Card Services for Credit Unions, an association of credit unions, are calling on credit unions to adopt big data to help manage their card portfolios.

The Credit Union Times this week said companies need to start analyzing the payment behavior of card holders if they want to increase the cardholders use of the credit union's card or market them to potential new customers.

The two groups mentioned above wrote a whitepaper outlining case studies where big data helped a credit union re-evaluate lower value accounts and focus more sharply on accounts with higher potential profit. Such moves could avert unpopular rate increases.

Todd Herren, CTO at TMG, told The Credit Union Times that most credit union executives think primarily about demographics and not data collection. If CUs knew what card holders were using their cards for, they could market to them appropriately, he said.

However, Ron Shevlin, senior analyst with the group, said recently on The Financial Brand that the empirical proof is missing from most claims about big data and that financial marketers should dodge the "big data" trap. The marketing effectiveness has just not been proved, he said, and the challenge of data integration is still very real, as is the problem of finding qualified data scientists.

"Yes, it's true that analyzing data can produce insights that can help produce improved marketing results. And I'll concede that incorporating new types of data, and in more timely ways, could improve the quality of insights," Shevlin said.  But the analysis process--the ability to identify consumer needs and intentions based on their behaviors and actions--at best only partly determines marketing effectiveness," he said.

He said 2013 is the year of the big data fad and that "smart execs should ban abstract fads like 'big data' from all management conversations, and force executives to talk in terms of concrete problems and specific technology solutions."

For more:
- see the Shevlin article

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