Good use of analytics makes planning through uncertainty possible.
Reprinted with permission from AdvantEdge’s blog
One of the silver linings of the COVID-19 crisis is the prediction that economic recovery may come faster than similar downturns in the recent past. Less comforting, however, is the intense disparity of financial impact across member segments. Whereas some Americans have suffered deep income losses, others have thus far weathered the pandemic storm with few financial wounds.
Designing programs to accommodate members across such a wide spectrum has been and will continue to be a challenge for credit unions as we navigate the unsystematic reopening of local economies. With the help of insights from data analytics, however, credit union decision-makers will be in a much better position to help members navigate the winding road ahead.
Examine Global Predictions Through the Lens of Local Data
A good place to start is by lining up the demographic data of your membership with global expectations for job loss, economic impact, retail disruption and other forecasts. This will help your teams make predictions about how these trends are likely to play out in local neighborhoods.
For instance, analysts expect the millennial generation will be particularly hard hit economically by COVID-19. Understanding how many of your members were born between 1980 and 1997 can provide a decent predictive measure of the risk millennial impact presents to your credit union.
The same information can also point decision-makers in the right direction in terms of specialized products or programs to help millennial members pay their bills. If your membership includes few millennial account holders, but plenty of parents to millennials, you could consider a program that enables moms and dads to help their children through this tough time. A program like that may even serve as a foundation for a millennial outreach campaign when your credit union is ready to resume its aggressive growth plans.
Monitor the Health of Local Industries and Supply Chains
Expectations about how different industries may respond to a pandemic recession can also serve as a decent backdrop for forecasting member and credit union impact. If your credit union serves a select employee group or a number of SEGs, for instance, it makes sense to monitor the health of those industries, as well as the companies along their supply and distribution chains.
Arming your team with basic employment data on your membership in aggregate can help your leaders make educated assumptions about the degree to which your community will experience certain trends. It will also be helpful in terms of designing tiered programs to fit the needs of different member segments. A loan modification program, for instance, is not something your credit union needs to offer every member. Members who have been fortunate enough to maintain their income are not well served by skip-a-pay, loan deferment or similar programs.
Continuous Investigation Serves Long-Tail Needs
Because local economies are opening at different rates, it will be important to run your analyses frequently. Members furloughed one month may be going back to work sooner or later than expected. Businesses expected to shutter their doors may reopen more quickly than anticipated.
The key is to maintain a close eye on both snapshot and trending data and to empower your teams to respond quickly to the stories the data is telling.
During times of crisis, members need support in the moment; they also need advice to guide them toward what’s next. Data can provide the intelligence your teams need to provide immediate assistance while also looking ahead to prevent financial trouble down the road.
Keith Dunlap is managing director of sales for CUESolutions Platinum provider AdvantEdge Analytics, Madison, Wisconsin.