The amount of data in the world is growing exponentially as a result of the detail and volume of data captured by businesses, the rise of multimedia and social media, and the prevalenceof the Internet. According to a McKinsey Global Institute estimate, in 2009 companies with more than 1,000 employees in nearly all sectors of the United States economystored an average of 200 terabytes. To put that number in perspective, that is more than twice the amount of data Wal-Mart Stores Inc. held in 1999. In May 2011, an MGI report predicted big data would become a key basis of competition and growth across every sector of industry, with finance especially well-positioned to gain from its use.
Big data makes information more transparent and actionable, improves decision making, and allows managers to collect accurate, detailed information on everything fromproduct inventory to sick days. Big data helps companies boost performance, expose weakness, and tailor products and services. Big data is essential for the development of the next generation of products and services; however, its demand is outgrowingthe supply of analysts with the skills needed to review the numbers and create progressive solutions. Credit unions would do well to educate interested employees many local colleges and universities offer training courses and create in-house specialists or offer incentives to recruit top talent from outside the institution.
The McKinsey Global Institute predicts big data will become a key basis of competition and growth across every sector of industry.
Big data presents nearly limitless opportunities. Here are two examples of how companies are incorporating big data into their strategies. Use these case studies to begin a dialog with your management team about how to better serve members by using the data already at your disposal.
According to a February 2012 article about big data in The New York Times, retailer giant Target assigns its regular customers an ID number, then tracks their purchases and collects data such as age, estimated salary, and frequently visited websites.The more Target knows about the customer, the more precisely it can tailor advertisements and coupons to earn higher returns. Although several factors contribute to the retailer’s success, its sophisticated use of big data helped land it a spot at No. 78 on Forbes‘ list of the World’s Most Powerful Brands.
What do you know about your members that might inform your marketing strategy? Payments data isa great place to start learning more about your members. For example, a member that has greatly increased their patronization of retailers such as Buy Buy Baby, Babies R Us, and Diapers.com is likely preparing for a major life event. Do you have theproducts and services needed to help a growing family? More importantly, are these members aware of your full suite of offerings?
If you have birthdates, then you can determine when members need to start saving for college through a 529 or start borrowing for college through a student loan. Members with school-aged children might be interested in a back-to-school loan. Members withyoung children might be interested in a holiday savings product. Take advantage of the data you already have, but be sure to remain respectful of your members’ privacy.
Nothing Simple About This Juice
In February, Bloomberg Businessweek peeked inside the great lengths Coca-Cola Co. takes to ensure the quality of its Simply Orange orange juice. The drink’s recipe calls for satellites, complicated data algorithms, a 1.2-mile juice pipeline,and hand-picked oranges from Florida and Brazil. Coca-Cola monitors its growers via satellite imagery to ensure fruit picking coincides with bottling plans. And the beverage company uses an algorithm it has coined Black Book to controlthe taste of the juice from acidity levels to pulp content.
Revenue analytics consultant Bob Cross, who is known for building the model Delta Air Lines uses to maximize revenue per mile flown, created Black Book. According to Businessweek, the process requires analyzing up to 1 quintillion decision variables.Cross and Coca-Cola use their data to control the ultimate variable, Mother Nature, and produce an optimal product regardless of time or location. The growing season might be only three months long, but Coca-Cola uses big data to deliver a consistenttaste year-round.
How can you apply Coca-Cola’s strategy which is all about gathering and applying contextual data to your local market?At most credit unions, you know more about the financial environment than your average members, so use that knowledge to help members make decisions about things they might not see coming.You understand the rate environment, you have data on housing starts and employment how can you use that data to benefit your members?
What Does Big Data Mean For Credit Unions?
Credit unions across the industry are already applying big data to help support sales, operations, and strategic focus. How is your credit union preparing to be a partof the data-driven future? How do you see big data shaping the industry? Please use our comment box to weigh in on the discussion.