How Data Analytics Helps Peoples Advantage Fulfill Its CDFI Mandate

Peoples Advantage Federal Credit Union ($92.3M, Petersburg, VA) is more effectively meeting its mission as a community development financial institution thanks to a deeper dive into data analytics and taking steps to ensure all team members are on board.

The credit union completed a core conversion in October 2020, automating a data analysis process that was previously managed through manual extracts and separate uploads to an analytics platform. Although PAFCU still uses the same analytics platform, the core conversion automated the uploading process. The end result, says CEO Amanda Habansky, is that rather than focusing on a time-consuming process of pulling data, staff and management can focus on what that data tells them.

A key component of that has been maintaining CDFI certification by ensuring that membership and lending are targeting designated CDFI census tracts.

“For us, it was kind of like hope and pray that when the certification time comes we have the right strategy and the right target,” Habansky says of the old method. “Now we can look at our membership and our loan origination month over month and know exactly where they are. Not only to retain certification but to really assess if it’s a good strategy for us short-term, and, long-term, are we on the right track based on the ever-changing demographics of our market?”

From a practical perspective, a better data analysis process has allowed the credit union to gauge how it serves consumers in nearby CDFI census tracts to judge whether it needs to tweak its marketing to better reach potential members who haven’t joined. For existing members, staff at all levels can now see credit score migration patterns to better determine risk levels when underwriting loan applications.

“Prior to having this data across the organization and at our fingertips, setting loan goals and loan strategy was always isolated to the executive and management team areas,” Habansky says. “It was hard to communicate across the organization that we don’t just throw a dart at a bulletin board and say, ‘That’s your loan goal for the day.’ Being able to see the loan portfolio and how it shifts over the months and the calendar year empowers the team to understand member behavior so they buy into the culture it takes to be successful in this space.”

Loan growth at Peoples Advantage has fluctuated over the past several years, rising through much of 2017 and 2018 before falling substantially beginning in the first quarter of 2019. Lending has been on a rebound of source since bottoming out with -16.5% growth in the first quarter of last year, and by year-end 2021, contraction of the loan portfolio was limited to just -3.4%.

“COVID was brutal for us, just like everyone else,” Habanksy says. “We didn’t have great loan growth for the last two years, and part of that was conditions beyond our control. What we’ve been able to do is home in on what we can control and get buy-in by setting strategic membership goals or production goals from the loan side. It goes back to not throwing a random target up for the team to meet. It’s Hey, this is how we have to grow and continue serving the members who need us most. Then show that data in a way that [staff] can digest.”

Although loan growth remains in the red, some areas are growing. First mortgages, for example a relatively new offering for Peoples Advantage were up more than 60% in 2021, surpassing the $7 million mark. And even though the credit union closed out its auto loan portfolio with a double-digit decline, analytics tools have helped staff members better understand how quickly those loans roll off the books, Habansky says.

One of the biggest takeaways for Peoples Advantage has been that a successful data analytics program doesn’t have to be daunting.

“You can have a tremendous impact if you take the data you have and deploy it the right way,” Habansky says. Don’t let it scare you. “Get in there, roll your sleeves up, and go for it.”

Vendor partners have helped PAFCU make better use of its data, but the CEO notes that those partners are there exactly for that reason.

“You can lean on your resources and they can provide information to support things you’re already doing,” she says.

That’s particularly important for small credit unions, which might think they don’t have the resources to go all-in on data.

“I’m not going to pretend that we have mastered data analytics that’s not even close to the truth,” Habansky says. “But we’ve been able to leverage what’s important to us now to see what needs to be important to us in the future.”