“I want credit unions and financial brands to think about the cost of inaction,” she argued. “The cost of standing still is a defined cost.” -Anne Legg

Your financial brand probably has more information about its customers now than at any other time.

So, what are you doing with it?

Fewer than 30% of financial institutions have long-term data strategies in place. They’re collecting mountains of data and then…doing nothing with it.

Anne Legg, founder of Thrive Strategic Services, wants to encourage financial brands to stop standing still. She’s the author of the book Big Data/Big Climb, which is designed to help credit unions and financial brands improve account holders’ lives through data.

Educating and Inspiring Through Data

Education is at the core of Anne’s company and mission. She and her team at Thrive Strategic Services are helping financial brands maximize digital growth potential through data. 

She’s particularly excited about a major project helping credit unions leverage data to improve member experiences. Although the concept of “analyzing data use cases” might sound a little dry at first, it’s fascinating work for Anne’s team to dig into the details and see how data is improving people’s lives.

Plus, it’s fun to educate eager financial professionals. When they build a foundational understanding of what they can do with data, boundless opportunity arises. They get excited about ideas like reducing member friction, which reliably leads to better member experiences.

What’s Your Financial Brand's Biggest Friction Point?

One of the most common points of customer friction at financial brands is making people sign their names on too many documents. It makes them feel that they’re doing repetitive work and erodes the pleasure of an otherwise pleasurable experience.

Anne explains that friction has three key aspects: product, process, and people.

A simple frustration, like signing for too many things, slows people down in the process and reduces their enjoyment of the product. When Anne can help financial executives understand this simple but complex concept, it’s the first step in developing the right mindset for transformation.

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And one key thing to remember: having a strategy is different from having tools.

Tools should be secondary to strategy, and the strategy should be leading the overall action plan. Tools are just there to bring the strategy to life.  

Why does this distinction matter?

Because your strategy so strongly impacts the ultimate focus of the process: your customer. A financial brand holds tremendous power to improve the financial lives of its customers by reducing friction. 

Unfortunately, many financial brands are wasting this opportunity. They are customer service-focused, but they’re not focusing on the customer. They’re gathering massive amounts of data, but they’re not using it to benefit their customers’ lives. 

In short, they have a lack of data strategy.

The Four Main Financial Problems

Anne has seen research showing that 70% of financial brands don’t have data strategies in place, a fact that she finds extremely frustrating. It means they’re probably ignoring one or more of their customers’ main financial problems in life.

Here are the four main financial problems all customers tend to share:

  • A shelter problem
  • A transportation problem
  • A travel/play problem
  • A rainy day/retirement problem

As your customers live their daily lives, they encounter symptoms of these problems. For example, their car breaks down and they don’t have enough money to pay for the repairs. They have a transportation problem.

At this point, the person begins to experience increased financial friction. Will their bank help them resolve this problem with minimal friction? Or will it add even more friction to the process?

Understanding Data Governance

To understand how data factors into this equation, you must first understand what data governance is. It involves setting policies and standards for gathering, storing, and using data within your organization.

“You’re already doing data governance,” Anne says, “when you’re doing loan governance. You know the sources of your information, the quality of it, and so forth. If you understand loan governance, you already have a basic understanding of data governance.” 

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Anne is always happy to see financial executives look at their customers and wonder what kinds of information they need to reduce friction. “That, my friends, is all gorgeous data,” Anne says. 

James Robert suggests thinking about data governance as a sort of “front stage, backstage” concept, like a Broadway play. Your front stage is only as good as your backstage. Stagehands are adjusting the curtains, controlling the lights and audio, and avoiding missed cues. If everyone isn’t working together in harmony, you can’t accomplish an outstanding performance.

In the financial world, a lack of capability is often found in talent. Perhaps the financial brand lacks tech-minded thinkers or doesn’t have a data expert on board. As a result, they always struggle with certain aspects of the “performance” and the audience senses they’re not experiencing a top-notch production.

Thinking Beyond 90 Days

It’s common for financial executives to focus on the upcoming 30 to 90 days. When Anne suggests that it’s time to develop a 5-year data strategy, people often look a little shocked.

Making a data strategy plan that stretches out 18 to 24 months isn’t as hard as you might think. It’s where Anne starts with her new clients. This phase involves tools, components, testing, checking, and governing.

What’s more challenging and intimidating is making a plan that reaches across 5 full years. Particularly in the COVID era, people are reluctant to make long-term plans.

This is one of the reasons why Anne often brings up the idea of “making our members sign less.” It’s a simple step that can usually be accomplished in 60 to 90 days. Helping members sign less encourages a credit union to feel the wherewithal to accomplish more transformative feats in the future.

Focusing on Your Account Holders' Pain Points

If your organization is struggling to focus its data strategy, start with the pain. Your customers’ pain points are like red flags waving around in need of attention.

James Robert predicts that in the coming year, with economic strain, the main pain points will be “the two Gs”: gas and groceries.

What can financial brands do to help with the two Gs? 

Anne explains that someone who was buying most of their groceries from Whole Foods a year ago might have switched to Costco or even 7-Eleven. This shows a significant shift in their shopping behavior and a pattern change that’s detectable through data.

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Food and fuel are also necessities that are often handled through ATM transactions. Rather than making a big purchase on an entire grocery shopping trip, someone might withdraw $20 from an ATM and see how much food and fuel they can buy with a small amount of cash.

This is what James Robert calls digital anthropology.

Just like an archaeologist who digs through an ancient site and dusts off artifacts, a digital anthropologist digs through data to understand how people live.

How’s Your Financial Brand's Data Culture? 

Your financial brand’s data culture is essentially how its staff and customers consume data. It includes your key performance indicators (KPIs), operations, and descriptive data, which is data that explains consumption.

Anne suggests building a basic understanding of your data capability. Ask questions like: 

  • How well are you innovating? 
  • Do you have a formalized data capability plan? 
  • Do you have informal data structures in place? 
  • What insights are available to help you take action?
  • What’s your data consumption like?
  • Are you using a forward lens, a backward lens, or a current lens?
  • How do you innovate?
  • Do you have a growth mindset?

James Robert explains that a growth mindset is about more than just being open to growth and change. You must be capable of continuously learning, gaining new perspectives, and actually acting on your mindset shifts. He recommends Peter Diamandis’ book, Abundance: The Future is Better Than You Think, to understand the growth mindset.

Why Data Silos Inhibit Transformation

Information technology (IT) experts usually manage data at financial institutions. James Robert recently worked with a marketing team that expressed irritation over the fact that “IT owns the data.”

This situation creates a cultural conflict and prevents open, transparent information sharing within an organization. The marketing department wants to learn about the data and use it to provide better customer experiences, but IT keeps it under lock and key.

James Robert sees this type of ownership thinking as a major roadblock to maximizing a digital growth strategy. He asks Anne whether she finds the same thing in her work. She says she tends to think of various departments as disciplines of knowledge.

“What we have to remember is each discipline is a data steward,” she says. “Whether you're front stage or backstage, you are all doing that. That is your common language. So why don't we talk about the member's language and not who owns the data?”

When you view yourself as a data steward, you stop worrying about keeping data away from people and start being more proactive about helping them access it. Anyone who works with data in your organization - including IT and marketing - should use a data stewardship approach that welcomes colleagues into data analysis.

Budgetary Boundaries

James Robert and Anne commiserate over the impact of budgeting on data strategy. They’ve both heard financial professionals lament that they value the importance of using data and having a data strategy, but they just don’t have the budget to address it.

Anne suggests adjusting your mindset by asking.”What is the cost of no action?”

Standing still comes with defined costs. You’re missing out on opportunities. Competitors are wooing your customers. You’re tarnishing your reputation.

You’re getting left behind in the digital marketplace.

“I love to pull a little beautiful page from technology,” Anne says. “What is my minimal viable product to maintain momentum? My MVP?”

Maintaining momentum requires action. You can’t stand still and refuse to spend money and then wonder why you’re getting left behind.

The Concept of Community

Many community banks have a strong focus on assisting people and supporting community service. But they somehow forget their community focuses when it comes to data-driven decision-making.

In practice, this means someone with a bad credit score doesn’t have a lot of options for getting help from their community bank. The bank doesn’t view itself as a problem-solver for someone without a good credit score. Despite all the helpful data they have about this person, and despite their position of power, they leave their customer dangling.

“Honestly, when it comes to community and common bond, the seventh cooperative principle is concern for community,” Anne says. “I mean it's like, dude, it is in your principles. It's in your founding principles.”

Long-Term Data Strategy: Your Top Takeaway

So what can any financial brand do to improve its long-term data strategy?

“I would like for them to ask one simple question,” Anne says. “Ask it of your leadership team, ask it of your departments, and ask it of your frontline. What is the friction the member has doing business with us?”

Create a top 10 friction points list and have each member of your leadership team circle the friction point they believe is creating the most friction overall. This simple act of having them circle their top choice could be the first step to building their buy-in for creating a better data strategy.

Now compare your top executives’ #1 friction picks with the #1 picks from your department managers, then your frontline customer service workers. Do they all have the same picks or are they completely different?

This is the first step in assessing your data culture and beginning to understand your data capability. From there, the future is wide open as you build your unique long-term data strategy.

To connect with Anne Legg, please visit anneleggthrive.com or look up Anne Legg on LinkedIn. For more about financial transformation, reach out to James Robert Lay at the Digital Growth Institute.