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Our Community Credit Union joins growing list of CU Rise Analytics clients to access powerful predictive models

Posted on May 2, 2019 at 12:45 AM

Today, credit unions operate in a landscape dramatically impacted by technology. Customer expectations are rapidly evolving, and deep analysis of the ever-growing amount of data is a crucial strategy for credit unions that want to understand members’ needs and behaviors, and proactively respond in targeted, effective ways.




Bert Fisher, CEO of OCCU was impressed with CU Rise’s ability to help them effectively target efforts with the most return. “CU Rise analyzed last year’s member attrition data in the Predictive Model Suite and revealed the ways we could have more narrowly focused our efforts. We immediately realized that this not only provides huge cost-savings, but we expect to get better results from more targeted efforts. This is a big step in our analytics evolution and we expect CU Rise to be a crucial partner at each step.”




Currently, the Predictive Model Suite includes a set of ready-to-use models along with the option to custom build additional models built around OCCU’s specific needs. The suite synthesizes a multitude of factors drawn from the members’ demographics details, behavioral traits, transactional history and relationship with credit union to generate easily-actionable intelligence, reports and lists.


This article was originally purblished on CU Insight.

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Three Ways for Credit Unions to Overcome Decline in Deposit Growth

Posted on March 20, 2019 at 9:35 AM

Credit unions in the US have been witnessing a steady increase in membership since 2010. Average annual membership growth has been ~4% in the last 4 years. On the contrary, the deposit growth has shown a decline since Q3 of 2016. The deposit growth rate was recorded at 4.87% in Q3 of 2018 compared to 8.44% of Q3 of 2016.


Around 40% of the credit unions have reported a decline in deposits in 2018 which amounted to ~$3 billion on a YoY basis. Chartway credit union (Virginia) showed the highest decline ($120 million) in the deposits in 2018 whereas in 2017 Melrose credit union had the highest decline in deposits. To find more about declining deposits, refer to our article Are Credit Unions over-extended; Again? Impressive loan growth, Alarming deposit growth




Focusing on increasing deposits is essential for sustainable and profitable growth strategies. With increasing, Federal Funds rate in recent years, achieving adequate deposit growth is the best way to manage the rising cost of funds to attain the lending goals with a lower borrowing requirement.


It becomes more and more important to bring in funds/deposits organically with rising rates and delinquencies. For competitive lending, credit unions must find ways to generate new deposits and retain existing deposits. Here are a few ways that could help in growing deposits for credit unions.



1. Changing Deposit Product Proposition


Thinking of new and innovative products has become a need of an hour. Redesigning existing products with new features can also do the trick as it did for a California based credit union with $500M of asset size and 30k members. They launched a new checking product with a low monthly fee of $6-$8 and loaded it with a lot of money-saving benefits. The salient features being offered are:


  • Rebate on all debit card transactions
  • Fee Waiver offer
  • Increased dividend rates
  • Special money-saving offers for Loans and Share Certificate rates
  • Value-added benefits


Within 6 months of the product launch, it has created strong interests among members. Credit union saw 20% conversion from the basic no-fee checking account to this premium checking account. Below is the impact post the product launch on credit union’s portfolio -


  • Average beginning balance for new accounts acquired through new product increased by 50% compared to older checking product
  • The low monthly fees alone helped credit union earn an additional monthly income of ~$50K
  • Debit card transactions were up by 30%
  • Average monthly balances have doubled


2. Deepen your Branch network


Adding new branches helps credit unions to expand their operations in new markets and attract new households and members thereby adding to the deposits with CUs. However, it seems growing branches for most credit unions is not a priority. The number of branches held by all credit unions was 21,830 in Q3 of 2017 and 21,874 in Q3 of 2018. Only 44 new credit union branches were added in a year.


Bigger credit unions are getting bigger and smaller credit unions are either shutting down or getting merged into larger credit unions. The numbers in the table below clearly show the trend. The credit unions with more than 10 branches have increased from 4.42% in 2010 to 7.92% in 2018 however credit unions with only one branch and smaller operations are experiencing negative growth.




17% of the branches belong to top 100 credit unions. The deposit growth rate for Top 100 is 7.34%, which is 1.5 times more than the national average.



3. Competitive Marketing Offers


Thinking through exciting marketing offers and offering them to the right members can accomplish a big win for credit unions. When a right offer is extended to the right member, it can entice the member to act and avail it thereby improving deposit balances with credit unions.These offers can be made in a variety of ways such as an introductory offer to new members where a joining bonus is awarded on a certain $s in deposits or a product bundling offer like one getting a fee waiver on credit card for on opening a checking account. Here credit unions can understand their members’ lifecycle, demographics, and transactional behavior to find the next best product for them. Identifying and forecasting a need for a deposit product at the right time for the member can help credit unions grow their balances.


Currently, many of the credit unions are introducing referral programs for member growth. On average, cost-per-acquisition for a member is around $100-$120 per new deposit account. Referral program often offers a cash benefit of $50 for referring and $50 for new member account opening, which is easier. Many of the credit unions have seen a positive impact on membership and deposit account growth using such referral programs.


Another way to keep their deposit balances from diminishing is to stop the members who are likely to leave the credit union. Sophisticated Attrition Models like the ones build by CU Rise can help credit union predict member attrition 11 times better than traditional methods. Re-engagement offers like providing free financial advisory services or monetary incentives on reactivation of their cards can go a long way in reviving relationships with lost members.


CU Rise Analytics welcomes two senior members to its growing team

Posted on January 31, 2019 at 4:05 AM


CU Rise Analytics was started in 2018 with a sole mission to help credit unions leverage the power of data to better understand, serve, and support their members in the most effective manner. It started last year with just two people and now grown to 30+ employees across India and the United States.




CU Rise is a value-driven, one-stop shop for not only credit unions’ detailed data analytics initiatives but also for best practices and advisory services. CU Rise operations have grown with new credit unions joining every quarter and the launch of its innovative flagship analytics products - CPMS (Credit Union Predictive Modelling Suite) and Householding for the credit union industry, both are offered as an automated self-serve solution to all OnApproach M360 clients.

 


 

To keep up with the growing requirements, CU Rise Management decided to hire Brian Reed and Neetu Saraf to lead BI and Analytics department respectively. CU Rise is excited to capitalize on Brian’s 20+ years of technology experience across industries and credit unions specifically. Karan Bhalla, CEO of CU Rise mentioned “Brian’s leadership and ability to drive large projects was instrumental in implementing and driving Business Intelligence function at 1st United FCU based in Pleasanton, CA. We expect our clients to benefit from Brian’s experience and achieve excellent results.”


 


Suchit Shah, COO of CU Rise says “Dr. Neetu Saraf holds 10 years of data analytics experience in the financial industry which makes her an apt choice to lead analytics engagements with our clients.” CU Rise team is confident that Brian and Neetu’s leadership and experience will help empower their clients and partners with forward-looking analytics strategies, products, and insights. She will be instrumental in translating client's requirement and delivery for our Analytics delivery"


Are Credit Unions over extended; Again? Impressive loan growth, Alarming deposit growth

Posted on December 27, 2018 at 9:10 AM

Increasing loan growth


After the sub-prime crisis, loan growth for credit unions started declining and in 2010 and 2011 the growth was negative i.e. more loans were paid off as compared to loan originations. Loan growth gained momentum in late 2011 and it has been increasing since then. As per NCUAQ3 2018 data, total loans for credit unions combined has reached $1.04T with a growth rate of 9.5% YoY., this includes $24.3B of loans of just the last quarter. The year-over-year loan growth rate for the credit unions has been over 9% for the last 4 years. Highest growth has been observed in auto loans, followed by unsecured credit card loans. The growth rate for Auto loans has been in double-digits for 6 consecutive years.



Deepening member relationships


Along with increase in loans balances, credit unions are performing well on the front of strengthening relationships with their members too. Today credit unions serve more than 116 million members across the U.S., increasing at an average growth rate of around 4% for the last 2 years. Average relationship size per member with credit unions has reached $19k of which 45% comes from loans. For credit unions with an asset size of more than $1B, average relationship per member has crossed the mark of $20K and loan relationship per member is more than $10k. Credit unions have deepened the extent of their relationships with members in not only in auto loans segment but mortgage loans and credit card loans with increasing growths rate year over year.


Falling growth rate in shares




One side we are observing a continuous increase in loan growth rates and on the other the growth rate for deposit shares is slowing down. The increased competition in deposit interest rate offering and the desire to earn more returns, is driving members to prefer interest-bearing deposits like share certificate. The only share product with increasing growth rate is share certificates, and for all other products the growth rate has been on a decline as compared to prior years. Net liquidity change, which is calculated as the change in deposit and change in loans, has been negative for the last 6 quarters and has further declined in the recent quarter increasing the difference to $23B. Apart from net liquidity, another good measure of a credit union`s liquidity is Loan-to-Share Ratio. In Q3 2018, for all credit unions nationwide, average loan-to-share ratio is 85.63%. This is the highest rate reported till date.




Based on the economic and credit union forecast report published by CUNA, the loan-to-share ratio is expected to be as high as 87% in early 2019 due to loan growth exceeding deposit growth. This will be the highest value of the ratio since the sub-prime crisis. An increasing loan-to-share ratio, in turn impacts the liquidity of the credit union and this may contribute to economic slowdown reducing the loan growth in the upcoming year. Hence, key focus areas for credit unions while strategy planning for 2019 should be:

  • Improve member experience, and offerings
  • Increase penetration into younger generation
  • Identify right deposit mix for your credit union


CU Rise partners with Georgia's Own Credit Union on their Credit Card Program

Posted on November 29, 2018 at 4:30 AM

CU Rise Analytics is excited to be associated with Georgia’s Own Credit Union, a credit union with $2.4 billion in assets and over 188,000 members. Georgia’s Own has always strived to make lives of their members better by providing them the most competitive products and services possible. They take pride in giving back to members and communities in which they operate.


While Georgia’s Own has been utilizing analytics driven approaches to drive their decision making, recently they decided to engage with CU Rise, a data analytics CUSO, to help them implement a series of campaigns on their credit card program to increase engagement while still managing risk, starting with effective credit line management.


“Understanding the needs of our members is an integral part of what we do. We are happy to work with the talented team at CU Rise who is taking the time to analyze our membership profile and develop the right changes and strategies for our credit card initiatives.” said Dave Preter, President and CEO of Georgia’s Own.


Karan Bhalla, CEO of CU Rise Analytics, said “Working with leading credit unions like Georgia’s Own is a big opportunity for us to continue to improve our tested ways. A scientifically driven campaign rarely fails so we look forward to partaking in the growth and success at Georgia’s Own while helping them implement analytically driven strategies.”


About CU Rise Analytics

CU Rise Analytics is a Virginia-based, global CUSO that was started with the sole mission of helping credit unions better understand, serve, and support their members in the most effective and efficient manner Our core competencies are data analytics, predictive modeling, business intelligence, and technology services. Learn more about us at www.cu-rise.com.


About Georgia’s Own Credit Union

Georgia's Own Credit Union is a credit union based in Atlanta, Georgia that was founded in 1934. They are the 3rd largest credit union in Georgia with over 188,000 members and assets of 2.38 billion as of March 2018. They operate 23 branch locations in Georgia. Learn more about them at www.georgiasown.org



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