Analytical Approach Pays Off For Credit Union

When Credit Union of Texas (formerly Dallas Teacher's Credit Union) embarked on a CRM data warehouse project two years ago, it had no ideahow large it would grow. What started primarily as a marketing tool has become an analytical decision-support for the entire organization.

The $765 million institution began by looking at profitability. Using Affinium Model, a sophisticated modeling and predictability tool from Unica, Lincoln, Mass., it built up 18 months of solid data to measure profitability by product, member, delivery channel, and branch. In addition, it supplemented internal data with almost 130 demographic data elements.

The credit union periodically runs profitability profiles against the database at large to come up with the top 10% most profitable customers, based on demographics, life stage, product usage, and delivery channel information. Using spatial analysis tools, it takes that information to locate clusters of like-looking potential customers in the community at large.

The project has evolved and expanded in scope to encompass things like building a strategic modeling tool for senior management. By analyzing loans, deposits, fees, member profitability, and other measurable areas, the tool will help executives understand how changes in rates and fees affect its income statement and balance sheet. "It will really give us a heads-up in terms of what the impact would be if we were to make those decisions," said Ken Sorrels, chief executive officer at Credit Union of Texas.

Projects like these have put Credit Union of Texas on the leading edge, according to Kathleen Khirallah, senior research analyst at TowerGroup. "The credit union market has really not started applying analytical CRM solutions at this point in time. Most credit unions are small in size and don't have the resources needed to implement and get full value out of them."

However, Khirallah said Credit Union of Texas has always been a little more aggressive in its use of technology, due largely to Jerry Thompson, its innovative chief information officer. Thompson said that some projects are easily justified, such as a recent campaign targeting low-balance members, which achieved a 10% response rate. Others, like the profitability project, require a leap of faith. "We never did go into this with a predefined payback amount or period of time. You start using it in so many different ways and for so many different aspects of the business."

Thompson's willingness to take risks is exemplified by a recent decision to offer wireless banking services to the credit union's 147,000 members, about 20,000 of whom are using "wired" home banking services. He's confident that many of them will make the switch to wireless.

The credit union chose SensCom, a San Diego-based application service provider, as its technology partner on the wireless project. SensCom acts as a gateway between a financial institution's operating system and its customers' wireless devices.

The SensCom technology, which Thompson calls "best of breed," crosses all wireless Internet platforms and covers every wireless device on the market. "We did our due diligence and found that SensCom's technology is the only one that does that," he said.

Meanwhile, the credit union is pushing Affinium Model to the max. Each of Affinium Model's four components provides a different perspective on the behavior of customers and prospects. Customer Valuator predicts customer profitability and lifetime value. Market Segmenter/Profiler identifies and analyzes attributes that drive customer behavior, helping marketers target people most interested in a particular product or service with the right creative message. Response Modeler identifies individuals most likely to respond to a given offer based on past purchases, demographics, and lifestyle data. Cross Seller prioritizes customer purchases and forecasts products they're likely to buy next.

"It is really very easy to use and very powerful in terms of the analytics it has," said TowerGroup's Khirallah. "That's a good combination for small and mid-sized organizations."

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Jerry Thompson

chief information officer

Credit Union of Texas

Bank Profile: One of the top 100 credit unions in the country in asset size, Credit Union of Texas (formerly Dallas Teacher's Credit Union) serves over 140,000 members in all fifty states.

HQ: Dallas

https://www.banktech.com

2001 CMP Media LLC. 7/1/01, Issue # 3807, page 42.