Four Data-Driven Ideas for Helping Members Use Economic Impact Payments
Leveraging business intelligence to guide spending and saving discussions with members
By Brian Stahl, Business Solutions Consultant, AdvantEdge Analytics
By now, many of your members have received Economic Impact Payments of $600 or more as part of the U.S. government’s second economic stimulus action. Others are anticipating the extra funds becoming available around tax-return time. How members plan to use that money to improve their financial situations will depend greatly on the guidance they receive.
Identifying those members who have already received the money is as simple as a review of ACH transactions to look for deposits with an entry description of XXTAXEIP2 or company name of IRS TREAS 310. In October 2020, the IRS shared that 82 percent of direct deposit refunds for the recent filing season were provided via direct deposit.
Beyond simply identifying the members who may welcome your outreach, your credit union should also consider the tone and type of message members will be most open to receiving. The more personalized the advice, the better chance members will follow it.
By using the credit union’s own data to drive outreach, your member service team can offer up highly relevant, easy-to-implement ideas for how members can gain the greatest value from their stimulus money. Let's look at four specific opportunities data insights can reveal, and importantly, how your team can activate those insights.
Opportunity No. 1: Financial Health Checkups
Members focused on paying for ongoing basic needs and those who struggle to effectively manage money may need guidance on stretching their stimulus money as far as possible. According to a recent survey, nearly 60 percent of Americans plan to use their stimulus funds to pay household bills. This is a great opportunity to offer financial health checkup services to targeted members, as well as remind them of the educational opportunities offered through your digital platform. Certainly, the more frequently members engage with this type of content, the closer you’ll get to becoming their primary financial relationship.
The Data: Use loan application data, ACH direct deposit activity, credit reports and checking account data to identify members with low incomes, low credit scores and perhaps a few overdrafts. This data can be especially informative when viewed through a year-over-year, or perhaps more accurately, a before-and-after the pandemic lens.
Opportunity No. 2: Higher-Interest Savings
Members looking to save for a goal or fund an emergency reserve will be interested in higher-yield savings accounts. While interest rates are low, competition for deposits is high, and rate-conscious members may now be searching for higher-yielding places to park their stimulus cash.
The Data: Look for members who are generally good at managing their money (e.g., no overdrafts over the past 12 months) and who also maintain at least one savings account. Members who regularly make electronic transfers to other financial institutions can be another segment to consider reaching out to with this type of offer. You can easily find this information by looking at ACH transactions with Entry Descriptions like Transfer, xfer or Trnsfr.
Opportunity No. 3: Auto Loans
Members who are almost done paying off an auto loan, or those who regularly make auto repair payments, may be more interested in putting stimulus money toward the purchase of another car. A sudden influx of cash can be a tipping point for members who have been battling pain points related to an older vehicle. Those pain points may become especially acute as shutdowns are lifted and people get back to work, school and nights out.
The Data: Use loan origination or core system data to identify members who are more than halfway through an auto loan by comparing origination and maturity dates. Also, consider leveraging Merchant Category Codes (MCC) within card portfolios. Filtering card transactions by “Automobiles and Vehicles” can reveal a segment of members making frequent repair payments and/or visiting automotive parts stores more often than the average member.
Opportunity No. 4: Investing for the Future
If your credit union offers investment services, does the right segment of members even know about this offering? Do those members invest through your financial advisors or do they go elsewhere? Reviewing your ACH data to gain a view of all the deposits regularly leaving your credit union for an investment firm can be an eye-opening experience. It’s something our Consulting Services team does regularly for credit union partners in conjunction with our sister firm CUNA Brokerage Services, Inc. (CBSI). Receipt of stimulus funds may be just the door opener you need to gain a greater share of your member’s investment wallet.
The Data: Review ACH data for well-known financial firms like Schwab, LPL or JP Morgan to identify members who are already active investors. Reach out with messaging tailored to those just getting started vs. long-time investors or to those who are approaching a life event (e.g. retirement). Connect the credit union difference to their personal financial goals and offer a no-cost/obligation consultation to review how a credit union financial advisor can help with the member’s financial goals.
Unlocking Data for All
These are only a small sample of the many opportunities credit unions have to leverage data to proactively engage members with customized financial guidance. Keep in mind that many of these opportunities are repeatable. Each time you perform the analysis, you’ll gain a new set of members; each time you perform the outreach, you’ll walk away with new lessons on what triggers the most desirable outcomes.
A big part of successfully scaling a data analytics project is making sure data is not locked away in the IT department. It should be made available for key business stakeholders in a way that supports changing market realities and member needs. Having solutions like dynamic reporting, for instance, at the fingertips of key business and marketing stakeholders sets your credit union up to quickly spot opportunities, and just as quickly, take action.