How credit unions can improve member retention rates through predictive AI

Now more than ever, member retention is a requisite for the success of credit unions. The steady rise of technological innovations has impacted the delivery of financial services and significantly changed the financial landscape. Not only are financial service consumers spoiled for choice, but they have also been handed a sizable measure of freedom by digital banks and large financial institutions. This leaves credit unions struggling to attract new members and more importantly, retain the current ones.

Unlike banks where customer acquisition is a priority, credit unions derive the most value from preserving existing members. They achieve this by providing personalized financial solutions and building lasting relationships with these members. The successful ones are those who recognize this value as a competitive advantage and exploit it for the mutual benefits of the company and its customers.

But is it enough?

Tips for improving member retention

Your biggest competitors are banks and large financial institutions with access to sophisticated technology and tools for delivering upgraded services to customers. This begs the question, “why should your customers be loyal?”.

When designing your retention strategy, it is crucial to prioritize the relationships you’ve built with members and the trust they have placed in you over the years. You should aim at improving the overall quality of these relationships and the experience of members.

Here are several key ways you can put this into action:

Keep communication lines open

Customers are more likely to remain loyal if they feel a genuine sense of connection with your company. You have a responsibility to identify new opportunities to sustain the connection. One of such is by keeping channels of communication open.

Determine each member’s communication preferences such as channels (digital or in-person), frequency (weekly or monthly), messaging style, etc. Your findings will be useful in managing your relationships with them. It is also important to keep them engaged by directly requesting feedback on your products and services and ensuring their feedback is analyzed and incorporated where possible.

Customize experiences

Leverage your relationships with members to find new methods of providing their financial needs. Credit unions are typically smaller in size compared to banks thus the advantage of customization. As a follow-up to tip #1 above, you can pair customer information gained from feedback surveys with analytics from technology-enabled customer research to create personalized experiences for members.

This would require a sizable investment in digital transformation as well as human resources, the latter would especially be useful in physical branches. Customers value experiences that leave them feeling extra special and the merits of the human touch cannot be overemphasized.

Reward loyal members

Another way to secure member loyalty and deepen relationships is to provide incentives such as reward programs to make them stay. Implementing such programs can also be an offshoot of your survey. Ask leading questions on your services, improvements they would like to see, and new offerings that would excite them. This would help in designing a fitting program. Rewards can be designed in the form of points program, cash back systems, referral programs, among others.

Invest in Artificial Intelligence (AI) solutions

Data holds the power to study the behaviour of your members and decipher their next moves when it is strategically captured and analyzed. Investing in modern predictive analytics tools that make this possible can significantly boost your member retention rates. You’re able to better understand your members, predict their actions, and feed the captured data into your marketing campaigns. It also helps in identifying gaps in your service delivery that need to be immediately filled.

What is predictive analytics?

Predictive analytics combines historical data with modeling techniques and machine learning to predict future outcomes. These predictions could be for the near or distant future, and the insights gained enables organizations to make informed decisions and create data-driven strategies. This technology is a gamechanger in your credit union’s member retention efforts.

The solution process starts with integrating responsible data management practices. Collecting, storing, organizing, and analyzing data can be challenging. However, predictive analytics tools can make it easier to process data and uncover valuable insights.

The next step is descriptive analytics. This helps to examine historical data of your members for patterns and trends and can also reveal areas of weakness in your past marketing efforts. You’d learn about the factors that contributed to past member attrition and how to prevent future occurrences.

The final step in the process is predictive analytics. By using technology such as Microsoft Azure Machine Learning, your credit union will be smarter and steps ahead of competitors. It gives you a window into your members’ patterns of behaviour in real-time and provides you a roadmap on how to better serve and retain them. You will be able to forecast which members are more likely to leave and when and take targeted steps towards preventing it.

How can you benefit?

For credit unions on a member retention journey, predictive analytics is a proven and recommended path to tread. Institutions who have utilized this option are reaping rapid returns on investments. Real-world examples show that applying AI to improve member retention is feasible and can drive an increase in retention percentage of between three to five points, resulting in increase of $1.5 million to $2.5 million. According to a broad survey, data-driven businesses are 19x more profitable and there is $13.01 return on investment for every dollar spent on analytics with data visualization capabilities.

The MNP Digital team is experienced in harnessing organizational data to create tailored digital solutions that amount to profitability and improved efficiency. We undertake an in-depth review of all your available data, then iteratively develop AI and Machine Learning strategies and models, training algorithms to streamline the way they work for you. From designing a technology-enabled retention strategy to implementation and deployment, we will guide you to success.