Knowledge Is Power

• Mar 11, 2023
• By Joyce Moed

Ask the Right Questions,�Listen to the Answers

FIS executive Pat Valentino shares tips on how to make your credit union more relevant. As senior vice president and general manager for FIS? Real Time Solutions Division and with more than 35 years of banking and technology�experience in financial institutions, Patricia Valentino is well versed in the unique challenges of credit unions, ranging from multi-national financial services to community institutions. Valentino was also a founding principal of a financial services management consulting firm, specializing in strategic planning, information systems implementation, software conversion planning and regulatory compliance. As a former chief information officer for a $1.3 billion community bank, her perspective on using information technology to assist in supporting a financial institution?s strategic business plan, and developing a deeper understanding of the underlying client base, is unique. ?The four Rs are all tied together,? Valentino explained, speaking about Risk, Regulatory, Revenue and Relevancy.� ?The 4 Rs are all tied together.?

?You are in the business�to make money you can share with your members,?�Valentino said. ?Which type of members holds the best value to the credit union?�Get more of them.?

FIS is making the ?Four Rs? (Risk, Regulatory, Revenue and Relevancy) its four pillars this year, including them in its presentations, interviews and whitepapers. ?There?s a tool that hits regulation and relevancy; the tool is the ability to start to understand your membership and your business through measuring things like product penetration?how many services do my members use? What are their patterns and habits?? Valentino said. ?Understanding that, so as we get into things like revenue, things like analytics help you understand your current member base.? For example, Valentino explained, there is a different feel at credit unions with people by universities than at credit unions that cater to people like police and firefighters. ?Really who are your members and how do you service them today?? she asked. ?Is there more you need to add to be more relevant to them? Insurance? Car-buying service? How do you begin to engage them? Because today that is who is grabbing for your business. How do you get your members to engage and see you as relevant to them? If your membership is older how do you work in prevention of fraud? ?The older account-holders are being preyed upon by fraudsters,? Valentino continued. ?How is the organization helping to protect them? Do they have contact with family members? Becoming an important part of their members? lives?that?s really the difference where a credit unions needs to be going forward: being relevant. Why do members come to you? Do you know your membership? Does your membership like to come to your physical locations or do they mostly do everything online?? Learning this can help your credit union decide if it should invest in more branches, or in more banking, Valentino noted.

The way to begin this process is to start with business intelligence analytics.

?It?s amazing the amount of information that is within the credit union?meaningful information versus data,? Valentino said. ?Things like ?delivery channels.? Do they walk in, do they use ATMs, does dad use one channel, the mom another, the children another? Understand the pattern and behavior and then understand those members that are most profitable to you.? She stressed that the only way to continue to remain a valuable entity is to obtain a positive income you can reinvest back into your credit union. ?You are in the business to make money you can share with your members,? Valentino said. ?Which type of members holds the best value to the credit union? Get more of them.? She said it comes from member relationship management, and the collection of data within how you ask a question. From this you will learn how profitable each physical location is, how profitable your auto lending portfolio is, how many of your customers use multiple channels and which channel is the most used. ?You begin to ask questions,? Valentino explained. ?It helps you to hone into as a credit union?What is the business I want to be in?? To start, first form the questions: Who are our members? What is our value to those members? How do they see us valuable? Then you will be able to begin to look at the information and see it from your members? eyes, Valentino said. ?Why do they come there? Do they bring all their accounts to you or just some of their accounts? If they don?t, why don?t they? Analytics can help. What do I have to do to get that information out because obviously that is valuable to me?? she said. This is where partnering with a technology provider can help. Through this partnering a credit union can gain technology and obtain knowledge on how to use the technology to get the answers. ?The idea is that they?ve done research,? Valentino said. ?What are other credit unions doing? Today I look like this? What are other credit unions?which I want to�be like?investing in? What are they doing, Mr. Vendor Partner? Vendor partners are now offering solutions and putting products together."

?What do I need to attract the small businesses? What kind of lending do small�businesses need? What is the overall solution??

Other questions your vendor partner may be able to answer are: What do I need to attract the small businesses? What kind of lending do small businesses need? What is the overall solution? They?re all already out providing those solutions and services. You should be asking. Whoever is providing your technology, they should be providing that avenue, things like: Do I need to keep my technology in my physical location anymore, versus putting it online and letting someone else hold it and I just access it? ?It?s truly about innovation, and how can your technology company help you,? Valentino said. ?The MP3 was out way before the iPod, and what apple did was provide innovation around the invention. The technology was there. It?s about being more innovative.? Valentino has seen many credit unions that were able to use this type of information as a benefit. ?I?ve seen a number of credit unions improve their noninterest income,? she said. ?They were able to go in and use the information they gained through their analytics. They were able to ask which members were somewhat unprofitable. Another example was one of our customers who partnered up using credit scoring. So they provided the access to that information, and therefore allowing their customers and themselves to better address lending needs?to see if a customer?s needed to refinance opened up an avenue for members.? Valentino stressed that it is important to understand your members, and not just to understand them from a subjective view but from an objective view. ?Taking that and adding objectivity to it can make us help make better decisions, and really charter a better course,? she said. ?Credit unions are really there to serve the communities when a larger bank wouldn?t. Know the kinds of members you want to attract. And know it from an objective standpoint.? Valentino said that at FIS, they even ask themselves those questions, as a technology company. ?Why are we relevant? Why do they care to do business with us? And then match that with are we attracting the right members (or customers) and creating that mutually beneficial relationship? You?d think it was a natural thing to do but its not,? she said. ?Because you get involved in a business ongoing every day and you need to step back and really analyze it. Sometimes its what your gut told you but sometimes it?s not.? As for credit unions specifically, Valentino said the entire financial industry is being looked at very closely and bundled into the same basket. ?I think it?s important for the survival of the movement to really understand their value and their customers value and define their mission, even more so now. It?s so broad, yet it?s so basic. There really isn?t a magic bullet. It?s really taking the accountability, responsibility and the action to look at it differently.? Joyce Moed is the editor of Credit Union Business. She has worked for 15 years as a newspaper and magazine reporter and editor, covering news, features, business, politics and community news. Since 2007, Moed has focused on writing about the credit union industry.

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