• Jon Ungerland

Thriving Through the Data Wars (and Other Looming Perils) by ‘Banking’ on a New Core Strategy (pt2)

In part one of this article, explained how data – not money – has become the new currency of the global economy. I also looked at how the Amazons and Googles of the world are already defining the terms and conditions, and cost of doing business, in this digital economy. However, I also suggested your credit union has already amassed a treasure trove of member data that these modern-day interlopers can only dream of. I closed part 1 with a simple question:

What has your credit union done (or failed to do, by outsourcing ‘solutions’ to platforms and bolt-on vendors) with this invaluable vein of digital gold entrusted to you within your community?

Most community financial institutions have lost their treasure, or allowed it to be locked away out of their control, scattered, siloed, or even worse purged (or pillaged?) from their tired, tattered, crumbling treasure box – their legacy core.

Some credit unions and community financial collaboratives have invested in upgraded treasure chests, but they’ve failed to effectively collect up all the dispersed data gems and consolidate them into a strong, trustworthy, and profitable/powerful center of gravity for their institutions.

Any financial institution wishing to survive and thrive deep into the 21st Century should be working to understand how data – not dollars – is the essential commodity for the modern community.

We’re no longer solely in the business of brokering monetary transactions or balancing ledgers of deposits and loans. We’re now in the business of stewarding data, and using that data to enrich the lives of the members, consumers, and communities we serve.

If the theses presented in The Great Hackprove to be even fractionally accurate or factual, then it’s inevitable that the consumers, communities and individuals we are supposed to serve and enrich will arrive at a simple conclusion: We’re either part of the problem, or a solution to the problem.

As campaign rhetoric heats up around the upcoming election cycle, American voters (your members and potential members) will be handed a new lens through which to examine the world; and they’re likely to ask (with increasing intensity) whether you as an institution are protecting their data, profiting from their data, or positioning them to control their own data destiny.

Will you be perceived as a partner in the pending data wars, or will you be perceived as a problematic and greedy, for profit pillager of data?

For better or worse, valid or invalid, right or wrong, these will likely be the terms of engagement for the upcoming societal and industrial debates around data.

This is why we’ve been working overtime to educate credit unions and community institutions about the criticality of developing and adhering to a core-centric (as we coined the phrase) business and technology strategy.

Your business won’t be able to thrive through the coming economic, political, social, and technological turmoil if your entire IT strategy amounts to managing platform providers and your business strategy is simply to generate a 1% ROA from your fragmented, siloed, unstructured, business data.

If you’re positioning your business as a “platform,” as is a fad these days, then your members are going to eventually understand you as another potential risk to their data and identity, and they’ll find someone more interested in direct and local stewardship of their data and commercially committed to a conversation with them about their data, their digital assets.

Consumers are going to be looking for local institutions invested in protecting their economic/technological identity.

As the opinions of the modern community and consumer are shaped by forces beyond our local control, relevant institutions will design business strategies around the pillars of centralizing and controlling data, minimizing disparate and stale siloes, positioning yourself as a steward and custodian of digital assets for the consumer and communities you serve, and set out to use that data to their benefit and in a conversational community relationship.

It’s our belief this isn’t optional; it’s essential. Our history and future demand an authentic response, or our business model will be replaced by a more relevant model or mode of institution.

Credit unions were born out of a moment of collective social need: in Europe, when communities needed more sustainable methods of operating and optimizing their farm and agricultural assets. Today’s communities, like the farming communities of the past, use the fertile soil of the internet to produce industrial products and individual livelihoods. However, consumers and communities are waking up the fact that they can’t afford the costs of doing business with the current brokers and bankers of data. Their lives are losing individual autonomy, and the cost of doing business with global digital behemoths is becoming too usurious.

Credit unions can use technology, community presence, and connection to consumers to enter the conversation. It’s likely the only way the modern consumer and community will give us credit for having any unifying or enriching influence on their increasingly digital lives and identities! In other words, like DaLand has been saying and developing towards for a decade, data is the only path to relevance as a modern financial institution!

Jon Ungerland is the COO of DaLand CUSO.

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