Last month at our Spark! 2024 event in Boston, we hosted a panel about the Credit Union Data Exchange (CUDX), a CUSO formed in 2023 focused on expanding credit unions’ access to rich data and insights. Two of the panelists, Dr. Cheri Speier-Pero, the fellow for Filene’s Center for Data Analytics, and Adam Wright, Managing Director for CUDX Operations at Trellance, have been foundational in identifying the need for more and better data and bringing this platform to life. Our other two panelists, Melissa Cade, Chief Retail Officer at Chartway FCU, and Ben Maxim, Chief Innovation Officer at Michigan State University FCU(MSUFCU), represented forward-thinking credit unions who saw the potential for CUDX before there was a verifiable ROI or even a platform to look at. During the panel, we talked about what CUDX is and where its development currently stands, how credit unions are beginning to benefit from being part of the exchange, and what we can expect over the next few months.
Inspiration for Innovation Can Come from the Most Unlikely Places...
Filene's Spark! event is all about "sparking' ideas, often from outside the credit union industry. The inspiration for CUDX was an insight related to the ability to predict nursing home’s financial services purchasing patterns. In their own data analytics work, McKinsey showed that pooling data across multiple nursing homes significantly increased the ability to predict the propensity to buy financial services products as compared to using the data from just a single nursing home. This is exactly what CUDX allows credit unions to do – CUDX significantly increases a credit union’s ability to predict the behaviors of members, beyond what they would be able to do with just their own data.
Summarizing the potential well, Filene Fellow Dr. Cheri Speier-Pero shared “The power is in us being able to aggregate our member data in order to develop better predictive understanding. Whether it is in that propensity to have interest in a product, whether it's member churn, CUDX will allow us to identify all those other behaviors that we're really trying to understand and more purposefully, and in a targeted fashion, market to our members.”
What we're excited about is the opportunity to be more effective, the opportunity to serve our members differently, and the opportunity to collaborate within the credit union ecosystem.
CUDX is Uniquely By and For Credit Unions—a Major Competitive Advantage
CUDX could only exist in an industry built on cooperation and the mutual betterment of the movement and the members it serves. Chartway FCU's Melissa Cade reflects on this sentiment “what we're excited about is the opportunity to be more effective, the opportunity to serve our members differently, and the opportunity to collaborate within the credit union ecosystem.” For Melissa and Chartway FCU, yes, there is an upside to having access to more data, but they’re also driven by the ability to help the industry overall.
Because CUDX is by and for credit unions, it also has the distinct advantage of being shaped by people who know the industry inside and out vs. an off-the-shelf solution that is trying to maximize the numbers of customers, and therefore industries, that it works for.
I'm excited to build this kind of momentum in the industry and to really allow us to do all the cool things that everyone's talking about. People say ‘Oh, AI is going to change the world!’ Well, this will give us the data needed to power that kind of AI revolution.
CUDX Gives Credit Unions Access to More, Richer Data
CUDX is about more than the sheer amount of data you have access to and the predictive power that comes from that. It’s also about the access to data that you can’t currently glean from your members, even if you were able to instantly multiply your member count.
Considering expanding to a new region where you don’t have any members yet? Looking to attract members much younger (or older) than your current membership base? CUDX allows credit unions to look beyond their current member base along important dimensions for future growth.
The power of the collective data set will also be critical for credit unions to take advantage of new technologies that require large volumes of data. MSUFCU’s Ben Maxim shared “I'm excited to build this kind of momentum in the industry and to really allow us to do all the cool things that everyone's talking about. People say ‘Oh, AI is going to change the world!’ Well, this will give us the data needed to power that kind of AI revolution.”
It's More Than a Data Exchange, It's a Knowledge Exchange
On its face, CUDX represents a platform for exchanging data and extracting insights beyond what you’re able to pull from your own credit union’s data. In actuality, the members of the data exchange become part of an engaged network, working together and sharing strategies that wrap around CUDX.
One core part of this knowledge exchange is the Advisory Councils, which are, as MSUFCU's Ben Maxim put it “the secret sauce.” CUDX has three committees which serve to define practices and standards:
- The Research & Innovation Council
- The Data Privacy, Risk & Compliance Council
- The Data Governance Council.
The benefits of these councils go beyond process and best practices. Members are actively learning what others are trying, what’s working and what’s not, and how to bring larger strategies back to their own credit unions.
For example, Chartway’s Melissa Cade shared “Our Director of Data Engineering is on the Governance Council, so he has brought back some good ideas about simply how we manage our business. That’s good for our organization overall.”
The CUDX Journey— 12-Month Recap and a Look at What's Next
CUDX is not the first attempt at a data exchange by the credit union industry, and the CUDX team wanted to make sure that they got it right. The last 12 months has been all about laying strong foundations for the platform. The CUDX team has focused on answering fundamental questions like: what are the right councils? How do we ensure credit unions can safely and easily ingest extra data? What are the right use cases to start? CUDX has been working with some member credit unions to complete a proof of concept, leveraging some of Trellance’s proprietary accelerators to get CUDX to where it is now—ready to make impact.
Adam Wright shared that we can expect quite a bit of activity over the next few months coming from the CUDX team. The first two use case proofs-of-concept go live in early August for participating credit unions:
- A member KPI dashboard including demographic metrics, credit rating metrics, and information about deposit and loan balances over time.
- A transaction cleansing use case that leverages generative AI to clean messy merchant and category data to shine a light on how member’s spend with debit and credit, and move money to and from other financial institutions via ACH.
One of the next things up on the roadmap is the launch of predictive models—bringing power to member credit unions to better understand current and potential members’ behaviors and tendencies. For those who are interested in the ROI, CUDX will be doing a bake-off, but instead of the signature, technical, and showstopper challenges, there will be just one: showing the ability of a 25-credit union strong CUDX model to out-predict smaller data sets.
