Ina market defined by economic headwinds, slow growth and constant change, creditunions in 2024 face mounting challenges. These demand faster, data-drivendecisions that align the needs of today with the goals of tomorrow.
Inresponse to this, I see successful credit unions investing in growth in a newway. The emphasis is now on using data intelligently to deliver enhanced valueto members - and Chief Data Officers emerge as the key to achieving this.
Therole of Chief Data Officer (CDO) is becoming a popular hiring trend across thefinancial sector. In 2022, over halfof banks and insurers had a CDO, accounting for 22%of CDOs globally, and the number only continues to rise.
Thepotential for credit unions seizing this talent is huge. Those with theirfingers on the pulse have a better chance of delivering member-centricstrategies, growing their market share and reaching their goals for 2024.
The rise of Chief Data Officers in 2024
CDOsplay an increasingly crucial role in our data-centric world, where datavolume is ballooning from 1 ZB in 2010 to anestimated 175 ZB in 2025.
Correlatingwith this rapid growth is the rise of artificial intelligence (AI)technologies, which hold exciting possibilities for the financial sector. Forcredit unions, AI provides the insights needed to enhance member experiencesand adapt to market trends, revealing itself as an instrumental tool to stayingcompetitive.
Butthis must be tempered with the knowledge that with new possibilities comes newrisks, highlighting the need to have someone on board who can oversee andprotect data initiatives.
Thisis precisely what CDOs do. Not only are they responsible for the management,governance and utilization of data, they also identify opportunities forleveraging that data into business growth, operational efficiency and enhancedcustomer experiences.
Throughthis work, CDOs are the beating heart of an organization’s digitaltransformation, enabling them to harness the full potential of their dataassets.
How the role of CDOs is evolving
Asbusinesses recognize the importance of hiring Chief Data Officers, theirperception of the role is also changing. 37% ofCDOs had their budgets increased in thelast 12 months and, in Deloitte’s2023 CDO survey, 66% of CDOs saw their remitgrow in the last 24 months. Today, their top three priorities are:
- Creating, updating or implementing data strategy (61% of CDOs)
- Improving the usage and availability of insights and analytics (54%)
- Improving or providing a consistent approach to data governance (43%)
Thissignals CDOs’ evolution from compliance-focused roles to strategic andproactive leaders, especially in data-heavy industries like insurance (46% CDOpenetration), banking (42%) and media andentertainment (40%).
Theprogression of CDOs into business-critical leaders is reflected in increasedhiring activity. In 2020, 67% oflarge corporations had a CDO, compared to 12% in2012, while in North America, leading firms with a CDOincreased from 33.7% in 2021 to 38.1% in 2022.
Asmore businesses become aware of the growth opportunities that CDOs facilitate,I predict that competition for this talent will begin to skyrocket. Creditunions, who are at the center of technological change, stand to gain a lot fromCDOs, and must be ready to make opportunistic hires if they want to protecttheir market share.
How CDOs support credit unions’ top priorities for2024
Inthe banking industry, credit unions have always led in terms of their communityengagement, and customer service experiences - but banks are catching up. Tostay competitive, credit unions need a more tactical digital strategy that’sdriven by data.
Stayingahead of the technology curve allows credit unions to future-proof themselves.Investing in a Chief Data Officer to front these efforts is equal to investingin the insights needed to remain agile and take a more member-centricapproach.
Chief Data Officers correlate with strong financialperformance
InWipfli’s2024 Credit Unions Report, retaining market share andmeeting member needs are top concerns for 40% and 33% of credit unions,respectively. CDOsforge competitive strategies that align with member demands and driveprofitability:
- Tailored data strategies enhance member satisfaction by leveraging data for personalized services
- Their proficiency in analytics boosts profitability by understanding member needs, thus increasing engagement
- They identify innovative technologies that streamline operations and meet evolving member expectations
- They promote data-driven decisions, accelerating competitive strategies that prioritize member needs for sustainable profitability
Deloitte’sCDO survey goes on to say that companies with CDOs are twice as likely to haveclear data strategies, allowing them to stay financially competitive.
58% of CDOs view AI initiatives as their primaryresponsibility
CDOsare essential for monitoring data and developing robust AI strategies.According to Gartner's 2024 survey, AI nowfalls within the primary scope of 58% of CDOs,a notable rise from 34% in 2023. This new focus is vital in aiding creditunions' chief goal: improving digital member engagement, identified as the toppriority by 51% of credit unions this year.
StrengtheningAI strategies is imperative for gaining actionable member insights, offeringpersonalized experiences and increasing retention. But AI is only as good asits data, and good data starts with good governance. This underlines theimportance of hiring a CDO.
Byorchestrating data management and utilization, CDOs safeguard data quality,security and ethics, developing AI initiatives that align with organizationalobjectives and member value. This not only enhances operational efficiency, butalso member experiences and engagement.
CDOs are crucial to developing data literacy acrossdepartments
Perthe Wipfli study, talent management is another top priority for 51% of creditunions today, with a further 65% reporting that talent shortages impedeprogress towards goals.
CDOsfill thedigital talent gap, not only by overseeing andoptimizing data-related functions, but also by fostering a data-drivenconsciousness within the organization. In fact, 75% of CDOs surveyed byDeloitte said they viewed improving data literacy as a key objective.
Enhanceddata literacy is conducive to a more innovative, efficient and risk-averseculture, where people are empowered to make data-driven decisions and mitigatepotential threats.
Organizations with a CDO have fewer securitycompliance issues
For33% of credit unions, regulation compliance is a top concern for 2024. CDOsprovide much-needed assurance by spearheading the compliance initiatives neededto navigate complex regulatory landscapes.
Witha CDO, credit unions honor ethical principles and regulatory guidelines whenhandling data. This not only builds trust and transparency with members, it’salso a cornerstone of enhancing brand reputation and driving long-termprofitability.
Setting a new standard for performance
ChiefData Officers strike the perfect balance between the innovative and secure useof data. Despite this, 73% ofCDOs feel their role is poorly understood.This lack of knowledge could be why credit unions haven’t fully embraced therole - but it’s only a matter of time.
Digitally-enabledorganizations set the bar for performance. As banks begin to double-down ontheir offerings to clients, credit unions can’t rely on reputation alone - theyhave to get proactive. Forward-thinking credit unions are the ones leveragingthe value of CDO talent to remain competitive and relevant during this criticaltime of change.
To learn how you can tap into top CDO talent andmake greater strides towards your goals, contact me today.
