Credit Union Maps Out Competitive Edge

BOSTON (06/12/2000) - Last month, the Dallas Teachers Credit Union (DTCU) went from a customer base of 250,000 professional educators to a pool of 3.5 million potential customers, a change the credit union says gives it a fighting chance against the likes of Wells Fargo Bank and Bank of America Corp., both of which have a strong presence in Dallas.

How? DTCU used new geographical data and analytical tools to find ways to improve its competitive position, a technique usually associated with banks and corporations that have large information technology staffs and budgets.

But the nonprofit DTCU was able to do this because vendors' integration of geographical analysis applications with database engines or applications is easing installation and use, and bringing costs down, according to a bank official.

"We're the first small institution to go the [geographical data analysis] route, although Bank of America, Chase [Manhattan Bank] and other large financial institutions have taken it on," said Jerry Thompson, senior vice president and CIO at DTCU. Thompson declined to disclose the cost of the project. "We're now competitive with Wells Fargo and [Bank of America]," he added.

According to analyst Mark Smith at Meta Group Inc. in Stamford, Connecticut, software for analyzing geographical data can often be simply added to an existing database application server. Increasingly, database vendors are forging alliances with geographic information system application makers, strengthening the integration between the two technologies and bringing down the cost of implementation, Smith said.

DTCU replaced a stand-alone financial database system with IBM Corp.'s business intelligence suite, Intelligent Miner, and DB2 on a Netfinity 7000-M10 server running Windows NT. It used IBM's Visual Warehouse to load its existing customer data into the data warehouse. Then the credit union purchased supplementary data compiled by Acxiom Corp. in Little Rock, Arkansas, to correlate credit scores, lifestyle statistics and locations of residents in the credit union's area.

Using analytic applications from Business Objects Inc. and ESRI's ArcView spatial mapping application, the credit union identified the top 10 percent of current profit-generating customers. It also identified customers' willingness to drive to a branch to do business by correlating where customers live to branch locations and the time it takes to drive the distance between the two.

Now that the credit union won its bid from a state commission to become a community bank, it will use its technology to provide "a heavy-duty marketing component" that is as important, if not more important, than the operational benefits, according to Thompson.

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