Independent Banker - February 2023 - 23

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loan and P2P payment options
with them.
" We've got this massive amount of
data, and we have to do something
about it, " says Greg Ohlendorf,
president and CEO of $207 millionasset
First Community Bank and
Trust in Beecher, Ill. " Once you
determine what your transactions
look like, then strategically, you
can decide if you want to be in any
of those businesses. Or if we're
in those businesses, we need to
discover why our customers haven't
chosen to get that service with us,
rather than competitors. "
Ohlendorf speaks to data as a
route for solving deposit leakage,
or the migration of deposit
account funds to other providers.
For example, as PayPal, Venmo
and similar payments platforms
encourage clients to leave balances
in their holding accounts, funds that
would have traditionally been in a
bank account are in these outside
environments, disintermediating
the bank.
In addition, funds may be leaving
the demand deposit account (DDA)
to pay an outside loan service
or investment fund, removing
resources that may have stayed
within the bank if the customer had
used its services.
" I have to look at where your
spend is going, and the question
is, 'What do I do about that?', "
Ohlendorf says. " That's what that
data is about. "
Avoiding data pitfalls
Data serves as a great resource, but
as community bankers dive into it,
they risk going down a rabbit hole of
fi ndings and subjecting themselves
to analysis paralysis where the
continued evaluation of data leads
to inaction. King advises staying
true to the original goals.
A short guide to data usage
Where data is concerned, fixed rules
are hard to come by, but the following
list off ers steps to execute data
analysis with discernment.
Do:
f Have a data use policy. Make sure all data research is in
accordance with your bank's policy and all applicable
regulations.
f Use data to help customers make better financial decisions. The
data can help community banks extend the relationship banking
model into targeted consultations with customers.
f Track where customers' payments are going. Through demand
deposit accounts (DDA), community banks have access to
customer payment transactions. Leverage that information to
see where there may be opportunities to educate customers on
the bank's existing products and services.
f Mine for opportunities to cross-sell other products and services
to meet a need found in the transactional data.
Don't:
f Fall victim to analysis paralysis. Data begets data, so ensuring
an unclouded vision of a specific goal is imperative to both
acting on the data and evaluating the eff ort's success.
f Allow preconceived stereotypes to drive data review. For
example, not all baby boomers are technologically challenged.
Don't let outside research overly influence internal review.
f Succumb to confirmation bias and automatically make
assumptions based on demographics or age. This could lead to
disparate impact. Let the data guide the approach, but ensure
that customers remain individuals with unique stories and needs.
" Don't allow the data to force you
to make assumptions about your
customers, " he says. " Prioritize
what's most important to you, what's
going to give you the biggest return,
and build your payments strategies
around them. "
Mitchum agrees. " You're never
going to have perfect data, and you
want to be able to make decisions and
move forward. Data is always going to
be coming in, and you're constantly
making sure you're on the right
path. Don't be afraid to change if you
need, " she says.
Experts caution that when
data is used to label behaviors, it
introduces stereotyping. Referred to
as confi rmation bias, this approach
runs the risk of surfacing false
assumptions about customer needs.
Tapping into the relationship banking
model and aligning what the bank
knows to be true about its customers
22 // ICBA Independent Banker // February 2023
Independent Banker - February 2023

Table of Contents for the Digital Edition of Independent Banker - February 2023
