The importance of hiring a Chief Data Officer: How credit unions can deliver more value in 2024

In a market defined by economic headwinds, slow growth and constant change, credit unions in 2024 face mounting challenges. These demand faster, data-driven decisions that align the needs of today with the goals of tomorrow.

In response to this, I see successful credit unions investing in growth in a new way. The emphasis is now on using data intelligently to deliver enhanced value to members - and Chief Data Officers emerge as the key to achieving this.

The role of Chief Data Officer (CDO) is becoming a popular hiring trend across the financial sector. In 2022, over half of banks and insurers had a CDO, accounting for 22% of CDOs globally, and the number only continues to rise.

The potential for credit unions seizing this talent is huge. Those with their fingers on the pulse have a better chance of delivering member-centric strategies, growing their market share and reaching their goals for 2024.

The rise of Chief Data Officers in 2024

CDOs play an increasingly crucial role in our data-centric world, where data volume is ballooning from 1 ZB in 2010 to an estimated 175 ZB in 2025.

Correlating with this rapid growth is the rise of artificial intelligence (AI) technologies, which hold exciting possibilities for the financial sector. For credit unions, AI provides the insights needed to enhance member experiences and adapt to market trends, revealing itself as an instrumental tool to staying competitive.

But this must be tempered with the knowledge that with new possibilities comes new risks, highlighting the need to have someone on board who can oversee and protect data initiatives.  

This is precisely what CDOs do. Not only are they responsible for the management, governance and utilization of data, they also identify opportunities for leveraging that data into business growth, operational efficiency and enhanced customer experiences. 

Through this work, CDOs are the beating heart of an organization’s digital transformation, enabling them to harness the full potential of their data assets. 

How the role of CDOs is evolving

As businesses recognize the importance of hiring Chief Data Officers, their perception of the role is also changing. 37% of CDOs had their budgets increased in the last 12 months and, in Deloitte’s 2023 CDO survey, 66% of CDOs saw their remit grow 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%)

This signals CDOs’ evolution from compliance-focused roles to strategic and proactive leaders, especially in data-heavy industries like insurance (46% CDO penetration), banking (42%) and media and entertainment (40%).

The progression of CDOs into business-critical leaders is reflected in increased hiring activity. In 2020, 67% of large corporations had a CDO, compared to 12% in 2012, while in North America, leading firms with a CDO increased from 33.7% in 2021 to 38.1% in 2022. 

As more businesses become aware of the growth opportunities that CDOs facilitate, I predict that competition for this talent will begin to skyrocket. Credit unions, who are at the center of technological change, stand to gain a lot from CDOs, and must be ready to make opportunistic hires if they want to protect their market share.

How CDOs support credit unions’ top priorities for 2024

In the banking industry, credit unions have always led in terms of their community engagement, and customer service experiences - but banks are catching up. To stay competitive, credit unions need a more tactical digital strategy that’s driven by data.

Staying ahead of the technology curve allows credit unions to future-proof themselves. Investing in a Chief Data Officer to front these efforts is equal to investing in the insights needed to remain agile and take a more member-centric approach. 

Chief Data Officers correlate with strong financial performance 

In Wipfli’s 2024 Credit Unions Report, retaining market share and meeting member needs are top concerns for 40% and 33% of credit unions, respectively. CDOs forge competitive strategies that align with member demands and drive profitability:

• 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’s CDO survey goes on to say that companies with CDOs are twice as likely to have clear data strategies, allowing them to stay financially competitive.

58% of CDOs view AI initiatives as their primary responsibility 

CDOs are essential for monitoring data and developing robust AI strategies. According to Gartner's 2024 survey, AI now falls within the primary scope of 58% of CDOs, a notable rise from 34% in 2023. This new focus is vital in aiding credit unions' chief goal: improving digital member engagement, identified as the top priority by 51% of credit unions this year.

Strengthening AI strategies is imperative for gaining actionable member insights, offering personalized experiences and increasing retention. But AI is only as good as its data, and good data starts with good governance. This underlines the importance of hiring a CDO.

By orchestrating data management and utilization, CDOs safeguard data quality, security and ethics, developing AI initiatives that align with organizational objectives and member value. This not only enhances operational efficiency, but also member experiences and engagement.

CDOs are crucial to developing data literacy across departments

Per the Wipfli study, talent management is another top priority for 51% of credit unions today, with a further 65% reporting that talent shortages impede progress towards goals.

CDOs fill the digital talent gap, not only by overseeing and optimizing data-related functions, but also by fostering a data-driven consciousness within the organization. In fact, 75% of CDOs surveyed by Deloitte said they viewed improving data literacy as a key objective.

Enhanced data literacy is conducive to a more innovative, efficient and risk-averse culture, where people are empowered to make data-driven decisions and mitigate potential threats. 

Organizations with a CDO have fewer security compliance issues

For 33% of credit unions, regulation compliance is a top concern for 2024. CDOs provide much-needed assurance by spearheading the compliance initiatives needed to navigate complex regulatory landscapes.

With a CDO, credit unions honor ethical principles and regulatory guidelines when handling data. This not only builds trust and transparency with members, it’s also a cornerstone of enhancing brand reputation and driving long-term profitability.

Setting a new standard for performance 

Chief Data Officers strike the perfect balance between the innovative and secure use of data. Despite this, 73% of CDOs feel their role is poorly understood. This lack of knowledge could be why credit unions haven’t fully embraced the role - but it’s only a matter of time. 

Digitally-enabled organizations set the bar for performance. As banks begin to double-down on their offerings to clients, credit unions can’t rely on reputation alone - they have to get proactive. Forward-thinking credit unions are the ones leveraging the value of CDO talent to remain competitive and relevant during this critical time of change.

To learn how you can tap into top CDO talent and make greater strides towards your goals, contact me today.