The Decision Maker

3 Ways Business Analytics Cultivate Cooperative Culture: An Example From Retail Mortgage Lending

Posted by Nate Wentzlaff on Aug 20, 2014 4:36:43 PM

In my previous blog, 3 Steps to Build Business Analytics in Mortgage Lending, I explained the steps a credit union should take to implement Business Analytics (BA). A great entry point for credit unions to begin establishing BA is mortgage lending. Once BA has been implemented, opportunities for deepening the cooperative culture of a credit union arise. Cooperation is the DNA of the Credit Union Movement. BA gives credit unions the ability to establish clear communication to strengthen their cooperative-oriented culture. Data-driven decisions and effective communication delivered by BA (embedded in business processes) will reinforce the cooperative strategy of credit unions.

1.) BA Fosters Collaboration

Business processes built around mortgage lending require decisions from employees spread across functions. Consistent, high quality data enables cross-functional teams to communicate effectively. Through clear communication, they are able to arrive at decisions that compliment, instead of circumvent, each other. Data gathered early in the mortgage loan’s life begins paying dividends downstream. As a river builds momentum unhindered by obstacles (i.e. bad data and inefficient processes), so too will the value produced by smooth processes and high quality data. After origination, mortgage loans reside as an asset to the credit union. This is where the Investor Relations team enters the picture. It is their role to manage all funded mortgages.

Investor Relations benefits greatly from high quality data throughout the mortgage loan life cycle. One of the greatest hurdles for them is forecasting the loan amount they will be able to sell to mortgage investors. Relying on accurate data (from upstream in the process) provides the IR team with accurate mortgage loan sales forecasting for the upcoming months. Utilizing predictive analytics, the IR team is able to build more accurate forecasts as they continue leveraging BA. This allows them to avoid the costly penalties slapped on by mortgage investors who need accurate forecasting to meet the high demand of their stakeholders. Utilizing BA allows the Investor Relations and Mortgage Origination teams to collaborate more effectively.

2.) Integration Nurtures Effective Communication

Utilizing a common data platform, where all sources systems are in the same database structure (via the data model), allows for effective communication across functions. Teams throughout the credit union are enabled to collaborate and make better decisions. More often than not, mortgage lending software is purchased to meet an immediate need without the big picture in mind. There are many different vendors that specialize in the various functions necessary to keep mortgage processes running smoothly. Origination, Servicing, Title Recording, Document Management and many other functions have been addressed by different software solutions through vendors running on unique database structures. Establishing a common data platform (through a data model) will produce remarkable value throughout the mortgage functions of the credit union. Once this common data platform has been built, the next step is to create a reporting environment in which all teams are able to view the BA reporting.

Establishing a common reporting environment that is accessible to all team members is essential in building strong communication and connecting various team members. Building a BA community around common datasets is needed to create effective mortgage loan processes. Data produced by the mortgage origination team can alert the Investor Relations team that increased activity is going to be flowing their way. These types of alerts are valuable for establishing priorities. Alerts allow for effective communication throughout the credit union and result in a better strategy built off a solid foundation: Business Analytics.

3.) Unity of Purpose

Maintenance and continuous improvement of BA brings more effective communication and deepens the bond between credit union employees. Employees become united in their purpose and cooperate instead of compete. As a credit union, the philosophy of cooperation is held in high regard. By maintaining quality data and establishing a highly active BA environment, credit unions will be able to get back to the business of “people helping people.” Mortgage lending is only one of many areas that credit unions can leverage BA to demonstrate the power of cooperation and the value it brings to all parties involved.

Back to the Co-Op!

Being examples of strong communities, built by communication and cooperation, credit unions can continue to demonstrate the power of the co-op. BA enables credit unions to develop deeper cooperation internally and ultimately externally as they are able to offer higher quality products and services to their members. Getting back to a cooperative strategy is exactly what the Credit Union Movement needs. Although channels and business processes continue their dramatic shift, the underlying strategy of data-driven decisions from BA remains the same. Cooperating on BA gives credit unions another tool to strengthen their cooperative strategies.

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