Many credit unions are under the impression they must have perfect data before beginning a Business Analytics (BA) initiative. While high quality data is the foundation for BA, one of the best ways to determine the quality of the credit union’s data is by jumping right into an analytics project. Business problems are the basis for beginning any new project. Viewing credit union data from the lens of BA software allows credit unions to assess their data quality and improve their underlying systems. In order to grasp the concept of analytics, and how it can benefit business decisions, starting an analytics project (with a top down view) is the first step.
BA software is designed for the business. Managers and executives should define what information determines the health and success of the business. A BA project is similar to visiting a doctor. Before the visit, you may think and feel that everything is fine as long you are ignorant of your true health conditions determined by sophisticated analysis and doctors’ expertise. There will be no diagnosed symptoms as long as a person does not visit the doctor. When implementing analytics throughout an organization, a credit union’s systems will undergo a check-up in deriving enterprise analytics. This testing is a good thing because it brings issues to the surface that may otherwise go unnoticed. Credit unions can begin to audit their systems through the implementation of BA.
Data quality can be difficult to determine from an IT viewpoint. Having clean, secure and well formatted data are some of the ways IT would determine the quality of the data currently residing in the credit union’s systems. IT may run expensive auditing and optimization programs to improve systems. However, this may be a waste of time and money if the data does not address current (and future) business problems. BA solutions are designed to address business problems faced by management. Business problems will then, in turn, drive managers’ needs in a BA solution. Thankfully, many BA solutions have reports already designed to address NCUA and other credit union agency regulations.
BA software solutions are built to sift data through algorithms which display information needed to execute future business decisions. After IT uploads data into the BA solution, management will determine if the data balances to month-end financials and other trusted reports. Reconciling the BA results to the financial statements begins the data validation steps. If the numbers are not matching the financials, there may be mistakes within the data implementation process. This can be as simple as a mistake in the logic (when querying the databases) or as complex as source system errors. A common issue that has been observed in implementing BA is miscommunication between the origination systems and core system. Many credit unions use complex business rules in determining which data is communicated to their core system. One example is determining which credit score should be used when a loan has two borrowers. Running this data through the analytics algorithms will give management a better visual into how the source systems are communicating information.
BA solutions are becoming the norm at credit unions. As the NCUA tightens up regulations and demands more robust reporting, BA software is becoming an essential tool. BA will give credit union management and employees the ability to make smarter decisions with limited resources. Business expertise and quality data are the pillars of sound decision making. In order to bring expertise and data together, credit unions should utilize business analytics. Allowing business analytics to build reports will assist in determining current data quality and system improvements necessary for the future of the Credit Union Movement.