The Decision Maker

DNA of the Credit Union

Posted by Nate Wentzlaff on Feb 26, 2015 12:50:00 PM

The DNA of any organism is the model of its identity.  Analytical models of data (the building blocks of the credit union) will allow the industry to make better decisions that reflect their character.

DNA of the Credit Union: Analytics Models

As data pours in from multiple facets, credit unions must be able to mold it into a model.  Similar to DNA code for each living organism, data needs to have a code.  Analysis built on raw data makes organization-wide decisions difficult.  Therefore, a certain data structure is necessary.  Defining this structure is how each credit union defines their unique character.  Every organism has a unique code for their life; DNA.  Genetic code instructs every cell and allows an organism to function harmoniously, even when it is not consciously in control. This is the way that the credit union of the future must be designed.  The analytical data model (ADM) is a credit union’s DNA code.

Analytical Data Model (ADM)

In order to create a data-driven culture, credit unions must build applications on their data.  However, without a data model that is designed to shape data according to analytical needs, reporting and analytics will not be effective.  Without integrating data in an ADM, data silos and compromised data integrity will plague the credit union. When employees from different departments (using data from different source systems) enter into a meeting around a business process, there will be disagreement on the validity of each other’s data.  ADM gives the credit union a single version of the truth (SVOT) that enables powerful analytics applications to synchronize departments around business processes.

Scalable Models

Innovative technology and an ever-expanding global economy are causing data changes to occur at an exponential rate.  Credit unions must be able to shift directions with agility.  The scalability of the ADM will be crucial for future shifts in a credit union’s strategy.  As people mature, their character will change.  In a similar fashion, credit unions must be able to learn from their past successes and failures and constantly improve the ADM to maintain effective use of data.  Building an ADM that is scalable to change is vital for bringing order to chaotic data.

The Art and Science of ADM

Building analytical data models is both an art and a science.  In a recent article on ADMs, Wayne Eckerson discusses the balance between the art and science of building analytical models.   A deep understanding of credit union data and business processes will be the foundation for building an ADM.  This is the science of understanding facts and empirical data.  Communicating the results of data analytics (in a language that is clear to the entire credit union) is the art.  Understanding your audience and how to effectively communicate insights is half the battle. Balancing the art and science of data will be accomplished through an ADM.

“The art of analytical modeling is a skill that requires intimate knowledge of an organization's processes and data as well as the ability to communicate with business executives in business terms. Like fine furniture makers, analytics professionals who master these skills can build high-quality models with lasting value -- and reap huge rewards for their organizations in the process.” - Wayne Eckerson (Industry Analyst)

Business Process Model (BPM)

Similar to the various functions of the body, data within a credit union must have a clear structure In order to facilitate the business processes of a credit union.  Analytic insights build on a data model that does not clearly support these business processes will cause confusion between IT and business.  An effectively built ADM will be powerless if the business is not intimately involved in its design.  Even if the ADM is built according to the highest industry standards, the data will not have integrity if it does not support business processes.  In order to build a more effective ADM, the credit union must establish a BPM that will guide the ADM.

Analytical Credit Unions of the Future

The future of the credit union industry relies on wise business strategy built on analytical insights.  In order to execute these decisions, the credit union will need a well-established ADM.  Building the desired identity for the credit union is essential for their survival.  When our body’s DNA has an error, we are not able to function properly.  Similarly, when the ADM is not built properly, a credit union will not function effectively.  As the credit union industry continues to master the abundance of data bombarding them on a daily basis, they will be able to solidify their model of cooperative finance for future generations.

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Topics: Analytics, Big Data, Big data/analytics, Analytic Data Model

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