The Decision Maker


Posted by Austin on Oct 3, 2014 11:51:00 AM

Credit unions are increasingly looking for ways to drive performance by improving their reporting and analytics capabilities. One of the biggest payoff initiatives is a data warehouse.

Simply stated, this is a secure, unified repository of the credit union’s most valuable data structured in a way to quickly deliver valuable insights.

While the credit union’s core and other operational systems are built to support efficient transaction processing, they are typically poor at reporting and analytics. A data warehouse essentially takes a snapshot of every transaction from the different operational systems and integrates them into a powerhouse of data fine-tuned to answer mission critical questions quickly.

The snapshot process is handled by Extract, Transform, and Load software (usually known by its acronym: ETL).

Using the word “snapshot” gives only a very high level idea for what ETL does. In actual fact, these three little letters represent what data warehouse guru Ralph Kimball says is, “estimated to consume 70 percent of the time and effort of building a data warehouse”. Kimball’s own studies led him to conclude ETL comprises 38 different sub-systems so it is no wonder it accounts for such a great proportion of the data warehouse effort.

So, what does this mean for the credit union planning to start the data warehouse “journey”?

For most CUs it means that developing an in-house ETL capability is not cost-effective. ETL expertise is very scarce and therefore very expensive relative to other IT roles. In fact, when one does the math on paying for in-house ETL resources, the ROI for a data warehouse is often not there.

Even if a less costly ETL resource could be obtained, the efficiency of an ETL coder is usually based on familiarity with the underlying data structures. ETL practitioners who are not familiar with the inner workings of credit union systems will simply take a very long time to get it right.

The best alternative for credit unions is a vendor who specializes in credit union systems and has already developed all the ETL and data architecture for this specialized type of data warehouse.

The top 5 most popular core vendors are used by 66% of U.S. credit unions. For specialized standalone systems (e.g. – student loans, mortgage origination, etc.), similar concentrations of vendor products prevails. This means experienced credit union-focused data warehouse builders have probably already built and integrated data warehouses based on these popular systems. Even if a particular system is new to them, the time to build is accelerated due to their credit union industry experience. The resulting cost to the credit union is then a fraction of a do-it-yourself alternative.

Think about rueful home repair enthusiasts who wish they had called a plumber first. In the same way, credit unions looking to join the data warehouse revolution will be best served by outsourcing ETL and other critical processes to the professionals.

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Article written by: Peter Keers, PMP, Engagement Manager at OnApproach

Topics: Analytic Data Model