To the Cloud for Risk Management, Performance Analysis
Risk management at credit unions has grown into an increasingly complicated process, and successfully integrating this critical business and compliance need with financial performance measurement and analysis has become an industry-wide challenge.
Credit unions must consider implementing a hosted Web-based or cloud portal that delivers enterprise performance management capabilities by integrating real-time, accurate financial data with risk, budgeting, forecasting and reporting processes.
Cloud portals provide a cost-effective, single sign-on platform to support risk modeling, planning and financial analysis. An integrated cloud-based platform can help credit unions make better-informed business decisions and implement effective performance strategies, enabling them to keep up with evolving regulatory mandates as well as the challenges of managing net interest margins and revenue growth pressures.
New Tools for Enterprise Performance Management Analysis
With today’s thin margins and reduced revenues, credit unions must monitor performance and achieve results faster. The aim of enterprise performance management – the overarching business management discipline that frames the condition, prospects and risks facing every financial institution, big or small – is to improve business performance and ensure the execution of the organization’s business strategy.
A key differentiator for credit unions looking to grow is the ability to unify strategic decision-making and operational execution of enterprise risk and financial performance management in a dynamic, interactive and adaptive way.
Enterprise performance management helps address the primary concern facing credit unions of all sizes: how to protect value while simultaneously growing profits. Protecting assets is another name for managing risk, and a certain amount of risk is inherent in sustaining and growing a business.
For a credit union, enterprise performance management assists in weighing the business decisions before it: How can consumer loan profitability grow in alignment with the credit union’s risk appetite? What are the best business strategies for dealing with the impact of continued low short-term interest rates? Should its marketing strategy be shifted to focus on expanding member “share of wallet?”
An integrated, Web-based portal supports the enterprise performance management perspective for credit unions, enabling the convergence of traditional financial risk management and financial performance management.
In general, credit unions can expect these portals to assist in improvements in business agility. Furthermore, these portals provide the management team with detailed insight and analysis, which they can use to continually monitor strategy and update plans in light of changing business conditions, especially as results are reported and analyzed in a continuous, dynamic cycle.
The portals are particularly effective for expediting financial information delivery, addressing the need for collaboration within the credit union around risk and financial management processes, and facilitating associated business decisions.
Integrate Risk, Budgeting and Reporting Technology
Credit unions require efficient processing of multiple forecasting scenarios and significant transaction volumes but a solution that offers all this must be easy to use and not cost prohibitive. The current need is for a cloud-based portal that addresses the diverse challenges and requirements facing credit unions today by making it easier for end users to manage and switch between multiple applications, while seamlessly integrating risk, budgeting, financial accounting and reporting data and processes.
However, credit unions today require more than just reporting tools if they want to grow. They need more complete information, delivered in a way that ties the past and present to the future. Member-focused behavioral analytics can be used to model and predict member behavior and buying propensities, enabling the credit union to identify and execute on growth plans through specific member treatment strategies. A credit union must also be able to model and simulate the credit union’s projected growth so that management can adapt to changes to its balance sheet, profit structure and the underlying risks.
An integrated ASP solution that marries budget planning, financial accounting, risk management and reporting tools should generate full balance-sheet and income statement projections, along with comprehensive risk management analysis for more accurate and efficient budget planning and execution.
The changing financial services industry is shaping the ongoing convergence of the crucial functions of risk, budgeting, planning, reporting and accounting. Credit unions, like all financial institutions, are experiencing this. As a result of recent advances in cloud technology, credit unions can now seamlessly integrate risk management, budgeting analysis and reporting management tools for better modeling, forecasting and monitoring that will facilitate the achievement of institutional goals.
Credit unions that embrace cloud technology will have the tools to ensure and improve compliance, grow their revenue and membership base, and be better-positioned to control performance from a central vantage point – to better weather market volatility and harness emerging opportunities.