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ST. JOSEPH, Mich. – Knowledge is power, but only if you can put it to work. That’s what First Resource FCU has done with a series of business intelligence (BI) deployments, and while ROI can be hard to come by in leading-edge areas like data warehousing, some positive signs are in. “We have worked on BI for about two years now and have documented financial savings and improved member service on projects where we used these tools as part of our decision-making process,” said Mark Weber, CFO of the $348 million, 41,200-member CU in the southwest corner of Michigan. Those tools include three BI products from its core processor ULTRADATA and Harland Financial Solutions: Financial Desktop, Transaction Desktop and Loan Risk Analysis Desktop. The first helps analyze operational results and streamline decision making. The second analyzes transaction trends such as how, when and where members are using services. The third looks at member behavior in loan product use to, among other things, identify potential “at-risk” members. First Resource also uses the Cognos PowerPlay program in synch with the HFS solutions. It analyzes (or scrubs) stored information in a way “that makes data errors (missing Social Security numbers, loans with zero balances still on member accounts, incorrect interest rates, etc.) stick out like a sore thumb,” Weber said. “As a result, we have developed a data integrity team that to date has identified over $200,000 in operational costs due to these errors. And now that we understand these issues, we are developing solutions to reduce costs and improve member service,” he said. Another way the BI tools helped turn mountains of data into meaningful measures was an analysis of the different kinds of credit risks showing up in different areas of the CU’s FOM. “Our credit union operates in three states,” Weber said, “and through a recent analysis using loan risk data, we discovered that members in our different markets with the same credit score displayed different levels of risk. “With the analysis, we learned that the risk was primarily in three product areas: overdraft protection, indirect dealer loans and used autos. We also determined that we could charge a higher rate in this market to compensate for the added risk, yet still remain competitive in the market.” Work on implementing a regional pricing system is now in progress, he said. The BI tools also were useful in determining that one branch being eyed for closure actually was doing well in drive-up traffic, so that part of the operation remained. First Resource is one of 45 credit unions using the ULTRADATA BI products from HFS. They’re not to be confused with CRM applications, but instead are “very focused business applications of an enterprise data warehouse system,” said Pamela Harris, data warehouse products manager at HFS.HFS’ first desktop BI tool for ULTRADATA core users was Financial Desktop, launched in 1998. The technology is still evolving, Harris added, “as the demand is ever increasing for more understanding and analysis tools. Some areas we’re looking at include checking account analysis and member propensity analysis.” Size is not a prerequisite for using such tools, but they’re not cheap. An initial investment in a data warehouse solution can range from $60,000 to $125,000 for base hardware and software, with the desktop tools following that. As far as ROI, the key is using them. “Merely dumping shiny new information into the same old business processes results in little ROI beyond reducing the cost of producing reports,” said Stephanie Shah, HFS vice president of marketing and product development. “The key is identifying business issues and opportunities specific to the organization and then acting on those,” she said. Facilitating that process was the idea behind the desktop solutions like those now being used at First Resource FCU. “We chose to go with the ULTRADATA solution to build a repository of data elements around immediate business requirements,” said Weber, the CU’s CFO. They began with existing data from transactions and loan activity and are adding other business areas, such as deposits, to the data warehouse as they go along, spreading out the cost and the learning curve. “The biggest technical challenge is data integration from our various systems,” Weber said. “We have all heard the stories of credit unions spending in excess of $1 million and several years to develop a data warehouse. “Unfortunately, our credit union does not have those types of funds, nor do I have the patience to spend several years creating the data warehouse.” Focusing the data also had a perhaps unexpected side benefit: focusing the people pushing the buttons, too. “As our managers begin to use this previously untapped data, you really see a shift in the thought process and how we make decisions,” Weber said. “I see meetings where we have much more productive discussions because of the analysis prepared for the meeting. “Unfortunately, we also have meetings where we get bogged down in too much information. But it’s a learning process.” This is not a CU reluctant to take on the learning curve, apparently. Its staffers also use Raddon’s CRM solution for targeted marketing and cross-selling, and offers its members bill pay, online banking, e-statements, e-mail alerts, account aggregation and instant chat support on the Web site. -

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