The new Current Expected Credit Loss (CECL) accounting standard for banks and credit unions of all sizes is set to go into effect in 2020 for SEC registrants, and 2021 for all other banks and CUs. The new standards in credit union regulations are going to be both a blessing and a curse for many small to mid-sized credit unions. Now more than ever, CUs are sitting on mounds of data about their members and accounts, but many struggle not only finding the data from disparate sources, but also in making sense and gaining actionable insights from it. The reporting required to comply with the new standards may pose a challenge to CUs, but is also an opportunity to finally put that data to good use. Harnessing data is no longer an option for the C-Suite. These new requirements can be used as a spring board to develop a competitive advantage in credit union lending.
Data is a credit union's best friend in today's financial market. An intelligence-driven strategy will allow you to provide personalized services and recommendations to members. It will expand your footprint, both within existing member accounts and with attracting new members, through targeted messaging. Thanks to advancements in credit union lending software, having an all-inclusive view of member data allows you to easily offer credit union member services that exceed expectations and expand the member's integration with your credit union.
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Now forced by the CECL requirements to collect, report and analyze all this data, it is more important than ever that your loan origination system and core technology is positioned to help, not hinder, your efforts. Having all the necessary data in one secure place, providing you the ability to analyze your loan portfolio and CQI's (Credit Quality Indicators), as well as create forecasting models, should be the goal of your core data processing provider. This will ensure your credit union is keeping clearer records for the new reporting requirements that are coming up.
The key will be to take that one step further than just the compliance requirements. The effort to pull this data together should also work for your credit union to see long term ROI. If you have to collect, analyze and report the data anyway, why not apply it to your marketing and sales efforts, as well as to improving your member services offering and operational efficiency? Staying compliant with new regulations should not be an additional task, but should be a by-product of the technology you use to operate your credit union.
