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Critical Business Intelligence for Strategic Planning and Process Improvement

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As many credit unions begin addressing their strategic plans this fall, it’s important that stakeholders have adequate business intelligence to help inform and support decisions to continue or adjust strategic direction.  While each credit union’s areas of focus will certainly be unique, there are common themes that we recommend all credit unions consider as they explore their environment.  Following are a few key pieces of business intelligence we recommend credit unions consider as they approach their strategic direction.
Is our lending process working?
Many credit unions face challenges with loan volume as the economy continues its slow recovery.  Examining each point in the loan process can provide insight on if the lending process overall needs to be addressed.  Don’t focus only on total applications received and total applications approved; look at the percent of approved applications that are funded.  Based on this ratio, consider the why behind the ratio and if something in the process is not working.  This ratio can provide significant insight on the lending process and if the credit union is really capitalizing on each opportunity.
Is our branch strategy and infrastructure in line with branch transactions?
It’s no secret that electronic delivery channels are becoming increasingly commonplace in consumers’ everyday life.  Analyzing branch transaction trends against infrastructure (number of branches, number of front-line staff hours, not just bodies) in relationship to trends in electronic service usage can provide a valuable foundation for addressing delivery channel strategy going forward.  While it can be more difficult to get at, understanding the type of transactions occurring in the branches is key.  Are your branches evolving to a more knowledge-based model or are your front-line staff mostly cashing checks and performing other transaction-based functions?
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A Few Questions To Consider Regarding Branch Strategy

What is your credit union’s long-term branching strategy?  That might be a tough question to answer for many institutions.  As margins have decreased, many credit unions have had to take a long and hard look at the effectiveness and profitability of their branch network.  While the bulk of new memberships, loans and deposits originate in branches, many institutions have considered shifting toward a model more geared toward e-services.  There are a multitude of questions that could be considered with respect to credit union branching, a few of which are outlined below:

  • How does the branch strategy align with the overall strategic direction of the credit union?
  • Can your institution afford to operate one or more branches that consistently have a negative overall contribution to the credit union?
  • Are branch location decisions based on where your current members live, or where members of your desired target market live?  Answering this question could lead to different decision-making regarding where to position future branch locations
  • Does your institution have the technology to allow for reduced member reliance on branch locations?  If not, how quickly are your technology offerings improving, and at what cost in terms of dollars and resources?
  • What might be the unintended consequences of your branching decisions?
  • How does the credit union measure branch success?
  • If the credit union is moving toward a model that relies less on physical locations, how will your organization effectively cross sell to members or prospective members?
  • Does the strategy fit with the financial realities your organization is facing now, or could face in the next 3 to 4 years, especially if rates remain low and loan demand is slack?
Continued margin pressure is likely to increase the importance and timeliness of these types of decisions.  Meanwhile, members are increasingly asking for more from their financial institutions which makes this a tricky balancing act.