A Critical New Data Tracking Need

Now that the recession is 100% certain, we know the traditional performance dashboard will light up with all the downward trends. These include rising delinquencies and net charge offs, falling or negative ROAs and capital levels.

Most credit unions expect these trends. They are using their capital to show that the credit union is there for members even in the most pressing of economic circumstances.

The Analytics of Recovery Tracking

Data analytics routinely captures on an ongoing basis hundreds of facts about members’ activity, product/service utilization, credit/debit transactions, and in some cases next most likely financial need.

But the numbers that will really tell the story of credit unions’ role in this crisis are the underwriting of member recoveries.

The data analytics challenge is to identify the segment of members most at risk during this crisis. Once established, then to focus assistance programs to help them return to a stable financial position.

If one third of American households are credit union members, and the unemployment rate hits 20%, it is reasonable to assume a high percentage of members will immediately suffer loss of income. Monitoring assistance and recovery trends of these members could include:

  • Number of members who were laid off, unemployed-and their work return over time;
  • Number who received unemployment-and then returned to employment;
  • The number and amount of loans rewritten to reduce payments-by loan type;
  • The $ amount of fee reductions extended;
  • The $ of new, low cost loan advances to navigate changing economic fortunes;
  • Foreclosures and repossessions halted; recovery status of these members;
  • The $ refinancings of loans at other firms to lower the members’ rates and payments.

Many of these individual situations are recorded in the traditional financial reports. But that hides the member impact. It makes the focus institutional financial health, not the members.

Credit union contributions to food banks, community foundations and other corporate forms of assistance are necessary and admirable. From the members’ perspective the real test of a credit union, regardless of size or resources, is were you there when I was most in need?

A Stronger Common Bond

At some future time, the complete cycle of current economic events will be chartered. The credit union system will have survived. The cooperative story should be about what we did for members in their time of crisis. For our institutional recovery depends on members’ achieving and sustaining financial well-being.

The message is that members are better off being part of a credit union. We must back that up with the facts and examples of going the extra mile. Then the rhetoric will be believable and appropriate.

Most important is that the we will have come out of this crisis with a stronger common bond.

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