VERNON HILLS, Ill.-If there's one thing Baxter CU learned from the recession, it has been the importance of understanding data at a deeper level.
"The most important lesson I took out of the recession is that analytics-really good analytics-are increasingly important to running the business effectively," said Jeff Johnson, SVP of information technology at Baxter CU here, and vice-chair of the CUNA Technology Council. "Whether it's really understanding your credit risk and projected credit risk, or really understanding member behavior, I think analytics is going to be a key differentiator. We need to do a great job in our analytics across the board."
Johnson, along with other members of the CUNA Technology Council, has also played a role in creating the Credit Union Financial Exchange (www.cufxstandards.org), which is working to establish data standards throughout the credit union community. ("Prepare For Emergence Of 'Big Data' In Q3 and Q4," June 11).
Adjusted Risk Strategies
Johnson explained that like most other credit unions, Baxter CU faced a host of credit risk issues during the recession. As a result of that, it has adjusted its strategy to put more of a focus on taking an aggressive approach to credit risk, looking closely at its own internal data and pulling external data to develop better models for predicting delinquencies and chargeoffs.
"That helped us plan if we needed to tighten our belt more or change our underwriting criteria," he explained. The 151,000-member, $1.6-billion credit union did see changes in delinquencies as the economy improved and bad debt was charged off, "but predicting what was going to happen was pretty important from a planning perspective."