By Keegan Daniel
While sitting in a room with professionals from seven credit unions, we got into a discussion on how to define an “active” member and members “in good standing.” Rather than give them my own definitions, I prompted each participant to give their own credit union’s definition of the two terms.
As you can imagine, we received many different answers, and some were even unsure of how they’re defined at their credit union and would need to discuss it further with their teams.
Consistency in defining those terms is the key for performing analysis. However, it’s not consistency at the industry level than is needed, but consistency at the individual credit union level. While it might be nice to have a consistent definition across all credit unions, empowering us to compare credit unions and get a better idea of industry-wide success, trends, and forecasting, it would necessarily exclude the widely varying circumstances of our credit unions, be it in size, location, field of membership, or any number of other factors.
When credit unions fail to define these terms, it can make analysis of the membership confusing if not outright misleading. If we apply different definitions depending on the type of analysis we’re performing, it makes it tougher to compare those analyses and search for correlations and causations.
Questions worth Asking
Have you sat down with your analysis team to define these terms? Is an active member one that logs into online/mobile banking once a month or once a week? Is a member in good standing one without any current negative balances or one that’s not gone negative in the last month?
These are the kinds of questions worth asking to ensure consistent definitions are upheld across all analyses performed over time. If you shift the goal posts to get the results you’re hoping for, you’re not doing analysis.
I suggest that credit unions define what their approach is and then create a set of rules that can be used for any data that is created. This helps to soothe the engine of creating data, because the credit union has already agreed upon the parameters for both what an “active” member is and what it means to be “in good standing.”
This also helps to take the guesswork out of the equation when creating/analyzing data to ensure that data creation and analysis can continue with an agreed upon routine.
Keegan Daniel is Asterisk Intelligence Manager with CU*Answers.