Managing Member Data During a Merger

Data Integration text concept on blue arrow flying over green world map background
By Kris Bishop

4 minutes

Three integration steps your credit union should take.

Did you know that improper data management during a merger can result in up to $275,000 in avoidable costs for your credit union? Even worse, it can cause unnecessary delays in responding to member requests, resulting in a hit to your reputation.

During a merger, most credit unions opt for one of three approaches to data management, all common but flawed. Either the organization leaves the data sitting in the acquired system, dumps the data to CDs or enlists its core provider to handle data conversion. What institutions may not realize is that effective alternatives to these data management strategies exist.

What Are the True Costs of Common Approaches to Data Management?

Perhaps the most obvious cost to credit unions relying on common data management approaches during a merger is the monetary cost. By hiring a core provider to handle conversion, credit unions will shoulder not only the cost of the conversion project (ranging anywhere from $20,000-$250,000), but also will encounter other hidden costs caused by operational disruption (averaging $5,000-$75,000). However, if the credit union simply leaves the data sitting in the acquired institution’s imaging or enterprise content management system, they’ll likely incur costs ranging from $50,000-$275,000 annually, associated with storage, licensing, maintenance, updates and other fees.

While it may initially seem like the cheapest option, housing acquired data on CDs can also result in exorbitant costs and significant risk. Not only is this media lacking the proper security measures to protect the institution from a data breach, but data is also much more likely to be misplaced or damaged. This can affect the credit union’s credibility with members and lead to additional monetary costs as a result of time wasted sifting through disorganized data or, even worse, lawsuits or other legal consequences.

Lastly, a drawn out process or disorganized data storage can cause operational disruption that negatively affects members’ experience. Members may not be able to access the historical documents or images they need or retrieving this data may take significantly longer than it should, increasing stress during such pressing financial situations as trials or bankruptcy filings. Inaccessible data can also impact front-line operations, affecting staff’s ability to serve members with basic information and transactions.

A Strategic Approach in Three Steps

To avoid these negative consequences, credit union management must develop a strategy for integrating acquired data.

1. Score

First, each piece of data should be assigned a score to determine its importance. Acquired data should be segmented by general type (such as check, statement, financial report or loan document) then broken down further by age. Each segment is then assigned a “score,” which reflects the type of data, who needs access, how mission critical it is, sensitivity and how long it needs to be retained.

2. Group

Once data is scored, the credit union should classify it into three groups:

  1. Group 1: Must have, requires immediate access
  2. Group 2: Must have, requires infrequent access
  3. Group 3: Nice to have, but not necessary to keep

3. Implement

The groups determine the best way to implement each type of data. Group 1, generally consisting of the last 12 months of members’ checks and statements, is worth paying to convert to production as it will be called on regularly to serve member needs. Only converting frequently referenced data to the production system will significantly cut down on cost, time and disruption, providing a more seamless experience for members and the institution alike. Credit unions may be able to mitigate cost and disruption by working with a third-party provider specializing in data conversion with experience working across multiple source systems.

Group 2, typically consisting of member checks and statements older than 12 months as well as archived documents and reports, is best handled by leveraging a commercial search tool, enabling the credit union to easily search across multiple systems to retrieve data. These tools are much more cost-effective to maintain than imaging or ECM systems; they enable the credit union to migrate data in its original format instead of converting it, virtually eliminating disruption. Best of all, credit unions can avoid expending a significant amount of money converting data that will only be accessed once in a blue moon, if at all.

As for Group 3, the credit union should either copy and store the data on to a local server, download it to CDs or dispose of it completely.

When undergoing a merger, it’s unnecessary for most credit unions to convert acquired legacy data in full. Instead, most will want to opt for a strategy that blends conversion to the current production system with migration to a commercial search tool. Doing so minimizes disruption to operations, risk and cost while ensuring that the credit union can still access the data it needs and extend the most seamless experience to members.

Kris Bishop is founder and president of Integrated Legacy Solutions, Trussville, Ala.

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