Delivering analytical capability and insight
Credit Unions are a key provider of lending products to people who may not have access to mainstream lenders, such as banks and finance companies. With increasing focus by Government, regulators and wider society for greater access to affordable lending for those who might otherwise be denied finance, More Metrics has been working with a number of Credit Unions to help them better understand their customer and prospect base.
The rationale for us undertaking this initiative is based on three assumptions:
1. Credit Unions have limited access to impartial analytical support they can call on because of cost and resource constraints. We think that the most important gap to fill is the analysis of portfolio risk. This is distinct from the assessment of individual lending risks, which we assume is better understood and managed by Credit Unions through the rapport they develop with individual members, supplemented as appropriate by the use of credit bureau data and open-banking data in line with industry best practice.
2. High failure rates amongst Credit Unions. Communities without access to a Credit Union are at a significant disadvantage with financially excluded neighbourhoods more reliant on high-cost lenders. A Credit Union failure is therefore a double-whammy and reducing failure rates needs to be addressed as a priority.
3. We believe our particular approach to data and analysis at More Metrics allows us to make a very useful contribution.
The More Metrics solution is the development of a robust, analytical product, the Portfolio Assessment Tool (PAT). A more detailed description of the PAT can be found in the White Paper section but in outline, the key objectives for the PAT are:
1. To provide Credit Unions with a set of robust and easy to understand measures of their catchment area, loan
and depositor portfolios that can be used to assess how well the CU supports its local community.
2. To ensure the presentation of results giveCredit Unions the wherewithal to have informed discussions with
their stakeholders. The main measures cover deprivation and financial hardship and are provided to help them demonstrate their "added value"
3. To analyse Credit Unions across the whole of the UK on a consistent basis. This is needed to enable accurate benchmarking between Credit Unions to be undertaken.
4. To minimise operational risk by avoiding the need for Credit Unions to share any personal data with third parties. At the core of More metrics data proposition is its focus on non personalised data. Using only publically available aggregated data that has no restrictions on its use (e.g. OGL licenced), keeps costs low and minimise any potential GDPR issues. Also to ensure that the main sources used are updated regularly (typically annually), to keep assessments up to date going forward.