Credit Union Central of Canada has reached a five-year agreement with Covarity Inc. to automate monthly financial reporting for 607 affiliated credit unions and their customers.

Credit Union Central of Canada (Canadian Central), which represents credit unions across the nation other than those

in Québec, will offer the online service to its members on an opt-in basis for a connection fee.

The service will be hosted by Kitchener, Ont.-based Covarity and organized on a regional level by the provincial Centrals that make up the national organization.

Designed to manage loans for small and medium-sized enterprise customers, the Covarity solution will automate financial statement gathering, credit risk analysis and financial reporting.

Customers can provide financial data directly to their credit unions, which should simplify some of the administrative issues around monthly reporting as well as increase the speed at which reports can be analyzed and acted upon.

E-mail notification to borrower

“”It’s an opportunity for us to do loans monitoring for all of our commercial accounts. Right now it is basically a manual process. Most of the banks, believe it or not, do most of this tracking manually,”” said Jim Hackett, chief operating officer at Canadian Central.

Report generation is typically a laborious process, said Rod Foster, vice-president marketing and alliances with Covarity, with a long cycle between customers filing statements and lending institutions getting back to them.

“”Here you’ve got an objective analysis that’s being done within 20 days of the month-end. There’s e-mail notification going out to the borrower (asking for statements), so it’s very transparent between the two organizations,”” he said.

Automating the reporting process acts as an early-warning system. A credit union can spot earlier on in the reporting cycle if a customer is having financial difficulty and they can counsel accordingly.

“”I guess the trick in the whole application is, where there is an account that looks like it’s potentially going into breach, it highlights all of those accounts within the portfolio. So it’s really focusing in on what we call issue management,”” said Foster.

Hackett stressed that the system is designed mainly to improve relationships and financial reporting for individual customers, but there may be broader applications.

Foster said the system will allow credit unions to compare customer data across verticals and within geographic areas. Restaurants, for example, are difficult to compare because their business is so closely tied to their location, he said.

“”It’s a pretty different environment that you’re dealing with, so if you can start to drill down and give information for

similar-type restaurants in similar-type economies, that has greater value. That’s where we think with our application and the data we’re collecting we’re going to able to produce that for them.””

Hackett estimated that more than half of its members will hook up to the Covarity system.

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