CUNA Mutual, Farin Pilot Robust ATM Tool; Debut Set For This Week

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As the business of running a credit union has gotten more complex, the need for a robust ALM tool to aid in the decision-making is all the more important, according to CUNA Mutual Group, which is unveiling a new ALM software suite this week at its Discovery conference.

While CMG has been offering ALM tools for about 25 years, the latest version of its Model Management program leverages the Internet and related technological advances.

"It was time for us to make the jump forward," said Farin & Associates President Tom Farin, whose firm partnered with CUNA Mutual to create the updated Model Management. "The original was built 14 years ago, so all that Windows code was pretty out of date. There was so much more we could offer, particularly with Internet access."

By using the .Net platform from Microsoft, the updated Model Management will provide credit unions with automatic updates to software and key ALM information, such as historical interest rates, prepayment and decay rates, said Bob Lindner, VP-sales and marketing for CUNA Mutual. That will eliminate the need for sending out new versions and upgrades.

"This new software marries interest rate-risk horsepower and ALM analyses with unparalleled ease of use with a new web-like, task-oriented user interface," Lindner said, adding that the new platform will also enable a collaborative workspace via the web, allowing credit unions to easily interact with CUNA Mutual consultants.

"This also gives us the ability to deliver certified financial instruments- loans deposits and borrowings that are certified by an outside firm," Farin offered. "NCUA has indicated it wants more validation of the inputs and outputs of a credit union's ALM model, and this will help with that ow, as Wall Street invents new types of instruments and a credit union adopts them, they can drop those right into the model."

Accurate Modeling Guaranteed

The software's certified financial instruments also guarantee accurate modeling of cash flows, which will result in better income simulation and financial analyses, he added.

The use of new technology also means the whole modeling process is faster and easier. "This is an innovative way of allowing people to set up whatever interest rate environment they want to model," Farin observed. "It can handle non-parallel shifts easily. Downloading a lot of information from the server eliminates some of the manual keying in of information. The result is it takes a lot less effort to care for and feed your model."

CUNA Mutual first partnered with Farin & Associates, also located in Madison, Wis., on ALM modeling in 1998, citing F&A's strong history of providing interest rate risk and ALM software to financial insitutions of varying sizes, Lindner explained.

"We wanted to come up with something that could be as sophisticated as the largest financial institution would need and still be very easy to use for smaller and mid-size credit unions," he added.

Model Management will be piloted by several credit unions before being introduced to CMG's credit unions in August.

"Having solid ALM practices and tools in place are critical for credit union boards and management to accurately chart their course and achieve their financial goals," said Lindner. "Changing economic conditions, competitive pressures and regulatory scrutiny are forcing credit unions to become better financial managers."

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