Don’t forget the physical files in a credit union merger or acquisition! (Part 1)

Posted by TAB on
Mergers and acquisitions are changing the credit union landscape in Canada. The impact of these transactions goes well beyond the boardroom and branch offices, reaching into every corner of the organization – including the file room.

In a two-part blog post we will explain why physical files require special attention during a merger or acquisition, and show you how to properly prepare your organization to onboard the incoming files.

You Need a Plan for Your Physical Files

Mergers and acquisitions are complex, and the physical files involved are often overlooked during the planning process – or at least not given the attention they deserve.

There are three reasons why physical files require careful consideration and planning during a corporate transaction.

1. Risk
Acquired physical files are a hive of potential risks and legal issues. If the target organization has kept files for too long, you could be at risk of contravening regulatory guidelines, or exposing your organization to risk in the event of a legal discovery. Or you may be inheriting incomplete or disorganized files, which is often the case with mortgage and loan files. Incomplete or lost files put you at risk of non-compliance with regulatory requirements and create member service issues down the road.

2. Operational efficiency
Every merger and acquisition is different, involving a different degree of operational integration between two organizations. Whatever the transaction ultimately looks like, a standard approach to physical file management is worth considering sooner than later. This avoids the many inefficiencies associated with running two different systems. There are several things to consider here:

  • The file tracking system, such as TAB FusionRMS. Will your system allow you to track all of the records and loan collections, some of which may be in different locations?
  • Physical filing standards, including folder types and label design. Are the practices consistent and compatible, or will you need to convert to a common standard?
  • File numbering systems.  Are you ready to seamlessly track and manage collections based on the existing numbering systems or will you need to create new ones?
  • File storage locations. Will the current records room and loan vaults continue be easily accessible by all staff or is some form of physical consolidation required?

From an efficiency standpoint, the ideal scenario is a complete standardization of filing practices and the consolidation of all files into a single record room or loan vault. In practice this rarely happens, but credit unions are still able to create efficiencies by focusing on one or two of these areas.

3. Member Service
The decisions you make about the physical files can have a big impact on member service. You can ensure that members are served faster – with fewer instances of lost files – by addressing the risks outlined above and ensuring that files are complete and easily accessible. This all adds up to a better member experience, which is one of the most important differentiators sought by Canadian credit unions today.

In part two of our blog post next week, we will show you how to avoid some of the common issues and help you maintain excellent member service in the course of a merger or acquisition. Read part two now >

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