Pioneer accelerates insight and enhances decision-making

Proactively identifying potential business risks and opportunities

Published on 09-Jun-2011

Validated on 02 Dec 2013

"The insight delivered by Cognos TM1 has helped us to bring delinquency to a historic low – I can’t overemphasize the magnitude of that achievement." - Dan McGowan, Executive Vice-President and CFO, Pioneer

Pioneer West Virginia Federal Credit Union

Financial Markets

Deployment country:
United States

Big Data & Analytics, BA - Business Analytics, Business Integration, Business Performance Transformation, Information Integration, BA - Performance Management, Smarter Planet, Information Infrastructure, Optimizing IT

Smarter Planet:
Smarter Banking


Pioneer West Virginia Federal Credit Union (Pioneer) traces its history back to the creation of the Kanawha County Teachers Credit Union in 1940. Pioneer today has an asset base of nearly $150 million. The organization provides a full range of financial services to 13,000 members across the six counties surrounding Charleston, West Virginia.

Business need:
Pioneer lacked fast insight into key financial indicators for its business such as delinquencies and portfolio credit quality. This made it difficult to address delinquent loans in a timely fashion or to roll out strategies to improve the credit quality of its portfolio. Decision-makers relied on information that was laboriously aggregated by hand and typically out of date before they received it – making it difficult to improve financial performance and provide better value services to members.

With a business analytics solution based on IBM® Cognos® TM1®, Pioneer has automated financial statement creation and regulatory reporting, freeing up skilled staff from tedious manual financial data consolidation and enabling near real-time insight. The solution provides a daily dashboard highlighting key financial indicators to decision-makers so they can understand and optimize Pioneer’s loan and deposit portfolios.

Delivers daily delinquency reports, helping Pioneer reduce loan delinquency from 147 basis points to just 37 basis points inside five months, a historic low.

Aggregates multi-dimensional financial data to deliver timely operational and regulatory reporting, providing vital insight into Pioneer’s financial health. Provides insight into merger opportunities, enabling executives to create what-if scenarios and model the potential financial benefits of merging with other credit unions.

Case Study

Pioneer West Virginia Federal Credit Union (Pioneer) traces its history back to the creation of the Kanawha County Teachers Credit Union in 1940. Pioneer today has an asset base of nearly $150 million. The organization provides a full range of financial services to 13,000 members across the six counties surrounding Charleston, West Virginia.

Unlike traditional banks, which exist primarily to build value for their stockholders, credit unions are cooperative organizations that aim to provide value-added services to their membership. Nevertheless, both types of organization look to constantly improve financial performance by maximizing internal efficiency, while simultaneously growing their customer base or membership and improving service levels. For Pioneer, achieving these goals was dependent on providing timely access to high-quality data for decision-makers.

Dan McGowan, Executive Vice-President and CFO, takes up the story: “We didn’t really have an analytics function, and we recognized that there was a clear need for timely information to help management make decisions. Operationally, we were reliant on manual reports that took significant time and effort to prepare, and that were always backwards-looking.”

Rapid results

Aiming to gain new insight into financial and customer information, McGowan proposed the adoption of IBM Cognos TM1. “Business intelligence is all about timely, meaningful information,” he says. “I knew that we could use Cognos TM1 to aggregate data and transform it into actionable insight.”

One of the first projects Pioneer undertook with Cognos TM1 was financial statement creation. To create these statements, the Accounting Manager used to enter a huge range of general ledger trial balance values – such as compensation and benefits, interest income, interest expense and so on – into a spreadsheet. This was a laborious process, and Pioneer recognized that it could be improved.

“I built data cubes to hold the trial balance values for the income statement and the balance sheet,” says McGowan. “Now, at the end of the month when the data becomes available, we simply load it into the TM1 system automatically. Because I’ve already built all of the consolidation and aggregation points, it’s just a point-and-click exercise to generate the financial statements. By cutting out all the manual steps, we’ve freed up a highly skilled Accounting Manager to work on other tasks, bringing more value to Pioneer.”

Daily dashboards

Pioneer is regulated by the National Credit Union Administration, and is required to report its operational results on a quarterly basis. This includes not only financial reports such as balance sheets and income statements, but also an increasing volume of peripheral operational data. “Over the past few years, our regulator has begun to ask a lot more questions, getting us to slice and dice the data to break down some of the elements on the balance statement, and to drill down to lower and lower levels of detail,” says McGowan. “That’s putting a burden on a lot of credit unions who don’t have the time or expertise to prepare these reports. TM1 is already making it easier to do the regulatory reporting, and we have barely scratched the surface of its capabilities to date.”

Pioneer uses TM1 to aggregate data from three different systems and deliver a daily dashboard known as “Today’s Pioneer Status”, or “TPS”, that shows the executive management team how various measures have changed overnight. “One of the things we look at is ‘share status’ – which is what we call deposits in the credit union world – so that we know on a daily basis how many dollars moved, and how many accounts were affected,” says McGowan.

“Using TM1, we also provide a monthly change number, a yearly change number and a running 30-day change number. The report shows us the composition of the portfolio of deposits, and the associated weighted average interest rate. The same type of information is provided on our loan portfolio, too. The CEO and COO think this is the best thing since sliced bread!”

In a challenging economy where credit unions face increasing pressure on margins, daily oversight of these key figures is more important than ever. Pioneer believes that the TPS report helps managers to keep the company focused on the core activities that support its bottom line – selling loans and gathering deposits.

Historic achievement

Before the introduction of Cognos TM1, the collections team at Pioneer used to receive reports on delinquent loans only on a monthly basis. This meant that the first action to help members resolve potential financial difficulties might be delayed by as much as four weeks. The organization now delivers a daily report on loans that are already or soon to be delinquent.

“The insight delivered by Cognos TM1 has helped us to bring delinquency to a historic low – I can’t overemphasize the magnitude of that achievement,” says McGowan. “In October 2010, our delinquency stood at 147 basis points, and no-one in Pioneer could ever remember it being below 100 basis points. At the end of February 2011, we were down to 37 basis points. Our COO attributes this to that daily visibility provided by Cognos TM1, which enables the collections group to be proactive in helping our members meet their commitments. Early intervention means fewer loans charged off, and enables us to be more member-friendly than a lot of other institutions.”

Pioneer also uses Cognos TM1 to analyze its loan portfolio by credit grade, enabling the organization to track on a daily basis the success of its efforts to improve the overall credit quality of its portfolio.

Spotting new opportunities

Pioneer is a progressive organization, and knows that there are significant opportunities to merge with other credit unions, thereby creating new economies of scale that will translate into lower costs and better deals for all members. To analyze merger opportunities, Pioneer now downloads the quarterly financial statements for all 7,500 credit unions into a repository in Cognos TM1.

Says McGowan, “Having all this information at our fingertips in Cognos TM1 makes it simple to put our financials side-by-side with the financials of any combination of other unions and see how we would look as a combined business entity. There is a high fixed cost of doing business as a credit union, and the rising cost of compliance is pushing many smaller unions into seeking a merger partner.

“Cognos TM1 is a way for us to identify these merger opportunities. There’s a clear value in having timely, accurate information, with the ability to slice and dice on the fly. Cognos TM1 enables us to make more intelligent and timely decisions based on better data, and to elevate what we’re already doing to a new level of excellence.”

One solution to many business needs

Aside from these major projects, Pioneer also uses IBM Cognos TM1 as a platform for solving all sorts of other smaller business problems. For example, when an employee questioned the amount of paid time off (PTO) that she was granted following a medical procedure, Pioneer realized that there was no easy way to check the facts. To avoid legal complications and ensure that the employee received her full allowance of PTO, the company performed a manual, payroll-by-payroll analysis of all her PTO accruals for the previous two years, the amount of days she had used, and the resulting balances.

“It took a huge amount of human resources and management time to perform the analysis, and we didn’t want to have to go through the same thing again if another employee raised a similar question,” says McGowan. “We set up a PTO data cube in TM1, and our HR Director now enters all incidents of PTO into the system on a regular basis. With a few mouse-clicks, she can now send a full PTO report to any employee who requests one.

“This is a great example of TM1’s versatility. Businesses generally purchase software to solve major challenges around management reporting, budgeting, forecasting and so on, but they also tend to have many other minor pain-points that don’t get addressed by IT because there isn’t a simple way to deal with them. In many cases, this results in many wasted hours of manual effort. With TM1, you can quickly and easily develop new analytical applications to solve these kind of problems, without any need to invest in new software.”

The value of the PTO reporting solution was recognized by the CUNA Technology Council, which presented Pioneer with an Excellence in Technology Award in 2012.

National recognition

In fact, Pioneer has won a multitude of awards over the past few years. In 2009, Credit Union Times named McGowan CFO of the year, and in 2011 he was designated Professional of the Year by the National Association of Federal Credit Unions. In 2012, he was honored by the Credit Union Executives Society (CUES) as the industry’s Exceptional Leader for the year. In both 2009 and 2012, IBM named him as an Information Champion – a designation bestowed on individuals who have made exceptional contributions to the global technical community.

Pioneer’s successful turnaround under its current management team has also led to national recognition within the industry: the National Association of Federal Credit Unions (NAFCU) named it Federal Credit Union of the Year in 2012. McGowan comments: “Having TM1 in place really played a part in enabling us to provide the service level that earns those kinds of national accolades – I don’t know what we’d do without it!”

Delivering value at C-level and beyond

Trevor Hyre, Chief Operations Officer at Pioneer, comments: “Prior to Dan’s implementation of IBM Cognos TM1, we had no easy way of analyzing delinquency information, except from monthly canned reports from our core system. That’s not good enough. We not only need to know the number and dollar amount of delinquent loans during the course of the month, but we also need the ability to identify potential problem loans where early proactive interventions with members may help. The daily status update summarizes those things for me, but the real value is that the underlying details are routed to our collections department via TM1 Web every single day, where they can quickly slice and dice it to determine priorities.”

Dana Rawlings, Pioneer’s CEO, concludes: “The daily status report has moved us out of the stone age into the 21st century. When I assumed the role of CEO here, I found that information available to me was often days or weeks old, and was served up piecemeal.

“Before Dan implemented the TM1 system, we had no way of explicitly knowing where we stood each day. Now we do, and that’s been a tremendous help in guiding me and senior managers in our decision-making processes – with measurable, tangible results to show for it. Overall, our use of the TM1 system probably places us in the top one percent of credit unions in terms of business intelligence capabilities.”

About IBM Business Analytics

IBM Business Analytics software delivers data-driven insights that help organizations work smarter and outperform their peers. This comprehensive portfolio includes solutions for business intelligence, predictive analytics and decision management, performance management, and risk management.

Business Analytics solutions enable companies to identify and visualize trends and patterns in areas, such as customer analytics, that can have a profound effect on business performance. They can compare scenarios, anticipate potential threats and opportunities, better plan, budget and forecast resources, balance risks against expected returns and work to meet regulatory requirements. By making analytics widely available, organizations can align tactical and strategic decision-making to achieve business goals.

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IBM products and services that were used in this case study.

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