Embrace full-population compliance testing to better serve members
Most credit unions still use sample-based testing, and they should switch.
Credit unions have a long-standing reputation for their commitment to members—a key differentiator among other financial institutions. But like most others, credit unions today still rely on sample-based manual compliance testing.
Is this really the best approach? More importantly, does this ensure a fair and equitable experience for all members?
No. Here’s why.
Let’s take a portfolio of a million loans. To get a 95% confidence interval with a 5% error rate, you would only need to test 383 loans. That means you have 999,617 unknowns that could leave you open to risk.
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