Ransomware Recovery: Strategies for Ensuring FI Business Continuity

 

In December 2023, a devastating ransomware attack targeted the cloud services provider Ongoing Operations, causing a widespread outage that impacted numerous credit unions. This incident served as a wake-up call for financial institutions and credit union leaders, highlighting the urgent need for robust business continuity strategies in the face of evolving cyber threats. Today we will explore the key steps credit unions can take to establish business continuity in the aftermath of a ransomware attack, ensuring the resiliency and security of their operations.

Understanding the Impact of a Ransomware Attack and the Importance of Business Continuity

A ransomware attack is a malicious cyber attack in which cybercriminals infiltrate a network, encrypt data, and demand a ransom payment in exchange for the decryption key. The consequences of a successful ransomware attack can be severe, ranging from financial losses and operational disruptions to reputational damage and legal liabilities. For credit unions, the impact of a ransomware attack can be particularly devastating, as it can compromise sensitive customer data and disrupt critical financial services.

The Ongoing Operations Ransomware Attack

In December 2023, the credit union industry experienced a major ransomware attack targeting Ongoing Operations, a prominent cloud services provider. This attack resulted in a widespread outage that affected numerous credit unions, causing disruptions to online banking services, member communication, and internal operations. The incident served as a stark reminder of the vulnerabilities faced by credit unions in the digital age and the need for proactive measures to mitigate the risks associated with ransomware attacks.

Building Resiliency Against Ransomware Attacks

To establish business continuity in the aftermath of a ransomware attack, credit unions must adopt a multi-layered approach that encompasses robust cybersecurity measures, comprehensive backup and disaster recovery solutions, and proactive incident response strategies. Let’s explore these key elements in detail.

1. Strengthening Cybersecurity Measures

Effective cybersecurity measures form the foundation of any business continuity strategy. Credit unions should implement a comprehensive set of cybersecurity controls to protect their networks, systems, and data from ransomware attacks. These measures may include:

  • Endpoint Protection: Deploying advanced endpoint protection solutions to detect and block malicious software before it can infect the network.
  • Network Segmentation: Implementing network segmentation to isolate critical systems and data from potential threats, limiting the spread of ransomware.
  • User Awareness Training: Conducting regular cybersecurity awareness training programs to educate employees about the risks associated with phishing emails, suspicious links, and other common attack vectors.
  • Patch Management: Keeping systems and software up to date with the latest security patches to address known vulnerabilities that can be exploited by ransomware.

By strengthening their cybersecurity measures, credit unions can significantly reduce the risk of a successful ransomware attack and enhance their overall resiliency.

2. Implementing Anomaly Detection Systems

Anomaly detection systems such as IMS’ Polaris Radar play a crucial role in early detection and prevention of ransomware attacks. These systems use advanced machine learning algorithms and behavioral analytics to identify abnormal patterns and activities that may indicate the presence of ransomware or other malicious activities. By monitoring network traffic, user behaviors, and file activity, anomaly detection systems can quickly detect and respond to potential threats, minimizing the impact of a ransomware attack.

3. Backup and Disaster Recovery Solutions

Having robust backup and disaster recovery programs is essential for establishing business continuity in the aftermath of a ransomware attack. Credit unions should implement regular, automated backups of critical data and systems. These backups should be stored in secure, offsite locations to ensure their availability in the event of a ransomware attack or other data loss incidents.

Additionally, credit unions should regularly test their backup and disaster recovery processes to ensure their effectiveness and reliability. Conducting mock recovery exercises can help identify any gaps or vulnerabilities in the backup strategy, allowing credit unions to make necessary improvements and adjustments.

4. Incident Response and Recovery Planning

In the event of a ransomware attack, a well-defined incident response plan is crucial for minimizing the impact and restoring normal operations as quickly as possible. Credit unions should develop a comprehensive incident response plan that outlines the roles, responsibilities, and communication protocols for responding to a ransomware attack. This plan should include:

  • Incident Identification and Reporting: Clearly defining the process for identifying and reporting a ransomware attack to the appropriate stakeholders, including internal IT teams, management, and external incident response partners.
  • Containment and Mitigation: Outlining the steps to contain and mitigate the impact of the ransomware attack, such as isolating affected systems, disconnecting them from the network, and implementing temporary measures to restore critical services.
  • Communication and Notification: Establishing communication channels and protocols for notifying affected parties, such as employees, customers, regulatory authorities, and law enforcement agencies. Timely and transparent communication is crucial for maintaining trust and managing the reputational risks associated with a ransomware attack.
  • Recovery and Restoration: Detailing the procedures for recovering encrypted data, restoring affected systems from backups, and implementing additional security measures to prevent future attacks.

By having a well-prepared incident response plan in place, credit unions can minimize the downtime and financial losses associated with a ransomware attack, allowing them to recover and resume normal operations swiftly.

Securing Business Continuity: Resilient Strategies

In today’s digital landscape, credit unions face increasing threats from ransomware attacks. Establishing business continuity in the aftermath of such attacks requires a comprehensive approach that combines robust cybersecurity measures, effective anomaly detection systems, reliable backup and disaster recovery solutions, and well-defined incident response and recovery planning. By prioritizing resiliency and taking proactive steps to mitigate the risks associated with ransomware attacks, credit unions can protect their operations, safeguard sensitive data, and maintain the trust of their members.

At IMS, we understand the importance of establishing business continuity in the face of evolving cyber threats. Our comprehensive suite of anomaly detection, backup, and disaster recovery solutions are designed to help credit unions increase their resiliency and protect against ransomware attacks. Connect with us to learn more about how IMS can support your credit union’s business continuity efforts.


Risk Management Strategies for Credit Unions

 

With fintech and general technology evolving at their current pace, credit unions must adopt effective risk management strategies that can safeguard their stability and promote growth. The economy’s uncertainty and volatility have transformed how the financial industry perceives risk, making it imperative for credit union boards and management to proactively identify and plan for potential risks. Today we’ll be exploring the importance of risk management for credit unions, examining the internal and external risk factors they face, and discussing strategies to effectively manage these risks.

The Importance of Risk Management for Credit Unions

In the past, credit unions relied heavily on financial projections to guide their operations. However, in today’s economy, financial projections alone are no longer sufficient to ensure the success of credit unions. To mitigate potential hazards and protect their business goals and objectives, credit union boards must have a comprehensive understanding of both short-term and long-term risks. While long-term risks are crucial, it is essential not to overlook the potential impact of short-term risks, as they can escalate into significant challenges over time.

Credit unions face a wide range of risks, each posing unique challenges and requiring careful consideration and proactive management. By being equipped with the knowledge of these risks, credit unions can develop risk management plans that minimize their impact when they occur. This proactive stance not only safeguards the credit union’s assets but also strengthens its overall stability and growth.

Internal and External Risk Factors for Credit Unions

To manage risks effectively, credit union leadership should first identify and understand internal and external factors that could impact their financial stability and operations. Recognizing these risk factors allows credit unions to develop targeted risk management strategies to mitigate their potential impact.

Internal Risk Factors

  1. Credit Risk: This risk arises from borrowers or members failing to repay their loans or debts, leading to asset quality deterioration and financial losses.
  2. Operational Risk: Inadequate or failed internal processes, human errors, technological failures, fraud, and other disruptions can result in financial losses or damage to the credit union’s reputation.
  3. Compliance and Regulatory Risk: Credit unions must adhere to numerous laws, regulations, and industry standards. Failure to comply with these requirements can lead to penalties, legal actions, or reputational damage.
  4. Liquidity Risk: The risk of not having sufficient liquid assets to meet short-term obligations, which could impact the credit union’s ability to function effectively and serve its members.
  5. Interest Rate Risk: Fluctuations in interest rates can affect profitability and the value of assets and liabilities, as credit unions often have a significant portion of their assets and liabilities tied to interest rates.
  6. Strategic Risk: This refers to the risk associated with the credit union’s strategic decisions, such as entering new markets, introducing new products, or expanding services.
  7. Reputation Risk: Negative publicity, customer dissatisfaction, or public perception issues can damage the credit union’s reputation and erode member trust.

External Risk Factors

  1. Economic Conditions: Changes in the broader economic environment, such as economic downturns, inflation, or recession, can impact borrowers’ ability to repay loans and affect the credit union’s financial performance.
  2. Market Risk: Fluctuations in financial markets, including interest rates, foreign exchange rates, and stock prices, can impact the credit union’s investment portfolio and overall financial health.
  3. Regulatory Environment: Changes in laws, regulations, or policies can impose new compliance requirements or restrict certain activities, affecting the credit union’s operations and profitability.
  4. Technological Advancements and Cybersecurity: While technological advancements can enhance competitiveness, they also introduce new cybersecurity threats and vulnerabilities that credit unions must address. Boosting cyber hygiene can help mitigate this risk.
  5. Competitive Landscape: Credit unions face competition not only from other financial institutions but also from emerging fintech companies, which can affect market share and member acquisition.
  6. Natural Disasters and Catastrophic Events: Natural disasters or catastrophic events can disrupt operations, damage physical assets, and affect the credit union’s ability to serve its members.

Understanding and effectively managing these internal and external risk factors is crucial for the long-term success and sustainability of credit unions. Credit union leadership must work closely with management to develop robust strategies that mitigate these risks and ensure the credit union’s stability and growth.

Key Risk Management Tactics for Credit Unions

To effectively address potential risks, credit unions can employ various risk management tactics. These tactics aim to identify, analyze, and prioritize risks, as well as develop proactive measures to prevent losses and recover from any adverse events. Here are some key risk management tactics for credit unions:

  1. Utilize Available Data for Decision Making: Credit union boards should leverage historical data to make informed decisions related to risk management. Analyzing past risks and their impacts provides valuable insights for managing future risks.
  2. Track Key Risk Indicators (KRIs): Tracking KRIs allows credit union boards to identify early warning signs of risk exposures. KRIs are metrics used to manage risks and assess the potential consequences of those risks.
  3. Employ Technology to Manage Regulatory Compliance: Credit unions can streamline their risk management processes and optimize staff allocation by utilizing technology. This helps ensure compliance with regulatory requirements while reducing manual, time-consuming tasks.
  4. Proactively Manage Collections: Investing in technology to streamline the collections process can make it more effective and efficient. Offering self-service options for borrowers can improve response rates and minimize credit risks.
  5. Leverage Data Insight: Data mining programs can help credit unions maximize the value of the data they already collect. These programs provide insights into how to better respond to members’ needs and address potential risks.
  6. Stay Vigilant of Regulatory Changes: Credit union leadership needs to stay informed about changes in laws and regulations that may impact their operations. Maintaining compliance is essential to avoid penalties and legal actions.
  7. Collaborate with Other Financial Institutions: Sharing resources and collaborating with other financial institutions can help credit unions stay competitive. This is particularly beneficial when retaining repossession agents or dealing with shared third-party vendor services.
  8. Optimize Risk Services: Utilizing predictive modeling, insurance tracking, location services, and loss mitigation can help credit unions reduce risks and plan for the future.

By implementing these risk management tactics, credit unions can enhance their ability to identify, assess, and mitigate potential risks, ensuring the long-term stability and growth of their operations.

The Benefits of a Risk Management Plan

A well-developed risk management plan offers numerous benefits to credit unions. These benefits include:

  1. Resource Protection: Risk management plans help protect valuable resources such as people, property, assets, time, and income. They ensure that credit union facilities and environments are safe for staff, customers, and visitors.
  2. Strengthened Stability: Risk management plans safeguard people, the environment, and credit union assets from harm, thereby strengthening the overall stability of operations.
  3. Reduced Legal Liability: A competent risk management plan can reduce legal liability and the threat of potential litigation. By identifying and mitigating risks, credit unions can minimize the likelihood of facing legal challenges.
  4. Cost-Effective Insurance: Risk management plans allow credit unions to work with insurance companies to define their insurance needs while keeping premiums as low as possible. This ensures cost-effective insurance coverage without compromising on protection.

Credit unions face various risks from both internal and external sources, and it’s crucial to prioritize risk management for their long-term success. As credit unions address these challenges, considering backup and disaster recovery solutions becomes essential to secure and maintain their operations. 

IMS offers specialized backup and disaster recovery services for financial institutions, providing local backup options and secure off-site replication. This ensures that credit unions are safeguarded against potential disasters or cyber threats, allowing for quick and efficient recovery to minimize disruptions. 

Adopting sound risk management strategies is key for credit unions to navigate the complexities of the financial industry. Let’s talk about how our solutions can help proactively manage internal and external risks, and empower your credit union to thrive in an ever-changing financial landscape.


How Artificial Intelligence is Transforming Credit Unions

 

Artificial intelligence (AI) has become a part of our daily lives. More often than not, the average consumer isn’t even aware of how deeply integrated it already is. From voice assistants to recommendation algorithms, AI is making its mark on industries and influencing customer expectations. Financial institutions, including credit unions, are also adopting AI to meet these changing demands and stay competitive. Let’s explore how credit unions, even with smaller budgets and teams, can effectively leverage AI to drive success in the digital age.

The Importance of Artificial Intelligence in Credit Union Operations

As credit unions navigate the challenges of the modern financial landscape, AI offers a host of benefits. By harnessing the power of AI, credit unions can streamline operations, enhance member experiences, and make data-driven decisions that drive growth. Take a look at some key areas where AI can make a significant impact on your credit union:

1. Personalized Member Experiences

AI-powered technologies, such as chatbots and virtual assistants, enable credit unions to provide personalized and efficient member experiences. These intelligent systems can handle routine member queries, assist with account management, and even offer financial advice tailored to individual needs. By leveraging AI, credit unions can deliver exceptional member service, building trust and loyalty in an increasingly digital world.

2. Fraud Detection and Prevention

Fraud detection and prevention are key concerns for credit unions. AI algorithms can analyze vast amounts of data to identify patterns and anomalies that indicate potential fraudulent activity. Machine learning algorithms can continuously learn and adapt to new fraud patterns, enhancing the accuracy and efficiency of fraud detection systems. By leveraging AI in fraud prevention, credit unions can safeguard their members’ assets and protect their reputation.

3. Risk Management and Compliance

Credit unions face various risks, including credit risk, compliance risk, and reputational risk. AI-powered risk management systems can analyze extensive datasets, identify potential risks, and provide proactive solutions to mitigate these risks. Additionally, AI can help credit unions stay updated with changing regulatory requirements, ensuring compliance and avoiding penalties. By adopting AI-based risk management solutions, credit unions can enhance their strategic decision-making processes and protect their long-term sustainability.

4. Data Analysis and Decision-Making

Data analysis is crucial for credit unions to gain insights into member behavior, market trends, and operational efficiency. AI-powered analytics tools can process vast amounts of data quickly and accurately, uncovering meaningful patterns and trends. This empowers credit unions to make data-driven decisions, tailor their products and services to member needs, and identify new growth opportunities. By leveraging AI in data analysis, credit unions can stay ahead of the competition and drive business success.

Overcoming Challenges: How Credit Unions Can Embrace Artificial Intelligence

While AI offers immense potential for credit unions, there are challenges to consider, such as limited budgets and resources. However, with a strategic approach, credit unions can effectively embrace AI and compete in the evolving digital landscape. Here are some strategies to consider:

1. Collaborate with Fintech Partners

Credit unions can collaborate with fintech partners specializing in AI solutions. These partnerships can provide access to cutting-edge AI technologies without the need for significant upfront investments. By leveraging the expertise of fintech partners, credit unions can navigate the complexities of AI implementation and ensure successful integration into their operations.

2. Start Small and Scale

Implementing AI solutions can be overwhelming, especially for credit unions with limited resources. It’s essential to start small and focus on specific use cases that align with the credit union’s goals and member needs. By starting with manageable projects, credit unions can gain valuable experience and gradually expand their AI capabilities.

3. Invest in Employee Training

Successful AI implementation requires a workforce equipped with the necessary skills and knowledge. Credit unions should invest in training programs to upskill their employees and build an AI-ready workforce. This investment not only enhances the credit union’s AI capabilities but also empowers employees to embrace and leverage AI technologies effectively.

4. Prioritize Data Security and Privacy

As credit unions adopt AI, ensuring data security and privacy is paramount. Credit unions must comply with data protection regulations and implement robust security measures to safeguard member information. By prioritizing data security and privacy, credit unions can build trust with their members and maintain a strong reputation.

Keep Sensitive Data Safe Alongside AI Implementation with IMS 

As credit unions embrace the boundless potential of artificial intelligence to personalize member experiences, fortify against fraud, and navigate intricate risks, they require a strategic and resilient safeguard. 

IMS’s Polaris Radar provides a crucial layer of protection through its advanced anomaly detection service, ensuring rapid recovery and bolstering credit unions’ security posture. This isn’t just about adopting AI — it’s also about securing your credit union with cutting-edge resilience. Connect with IMS to learn how our anomaly detection services can empower your credit union in providing secure, community-focused banking experiences.


Accelerating Digital Transformation in Credit Unions with IMS

 

Credit unions are facing increasing pressure to embrace digital transformation. The financial services industry, long known for its slow adoption of technology, is now recognizing the need to modernize and stay competitive. To navigate this digital revolution successfully, credit unions can leverage cloud solutions, specifically Infrastructure-as-a-Service (IAAS) services. 

Dive in to learn how credit unions can accelerate their digital transformation journey with IMS’s cloud solutions, benefiting from boosted flexibility, scalability, security, and cost-effectiveness.

The Need for Digital Transformation in Credit Unions

As technology continues to reshape the financial services industry, credit unions must adapt to meet the changing needs and expectations of their members. Digital transformation encompasses various aspects, including process automation, enhanced customer experiences, and improved operational efficiency. By embracing digital transformation, credit unions can streamline their operations, offer innovative products and services, and gain a competitive edge in the market.

Exploring IMS’s Cloud Offerings and IAAS Solution

IMS offers an enterprise-grade cloud Infrastructure-as-a-Service (IAAS) solution, powered by VMware vCloud technology and accessed through vCloud Director. This cloud infrastructure is designed to support various use cases, including development, testing, disaster recovery, and production environments. IMS’s IAAS solution provides credit unions with the flexibility and scalability they need to adapt to changing business requirements.

Advantages of Cloud Solutions and IAAS for Credit Unions

1. Flexibility and Scalability

Cloud solutions, specifically IAAS, allow credit unions to pay only for the resources they need, following a pay-as-you-go model. This flexibility enables credit unions to scale their infrastructure up or down based on demand, ensuring optimal resource allocation and cost-effectiveness. By avoiding over-provisioning or under-provisioning, credit unions can optimize their cloud costs and allocate their IT budget more efficiently.

2. Enhanced Security and Compliance

Security and compliance are critical for credit unions. IMS’s cloud solutions prioritize data protection and privacy. With leading-edge security technologies and best practices, IMS ensures that credit unions’ data is safeguarded with proper configurations and security measures. Staying on top of changes in data governance and following cloud best practices helps credit unions maintain operational consistency and address compliance requirements effectively.

3. Business Continuity and Disaster Recovery

Maintaining business continuity during disruptions is crucial for credit unions. Cloud infrastructure provides credit unions with the ability to access their applications and data even during disasters or outages. By leveraging the cloud’s resilience and redundancy features, credit unions can minimize downtime and ensure uninterrupted services for their members.

4. Cost Optimization and Operational Efficiency

Traditional IT infrastructure can be costly to maintain and upgrade. IAAS offers credit unions a cost-effective alternative by eliminating the need for hardware upgrades and reducing the total cost of ownership. The pay-as-you-go pricing model allows credit unions to optimize their IT budget, allocating resources where they are needed most. Additionally, the cloud’s automatic updates and maintenance capabilities reduce downtime and improve reliability, enabling credit unions to focus on core business activities.

5. Accelerated Innovation and Time-to-Market

The cloud provides credit unions with the agility needed to rapidly deliver innovative solutions and improve member experiences. By leveraging cloud-based infrastructures, credit unions can quickly adapt to market demands, scale their services, and introduce new products and features to their members. The cloud’s flexible and scalable nature allows credit unions to experiment, iterate, and deploy new solutions faster, gaining a competitive advantage in the digital landscape.

Implementing IAAS for Digital Transformation

Implementing IMS’s IAAS solution requires careful planning and execution. Credit unions can follow these best practices to accelerate their digital transformation journey successfully:

1. Define Business and Technical Objectives

Before starting a digital transformation journey, credit unions should identify their specific goals and objectives. This includes understanding the financial, operational and technical benefits of moving to the cloud and aligning them with their overall strategy. By clearly defining these objectives, credit unions can ensure that their cloud adoption efforts are focused and aligned with their long-term vision.

2. Conduct Research and Learn from Industry Peers

Credit unions can learn from the experiences of other financial institutions that have already undergone digital transformations. Gathering insights from analyst reports and actual testimonials can help credit unions make informed decisions and narrow down their choices when selecting the appropriate IAAS solutions.

3. Calculate ROI and Cost Savings

Credit unions should evaluate the return on investment (ROI) and cost savings associated with cloud adoption. By modeling the costs of migration relative to existing infrastructure, credit unions can determine the financial benefits of moving to the cloud. This analysis helps credit unions develop budgets and forecasts, ensuring that the cloud adoption process remains cost-effective and aligns with their financial goals.

4. Prioritize Compliance and Security

Data privacy and security are non-negotiable for credit unions. Staying compliant with evolving regulatory frameworks is essential to maintaining trust with members. Credit unions should follow best practice guides to ensure operational consistency and address compliance requirements effectively. Partnering with trusted providers like IMS can help credit unions mitigate risks and protect sensitive member information.

5. Foster Internal Support and Collaboration

Driving digital transformation requires support from key stakeholders within the organization. Gathering supporters will create momentum and facilitate the adoption of cloud solutions across departments. Involving employees throughout the transformation process and providing them with the necessary training and support will help ensure a smooth transition and successful implementation.

Embracing Digital Transformation with IMS’s IAAS Solution

By embracing digital transformation and leveraging IMS’s cloud solutions, credit unions of all sizes can position themselves for growth and success in the digital era. IMS’s IAAS solution, with its flexibility, scalability, security, and cost-effectiveness, can empower credit unions to accelerate their digital transformation and stay ahead in an increasingly competitive market.

Seize the opportunity to embrace innovation and secure your credit union’s future by partnering with a leading IT service provider like IMS. Our IAAS solution and cloud offerings are not just services; they are pathways to growth.

Connect with IMS to explore how we can accelerate your credit union’s digital transformation journey.


10 Credit Union IT Priorities for 2024: Navigating Digital Challenges

 

As the year comes to a close, credit unions are gearing up to face the challenges and opportunities that lie ahead in 2024. In an increasingly digital world, credit unions must prioritize their digital efforts to stay competitive, meet member expectations, and navigate the evolving financial landscape. This blog post explores the top credit union IT priorities in 2024, focusing on the challenges they’re expected to face and the strategies they can employ to thrive in the digital age.

1. Embracing Digital Transformation

In today’s fast-paced world, digital banking has become a necessity. Credit union members expect seamless online banking experiences, including mobile apps, 24/7 service, and digital transaction processing. To meet these expectations, credit unions must embrace digital transformation. This involves investing in technology and training to provide members with the convenience and accessibility they demand.

One crucial aspect of digital transformation is the integration of artificial intelligence (AI) into credit union operations. AI technologies, such as generative and conversational AI, can automate customer service, increase sales and conversions, streamline member experiences, and reduce call center workload. By leveraging AI, credit unions can enhance member engagement and deliver personalized services at scale.

2. Ensuring Regulatory Compliance

The financial sector is heavily regulated, and credit unions are no exception. Staying compliant with ever-changing local, federal, and international regulations requires a dedicated focus on regulatory compliance. Credit unions must allocate resources for ongoing training, maintain good data practices, and implement compliance programs to ensure they meet their obligations. By prioritizing regulatory compliance, credit unions can foster trust and confidence among their members.

3. Enhancing Cybersecurity Measures

As digital banking becomes more prevalent, credit unions face increased cybersecurity threats. Cybercriminals target financial institutions of all sizes, and credit unions, with their smaller IT teams, may be perceived as easier targets. Protecting members’ sensitive data and maintaining trust is of paramount importance. Credit unions must invest in robust cybersecurity measures, including advanced threat prevention systems, anomaly detection, regular security audits, employee training, and incident response plans. By staying vigilant and proactive, credit unions can safeguard their members’ information and maintain a secure banking environment.

4. Competing with Larger Banks and Fintechs

Credit unions often find themselves competing against larger banks and fintech companies that have significant resources at their disposal. To remain competitive, credit unions must leverage their unique strengths, such as their local presence, personalized service, and community focus. Credit unions should also explore partnerships with fintech companies like IMS to enhance their technological capabilities and offer innovative products and services. By embracing collaboration and innovation, credit unions can carve out their niche in the financial services landscape.

5. Increasing Membership Growth and Awareness

While credit unions offer numerous advantages over traditional banks, many potential members are unaware of these benefits. Credit unions must invest in targeted marketing and education efforts to raise awareness about their services and attract new members. Collaborating with community organizations, leveraging social media platforms, and participating in local events can help credit unions reach a broader audience and highlight their value proposition. By effectively communicating their unique benefits, credit unions can drive membership growth and expand their reach.

6. Engaging Younger Members

One challenge that credit unions face is the aging membership demographic. To ensure long-term sustainability, credit unions must engage younger members and tailor their services to meet their preferences. Younger generations have higher expectations for digital experiences, so credit unions must invest in user-friendly online and mobile banking platforms. Offering personalized financial advice, educational resources, and innovative product offerings can also attract and retain younger members. By adapting to the needs and preferences of younger generations, credit unions can future-proof their member base.

7. Attracting and Retaining Talent

In an increasingly competitive job market, credit unions must prioritize talent acquisition and retention. To attract tech-savvy professionals, credit unions should showcase their commitment to digital transformation, offer training and development opportunities, and provide a positive work environment. Building a strong employer brand and cultivating a culture of innovation can help credit unions attract and retain top talent. By investing in their workforce, credit unions can build a team capable of driving technological advancements and delivering exceptional member experiences.

8. Expanding Service Offerings

Credit union members expect a wide range of services from their financial institutions. To meet these expectations, credit unions should consider diversifying and expanding their service offerings. This may include specialized loans, insurance products, investment advice, and financial planning services. Offering these services digitally or online is a significant leap forward. By providing comprehensive financial solutions, credit unions can become a one-stop shop for their members’ needs and strengthen member loyalty.

9. Streamlining Technological Integration

Integrating new technology solutions into existing infrastructures can be a complex process for credit unions. They must ensure that new systems seamlessly integrate with their legacy systems and workflows. Credit unions should seek technology vendors and partners that offer flexible and scalable virtual cloud solutions. By streamlining technological integration, credit unions can leverage the power of emerging technologies without disrupting their operations.

10. Navigating Economic Uncertainties

Credit unions, like other financial institutions, face economic uncertainties such as recessions, interest rate fluctuations, and geopolitical events. During economic downturns, credit unions must prioritize the stability of their operations, safeguard sensitive financial information, and uphold the confidence of their members. Having a resilient disaster recovery strategy and contingency plans in place is crucial for credit unions to weather these uncertainties. Credit unions should regularly assess their risk exposure, stress test their loan portfolios, and maintain adequate capital reserves. By adopting a proactive approach to risk management, credit unions can mitigate potential financial downturns and ensure their long-term sustainability.

Credit Union IT Priorities: Staying Competitive in the Digital Age

By embracing digital transformation, ensuring regulatory compliance, enhancing cybersecurity measures, and leveraging their unique strengths, credit unions can navigate the challenges ahead. Engaging younger members, attracting and retaining top talent, expanding service offerings, streamlining technological integration, and preparing for economic uncertainties are also essential strategies for credit unions’ success. 

Focus on these key credit union IT priorities this 2024 to thrive in the ever-changing financial services landscape. Connect with IMS today and let’s talk about how we can help you provide your members with personalized, community-focused banking experiences.


The Long-Term Consequences of Credit Union Downtime

 

Picture this: it’s payday and your members eagerly log into your app, anticipating the arrival of their hard-earned money. But instead of seeing the reassuring digits on their screens, they are met with an error message – unplanned downtime strikes again. 

Your call center and chat system are flooded with frantic messages from unhappy members trying to access their funds and resolve the issue for their employees. Consumers take to social media and suddenly a new hashtag featuring your credit union’s name is trending – and not the good kind. Business owners and accountants call and drop by your credit union, threatening to switch financial institutions if this happens again.

The Long-Term Effects of Unplanned Downtime on Credit Unions

In today’s increasingly digital world, where convenience is king, such technical glitches can have far-reaching consequences for credit unions and their members. However, there may be a glimmer of hope amidst this chaos. By exploring the long-term effects of unplanned downtime, we can uncover strategies to mitigate risks and ensure that payday remains a moment of celebration rather than frustration.

Losing Member Trust

Credit unions thrive on trust and rely on the loyalty of their members. Unexpected downtime can jeopardize this trust and harm the credit union’s reputation. If members encounter frequent interruptions, they might lose faith in the credit union’s capacity to protect their financial assets, resulting in a decline in membership and challenges in attracting new ones.

Increased Financial Losses & Costs

Unexpected downtime can lead to immediate financial setbacks as a result of disrupted transactions, lost business opportunities, and potential fines imposed by regulatory authorities. Over time, these financial consequences can accumulate and have an adverse effect on the credit union’s overall profitability.

To avoid and minimize unexpected disruptions, credit unions may have to allocate funds towards enhancing their infrastructure, hiring additional staff, or seeking external support. These additional expenses will increase the credit union’s operational costs over time. However, it is important to note that these increased costs are likely worthwhile to stay in business.

Compliance Challenges

Non-compliance with regulatory requirements can have serious consequences for credit unions, including legal and regulatory challenges, financial penalties, and sanctions. Credit unions may even receive additional scrutiny from regulators. It is crucial for credit unions to maintain the security and availability of member data and financial services to avoid these issues.

Member Attrition

Members (especially digitally-native members) are prone to leave a credit union that experiences downtime. Even one instance of downtime can lead members to flock to your competitors. Given that the cost of acquiring new members is often higher than retaining existing ones, the loss of members can result in substantial long-term expenses for the credit union.

Competitive Disadvantage

Credit unions that frequently experience unexpected downtime may struggle to compete against other financial institutions that provide more dependable and convenient services. This can hinder the credit union’s growth and ability to effectively serve its members.

Operational Inefficiencies

Unexpected downtime can throw a wrench into the daily operations of a credit union, causing potential data loss or corruption and resulting in suboptimal processes. Over time, this can hinder the credit union’s agility in responding to shifting market dynamics and meeting member needs.

Reputational Damage

The credit union’s reputation is at risk when frequent unplanned downtime occurs, making it difficult to regain trust. Negative feedback from members in-person and online (in reviews, on social media, etc.) and word-of-mouth can discourage prospects from becoming members.

Strain on IT Resources

Unplanned downtime puts a heavy burden on IT resources, demanding considerable attention and effort. As a result, the credit union’s ability to innovate and stay ahead in the competitive landscape is compromised, as valuable time and resources are diverted from strategic initiatives and technology enhancements.

Maintain Member Confidence with IMS

In order to address these long-term consequences, credit unions must prioritize the development of strong cloud-based infrastructure, disaster recovery strategies, and preventive maintenance. You will also want to consistently evaluate and test your systems and adhere to regulatory guidelines.

However, even then, downtime is still likely to happen, which is why credit unions need to maintain transparent communication with members to effectively handle downtime incidents. You will also need to consistently save system backups and implement a comprehensive disaster recovery plan to reduce the length of outages and lessen their consequences. 

Additionally, credit unions should explore the possibility of outsourcing backup and disaster recovery management to effectively utilize cloud resources and relieve the strain on internal IT teams. This is where IMS comes in. We provide backup and disaster recovery services exclusively for credit unions. Contact us today to learn how we can help you maintain your members’ confidence and reduce the long-term effects of downtime on your credit union. 


How to Navigate Credit Union Regulations with Fintech

 

As technology continues to revolutionize the financial industry, credit unions are constantly grappling with new sets of credit union regulations. From credit risk reviews to cyber incidents, staying compliant can be a daunting task. But fear not, because financial technology (fintech) companies are here to save the day! 

In this article, we will explore why manual processes are a thing of the past, a few recent regulations that credit unions need to navigate, and how fintech solutions can help streamline compliance processes. Get ready to discover how cutting-edge technology can make regulatory headaches a thing of the past!

Constant Changes Call for Automated Processes

The burden of regulatory changes for financial institutions has surged from 10 per day in 2004 to approximately 200 per day in 2023, according to Thomson Reuters. unions that rely on manual processes to understand and implement these modifications find themselves needing help to keep up.

So how can your credit union keep up with these constant regulatory changes? By finding the right fintech partner, which will provide cloud-based compliance in real-time.

It’s easier than ever before to partner with a fintech company. The NCUA recently passed a new rule that enhances the collaboration between federally insured credit unions (FICUs) and fintech companies. The final rule modifies current regulations pertaining to indirect lending, loan participation, as well as the buying, selling, and pledging of eligible obligations and notes sourced from liquidating credit unions.

Commercial Credit Risk Reviews 

The NCUA has taken significant steps to strengthen its supervision of commercial real estate activities. This includes closely evaluating loan performance, conducting risk assessments and scenario analysis focused on loan exposures, implementing more rigorous review procedures for credit unions with elevated risk profiles, and conducting targeted reviews at credit unions with higher levels of risk.

Credit unions can use fintech to automate data collection and analysis, monitor commercial real estate loans in real time, develop risk assessment models, and more. These technologies enable credit unions to effectively manage their loan portfolios and ensure the overall health of their lending activities.

Collecting Small Business Demographic Details

According to Section 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which was issued on March 30, 2023, credit unions need to collect and report on small business lending to the Consumer Financial Protection Bureau. 

The primary objective behind gathering and documenting this data is to enhance the implementation of fair lending regulations and empower creditors and communities to effectively cater to the requirements of small businesses, with a specific focus on minority-owned and women-owned businesses.

Credit unions can use fintech to automate data collection processes. These innovative solutions empower credit unions to effortlessly gather essential demographic information from their small business members. By integrating these tools into their existing systems, websites, and apps, credit unions can simplify the entire data collection process.

Cyber Incident Reporting

Credit unions now have the obligation to notify the NCUA within 72 hours regarding any reportable cyber incident. Such incidents encompass unauthorized data access, disruptions in crucial member services, and breaches facilitated by third-party service providers. 

The NCUA has provided explicit guidelines for reporting procedures to ensure adherence to regulations. When submitting a report, credit unions must furnish vital information including their name, charter number, and a concise summary of the incident. However, it is recommended that specific sensitive data such as indicators of compromise (IoC) and particular vulnerabilities be omitted from the initial communication.

Credit unions are recommended to revisit their existing cyber response plans, thoroughly evaluate contracts with third-party service providers, and guarantee that employees possess adequate training to identify and report cyber incidents promptly.

Fintech companies like Information Management Solutions help credit unions back up data, identify and mitigate cyber incidents, and restore clean backups. We can also help your credit union maintain compliance

Navigate Changes to Credit Union Regulations with IMS

Using fintech to navigate regulation changes is essential for your credit union’s success. By understanding the regulatory landscape, collaborating with fintech partners, and leveraging technology solutions, credit unions can streamline operations, enhance member experiences, and drive growth. 

Are you interested in diving into fintech waters? Learn more about our Compliance services and contact us today to start keeping up with regulatory changes. 


Climate Risks & Credit Unions: Prioritizing Resilience

 

Climate risks, once distant scenarios or hypotheticals, have now become clear and present realities. From devastating wildfires to destructive storms, rising sea levels, and recurrent floods, these challenges pose serious threats to the business continuity of credit unions.

Credit unions have always been at the heart of the communities they serve, a local presence that taps into their financial needs. Unfortunately, this also leaves them vulnerable to climate impacts. These physical risks are closely linked with financial risks, and as we grapple with the destructive wake of environmental disasters, credit unions are called upon to support the recovery of these communities.

Diving Into Climate Risks

Reports suggest that climate-related events pose two distinct risks to credit unions: physical and transition risks.

Physical risks refer to the losses from acute climate-related disasters such as hurricanes, wildfires, and floods, and chronic, slower onset impacts like rising sea levels and increased temperatures. As these events have grown in frequency and severity, they have begun to dent the balance sheets of credit unions, especially those with a strong local presence.

On the other hand, transition risks result from the adjustment process towards a low-carbon and climate-resilient economy. They are triggered by substantial adjustments in climate policies, technological advancements, and shifting societal attitudes toward sustainability. These risks materialize as revaluations of assets and higher costs of doing business.

The Importance of Financial Resilience for Credit Unions

These multifaceted climate risks have supercharged the need for credit unions to recalibrate their risk assessment and management strategies. Integral to these new strategies is the role of financial resilience.

Financial resilience refers to the ability of credit unions to absorb the financial impacts of severe weather events and adjust their operations to withstand the transition to low-carbon economies. This level of resilience is crucial for credit unions to sustain their missions of serving their communities amidst the unpredictable tides of climate variability.

Building Climate-Resilient Systems in Credit Unions

Building financial resilience among credit unions begins with enhancing their understanding of climate risks and their potential impact. A comprehensive and robust risk management framework integrating climate-related risks is a starting point. This framework makes credit unions better equipped to anticipate, absorb, and recover from climate-driven events.

Trusted tools enabling the assessment of physical and transition risks would also help credit unions determine their climate vulnerability. This approach to climate risk management would not only ensure that credit unions maintain their operational continuity, but also that they can contribute optimally to the financial recovery of their communities.

Additionally, reliable disaster recovery solutions have become essential to counter the significant risks of data loss during severe climatic events. These solutions bring about a high level of data protection and ensure credit unions maintain the trust of their members through consistent service, even in the face of a disaster.

Deeper engagement with members regarding climate risks is another aspect of resilience. As credit unions operate on the principle of member services, aligning their strategies with the climate concerns of their clients would undoubtedly bring about cooperative resilience.

The rampant rise of climate risks may seem overwhelming, but the only way out is through. By integrating climate risks into daily operations, aligning with the sustainability goals of their members, and leveraging reliable disaster recovery solutions, credit unions are not just surviving the storm of climate risks but thriving amidst it.

Credit unions are transforming these substantial risks into extraordinary opportunities for resilience, growth, and lasting community impact. By proactively adapting and preparing for climate change, rather than merely reacting to it, credit unions are paving the way for a sustainably resilient future.

Unsurprisingly, in these trying times, building resilience against climate risk is more than a business necessity, it’s a vital part of credit unions’ commitment to their communities, their members, and to a sustainable future.

The Role of Disaster Recovery Solutions in Climate Resiliency

With the probability of climate-related risks becoming more rampant, safeguarding organizational assets, such as crucial data, has never been more essential for credit unions. 

Committed to fortifying credit unions’ resilience, IMS provides reliable disaster recovery solutions that ensure quick restoration after server crashes, human error, malicious activity, or natural disasters. The reliability and support from IMS’ disaster recovery solutions could be a valuable part of your credit union’s strategy to bolster financial resilience and effectively manage climate risks.

Discover IMS’ Disaster Recovery solutions and take a proactive step toward fortifying your organization’s resilience against climate risks.


10 Strategies for Boosting Credit Union Cyber Hygiene

 

As we recognize Cybersecurity Awareness Month, there’s no better time to reflect on why cybersecurity matters to the credit union community. Today’s interconnected world means there are near-infinite possibilities for credit union growth and member engagement. However, it also presents vast challenges, especially regarding credit union cyber hygiene. Threats from cybercriminals targeting financial institutions are constantly escalating, posing significant risks to sensitive member data and financial operations.

This blog aims to empower credit union leaders and IT professionals with effective strategies to bolster their institution’s cybersecurity efforts. By taking a proactive approach, you can considerably reduce the likelihood of a breach and protect your credit union.

Credit Union Cyber Hygiene: Safeguarding Member Data

The stakes are undeniably high. Did you know that the annual financial risks due to cyber threats can range from $190,000 for small credit unions to $1.2 million for large credit unions?  

Business email compromise schemes are by far the costliest financial cybercrime. According to research, victims of email compromise reported approximately $2.4 billion in losses in 2021 alone. These numbers underscore the importance of robust cyber hygiene practices for credit unions. Beyond the financial impact, consider the cost to your institution’s reputation, the potential loss of members, and the operational disruptions.

These trends cannot be ignored, and while daunting, they serve as catalysts for every credit union to prioritize its cybersecurity posture and scale up its defenses. Let’s take a look at 10 strategies for boosting your credit union cyber hygiene:

1. Perform Regular Audits and Assessments

Implementing rigorous audits and assessments will help identify vulnerabilities in your credit union’s security infrastructure. Routine assessments ensure proper security measures are in place and protocols remain updated when changes are made to the IT environment. Also, continuously examining server and workstation logs can effectively identify suspicious activities.

2. Educate Employees on Cyber Hygiene

Employees often constitute the first line of defense against cyber threats. Training is crucial to equip them with knowledge and practical skills to recognize and prevent phishing attacks, ransomware, and malicious downloads. Encourage safe practices, such as strong password management, to mitigate risks arising from human error.

3. Develop a Comprehensive Security Policy

Develop a comprehensive security policy addressing the credit union’s IT infrastructure, user authentication protocols, and data classification. This policy should outline procedures for reporting security incidents, handling sensitive information, and monitoring third-party service providers to ensure they adhere to data protection standards.

4. Deploy Multi-layered Security Measures

Implementing a multi-layered security approach enhances your credit union’s ability to withstand various threats and attacks. Deploying a combination of firewalls, intrusion detection and prevention systems (IDPS), email filtering, and spam protection reinforces security measures and ensures the swift detection of cyber threats.

5. Keep Hardware and Software Up-to-date

Software and firmware updates are essential to patch vulnerabilities and exploit loopholes that hackers use to infiltrate networks. Implement a systematic approach to managing updates, establishing clear patch timelines, and prioritizing the most critical vulnerabilities.

6. Optimize IT Utilization

Cyber resilience in credit unions can be substantially improved through the diligent use of technologies. While certain programs or infrastructure such as Microsoft 365 can bring significant benefits to credit unions, there is always a need for a proper understanding of security recommendations and best practices.

7. Secure The Cloud

The transition to cloud computing offers significant benefits, such as cost-saving on data storage and streamlined operations. However, the security of digital assets in the cloud remains a top concern. Credit unions should securely configure cloud services, encrypt sensitive data, and restrict access to authorized personnel to mitigate cloud-related risks.

8. Monitor Vendor Security and Risk Management

Credit unions often rely on third-party vendors to provide essential services and support operations. It’s crucial to diligently assess vendors’ security standards and risk management practices to ensure they align with your credit union’s expectations. Regular vendor audits and thorough risk assessments will strengthen your institution’s overall cyber hygiene.

9. Implement Robust Authentication Practices

Implement strong authentication mechanisms such as multi-factor authentication (MFA) to bolster access security for members and internal employees. MFA provides an additional layer of security beyond passwords and significantly reduces the risk of unauthorized access to sensitive information.

10. Plan for Disaster Recovery and Business Continuity

The ability to quickly recover from a cyber attack or security incident is crucial to maintaining a credit union’s operations and reputation. Develop a comprehensive disaster recovery and business continuity plan that includes frequent data backups, off-site storage of critical data, and protocols for resuming operations in case of a breach.

Elevating Credit Union Cyber Hygiene with Virtual Private Cloud Services

Protecting your credit union from cyber threats is an ongoing and evolving endeavor, necessitating a comprehensive and proactive approach. Implementing these strategies will help to significantly improve your credit union’s cyber hygiene, reducing the likelihood of a cyberattack and mitigating its impact if it does occur. By continuously monitoring and evaluating your institution’s security posture, you can stay ahead of threats and protect sensitive member data, ensuring trust and confidence in your credit union.

Partnering with a leading IT service provider like IMS can significantly streamline your credit union’s path to robust cybersecurity. Our Virtual Private Cloud Services — including backup, disaster recovery, Infrastructure-as-a-Service, compliance, and more — provide a comprehensive solution tailored specifically for credit unions. Connect with IMS to explore how we can help safeguard and empower your credit union with our industry-leading IT solutions.


Detecting and Preventing Financial Fraud: Safeguarding Credit Unions

 

As the financial services industry faces an unprecedented surge in attempted fraud, credit unions must strengthen their defenses to protect their assets and members’ data. Fraudsters continue to evolve their tactics, making it crucial for credit unions to adopt advanced technologies that can effectively detect and prevent fraudulent activities. In the battle against financial fraud, IMS’s Anomaly Detection service is a powerful tool, empowering credit unions to stay vigilant and combat fraudulent behavior effectively.

Let’s explore the current landscape of financial fraud and the key technologies credit unions can use for detection and prevention.

Addressing the Rising Tide of Financial Fraud

A TransUnion report has shed light on the alarming increase in attempted fraud within the financial services industry. Fraudsters have diversified their tactics, including money laundering, counter-terrorism fraud, synthetic identity theft through mule schemes, and peer-to-peer payment fraud. The constantly evolving market conditions contribute to the ever-increasing financial fraud risk, making it critical for credit unions to adopt proactive measures to detect and prevent fraudulent activities.

Recognizing the need for heightened security measures, 93% of credit unions have started funding security, authentication, or digital identity initiatives since 2021, according to research from PYMNTS.com. However, credit unions still lag behind other financial institutions in leveraging advanced technologies to combat financial fraud effectively. Traditional fraud prevention methods are no longer sufficient to counteract the speed and complexity with which fraudsters operate.

To fight this rising tide of financial fraud, credit unions and other financial institutions must leverage advanced technologies equipped with real-time monitoring capabilities. 

The Current Financial Fraud Landscape

Financial regulatory agencies, such as the U.S. Securities and Exchange Commission, the Federal Trade Commission, and the Financial Crimes Enforcement Network, have identified several prevalent fraud types that credit unions need to be vigilant about:

  • New Account Fraud: Criminals target accounts opened online or by phone to exploit vulnerabilities in the onboarding process.
  • Imposter Schemes: Fraudsters impersonate government agencies or other entities, offering fake services to deceive individuals and steal money or information.
  • Small Business Administration Loan Fraud: Schemes related to government initiatives like the Paycheck Protection Program and Economic Injury Disaster Loans have become a breeding ground for fraud.
  • Business Tax Credits Fraud: Criminals exploit tax credits intended for businesses for personal gain.

To address these incidents effectively, credit unions are increasingly focusing on key areas of risk mitigation. A PwC report highlighted data privacy and cybersecurity, the use of new technology, digital identity authentication, Anti Money Laundering (AML) efforts, Know Your Customer (KYC) procedures, and local regulatory pressures as key concerns for financial institutions.

Enhancing the Credit Union Business Model

While credit unions have historically been valued for their member-centric approach and personalized relationships, it is crucial to complement this model with a strong emphasis on digital solutions. Implementing strong authentication measures and investing in fraud prevention technology are important steps to prevent account takeovers and financial fraud. Unfortunately, many credit unions have been slow to adopt these technologies, making them prime targets for criminals.

Technologies Tackling Financial Fraud

To support their defenses against financial fraud, credit unions can leverage a range of advanced technologies, many of which rely on artificial intelligence and machine learning. These technologies play vital roles in fraud detection and prevention:

  • Member and Corporate Onboarding and Screening: AI-powered software can analyze member and corporate data in real time, identifying suspicious activities during the onboarding process.
  • Transaction Monitoring and Screening: Machine learning algorithms can monitor transactions in real-time, flagging unusual activities and potentially fraudulent behavior.
  • Transaction Fraud Detection: Advanced analytics and AI help detect fraud patterns, uncover hidden relationships among criminals, and reduce false positives. IMS’s Anomaly Detection solution, Polaris Radar, uses machine learning to actively monitor and generate alerts for suspicious activity. 
  • Sanctions and Watchlists Screening: AI-driven screening tools ensure compliance with regulatory requirements by identifying individuals or entities on watchlists.

By harnessing the power of artificial intelligence and machine learning, credit unions can achieve seamless, reliable, and strategic fraud and AML sanction compliance, significantly enhancing their ability to combat financial fraud.

Anomaly Detection: Empowering Credit Unions with Real-Time Fraud Detection

Detecting and preventing financial fraud is an ongoing challenge for credit unions and other financial institutions. With the threat landscape constantly evolving, embracing advanced technologies for real-time monitoring is crucial.

IMS’s Anomaly Detection service leverages the power of artificial intelligence and machine learning to analyze large volumes of transaction data. By establishing baseline behavioral patterns, the service can detect anomalies and deviations that might indicate fraudulent behavior. This proactive approach enables credit unions to identify potential threats swiftly and take decisive action to protect their members and financial assets.

Protect your credit union from the escalating threat of financial fraud. Explore IMS’s Anomaly Detection service today and connect with us at this link to find out how we can help meet your specific needs.