Important Credit Union Regulatory Hot Topics

Written by

 

As a credit union, staying up to date on regulatory trends and concerns is crucial to ensure compliance and avoid penalties. With the ever-changing landscape of financial regulations, it can be challenging to keep track of the latest developments. That’s why we’ve compiled a list of key credit union regulatory hot topics to help you navigate through the current environment.

By keeping yourself informed about these developments, you’ll be better equipped to manage risks and maintain your institution’s reputation as a safe and reliable financial partner for your members. Let’s dive in.

Credit Union Regulatory Hot Topics: Severance Agreement Changes

Recently, the National Labor Relations Board (NLRB) reversed a decision from 2020 that had restricted the language in severance agreements that “prohibits ex-employees from saying disparaging things about the old boss.”

Essentially, the law was put back to its previous iterations because the law was believed to be too restrictive. This protects employees from being required to sign severance agreements that include these prohibitions.

According to the NLRB, “It’s long been understood…that employers cannot ask individual employees to choose between receiving benefits and exercising their rights.” Several banking regulatory agencies are looking into similar policies in recent months as financial wellness declines in many areas of the U.S. due to rising costs and interest rates.

This underscores the importance of updating employee and employer policies and agreements to ensure they stay compliant with changing laws and regulations.

Assessing Loan Delinquency in Mergers

There has been some talk recently about how the valuation and evaluation of delinquent loans and potentially delinquent loans are handled during mergers and acquisitions under the current expected credit losses (CECL) methodology.

Currently, a credit union that is acquired and seems to be performing well, or at least at sustainable levels, will need to include a prediction for how many of the loans being acquired may end up delinquent after the transition. This is based on a concept called Purchased Credit Delinquencies (PCD)

Conversely, acquiring a poorly performing lending program and credit union currently means that no further predictions or analyses must be made – the delinquencies are assumed to have already been in effect at the time of the merger. This has the potential to undervalue CUs performing well and overvalue CUs that are performing badly, according to several critics in the financial industry.

NCUA 2023 Supervisory Priorities: Interest Rate and Liquidity Risk

In January, the National Credit Union Administration (NCUA) shared a list of supervisory priorities for 2023.

Two of the top items are interest rate risk and liquidity risk. Since interest rates rose quickly throughout 2022, this increased interest rate risk (IRR) as well as the exposure to earnings and capital in related scenarios.

NCUA has urged credit unions to be proactive in managing IRR and will be reviewing credit union IRR programs for risk management and control activities to ensure:

  • Key assumptions and related data sets are reasonable and well-documented.
  • The credit union’s overall level of IRR exposure is properly measured and controlled.
  • Results are communicated to decision-makers and the board of directors.
  • Proactive action is taken to remain within safe and sound policy limits.

You can see the examiner’s guide for interest rate risk here.

Liquidity risk is also addressed in the examiner’s guide. Since higher interest rates reduce cashflows for many institutions, NCUA is telling credit union leaders to focus on and do a thorough audit of their CU’s liquidity risk management framework and to update and amend it as needed for the current markets.

NCUA 2023 Supervisory Priorities: Fraud Prevention and Detection

Fraud and cybersecurity threats continue to increase in volume year after year. And the NCUA has included some new items because of these elevated risks.

The first includes the implementation of a management questionnaire “designed to enhance identification of fraud red flags, material supervisory concerns, or other potential new risks.” The goal of this questionnaire is to help protect credit unions and prevent potential losses. To reduce instances of duplication, federal and state examiners will be coordinating to ensure all the bases get covered, but time and resources are not wasted.

Overdraft and NSF Fee Regulations

Regulatory agencies are scrutinizing the use and applications of overdraft and NSF fees as well. They are looking to establish whether credit unions’ usage is considered unfair under the Unfair Deceptive and Abusive Acts & Practices.

This doesn’t necessarily mean your credit union should abandon them, but it does warrant an assessment of your current fee structures and applications to ensure they don’t have the potential to be labeled as unfair.

Keep an Eye on Compliance

Keeping your members safe and thriving is a top priority for your credit union. And keeping your operations and data protocols compliant with current regulations, or exceeding them, is a main component.

And as credit unions continue their digital transformation journeys, it’s crucial to have top-level software in place to help with that.

IMS uses Polaris Sonar to help credit unions maintain compliance:

  • You can automate with machine learning and policies
  • Identify sensitive data exposure
  •  Accelerate compliance with privacy laws
  • And more

Reach out to us today with questions or let us walk you through our services and their features, all made specifically with your credit union in mind!

Silicon Valley Bank Collapse: 4 Takeaways

Written by

 

Silicon Valley Bank is one of the most prominent financial institutions in the tech industry, providing banking services to startups and venture capitalists. Recently, the bank experienced a security incident that affected its clients’ sensitive information. This incident has raised concerns among Silicon Valley Bank’s customers and other businesses alike.

We will examine the key takeaways from the Silicon Valley Bank collapse and provide insights on how businesses can better protect their data. Whether you are a startup, investor, or any other stakeholder in the tech industry, it is crucial to understand what happened at Silicon Valley Bank and how to prevent similar incidents from occurring in your organization.

Let’s dive into what we know about this event so we can learn from it.

Silicon Valley Bank Incident Is Not an Indicator of Widespread Financial Collapse

Whether you are serving credit union members in the California markets, have clients who finance tech startups, or don’t have anything in common with SVB, your members may still be concerned.

So, we first want to look at the core issue behind the Silicon Valley Bank incident. By many accounts like this one from the Kenan Institute of Private Enterprise, SVB suffered from mismanagement of its balance sheet.

The Silicon Valley Bank assets were long-term in nature but their liabilities were mostly short-term in the form of demand deposits, which isn’t wholly unusual for financial institutions. But the nature of their business – having served mostly tech startups – meant that their assets were more sensitive to interest rate changes. And we saw some record-breaking interest rate changes in 2022.

SVB was operating with a larger-than-normal amount if uninsured deposits and, when hit with an unexpectedly high volume of withdrawals from these uninsured depositors in less than 24 hours, more than 90% of the bank’s total deposit base became a liability that was coming due immediately, so to speak.

There were several ways to mitigate these fluctuations, and in fact, most well-managed financial institutions (like yours) do just that. But because the nature of banking is often hard for your members to conceptualize – and personal finances alone are difficult to manage without proper education – you may have noticed your teams encountering more members with worries about the safety of their assets.

Because of that, we want to share some of the biggest takeaways banks and credit unions can glean from the SVB fallout.

Focus on Difference Messaging

The Credit Union Times recently shared an article about how CUs can re-educate members on some of the biggest differences between banks and credit unions.

Credit unions should share insights about how they accept deposits, and then nearly always turn around and reinvest those funds into local communities.

Leaning heavily into the non-profit nature of credit unions versus private banking services can help bridge the trust gap that has been created for banking members all over the United States. It’s important right now to instruct your front-facing staff members to take their time to reassure your members that their funds are safe.

Credit unions are, at their core, agents of growth and financial wellness for their members and the larger communities that they serve – sharing the regulatory and insurance-related protections your CU has in place will help members maintain peace of mind knowing their funds are safe, no matter what happens.

Warnings about Cryptocurrency from NCUA Were Warranted

Many professionals within the American banking system and industry had strong opinions about the NCUA and its recommendations for a cautious approach when it comes to cryptocurrency.

As a new form of trending currency as well as financial and investment opportunities, SVB worked closely among startups and crypto enthusiasts. While this in and of itself isn’t inherently incorrect, it’s also a big leap to endorse new assets and banking trends, especially since economic stability since the onset of the COVID-19 pandemic has been harder to predict.

Single-Sector Business Isn’t Dooming Any FIs

Yes, part of the problem with SVB was the lack of diverse business – it was a bank that catered to a specific market and industry. But you may be thinking, “Aren’t there many instances of banks and credit unions keeping their business concentrated on a specific industry or region?” and yes, there are.

So it’s important to note that SVB was concentrated in such a way that it only did business in highly volatile markets. It catered mostly to venture capital-backed startups in tech and healthcare, and only in the Northern region of California.

Similarly, the behavior of SVB’s clients differs from the average banking member base in America. SVB’s deposits often far outweighed the demand for loans, and that was coupled with the bank’s tendency to invest in securities with long-dated maturities. Then, when interest rates rose, these long-term bonds lost much of their value.

Essentially, their narrow focus, coupled with economic factors and underestimation of their need for liquid assets is what created a perfect firestorm for Silicon Valley Bank.

So how do you communicate this into a solid strategy for helping your credit union members? Remember that regulations and compliance with governing bodies is the bare minimum. You can always put extra precautions in place, especially in this post-COVID landscape.

Diversification in the industries your CU serves isn’t a cure-all for preventing bank failure. It is most certainly something to keep an eye on, but with strong financial management practices in place, you can communicate to your members that their funds are not in danger of disappearing with a simple economic shift or downturn.

Reliability and Trust are Indispensable

Bank and credit union members are looking for safety in the wake of SVB and other financial uncertainties. And if they can’t trust your financial institution to help them weather a crisis because you are the one creating that crisis for them, you may never be able to recover that trust once it’s lost.

Credit unions already have a leg up on big banks when it comes to providing a satisfying member experience. And your member experience should always be coupled with top-tier backend programs and protocols.

That’s why IMS offers IaaS (Infrastructure-as-a-Service) to help you reduce expenses by eliminating the cost and headache that comes with setting up and managing your own on-site data center.

Our IaaS offering is enterprise-grade and cloud-based, built to meet the needs of your organization as it grows and changes.

How Credit Union Data Analytics Can Improve Financial Performance

Written by

 

In the modern age, credit unions are increasingly turning to data analytics to gain a better understanding of their financial performance. By leveraging data analytics, credit unions can track customer preferences, improve the member experience and ultimately increase their profits.

With the right strategies in place, credit unions can use data analytics to gain insights into their customers’ behaviors and preferences, as well as uncover new ways of boosting their financial performance. Let’s explore how credit union data analytics can help improve financial performance and provide customer satisfaction.

Benefits of Credit Union Data Analytics

Financial institutions like credit unions are often behind the times when it comes to technology. And this new emphasis and dependency on data analytics is a chance for credit unions to upgrade some of their current solutions to capitalize on the immense benefits of top-tier credit union data analytics.

But what are the biggest benefits of data analytics? Here are a few:

  • See the big picture of your credit union’s financial performance
  • Increase agility
  • Improve decision-making

Data-driven profitability is created by gaining visibility into your credit union data and adjusting your transformation plans to suit that data’s story.

Agility is a core component of thriving businesses in the post-pandemic financial climate. As the marketplace changes with things like cryptocurrency, stock market fluctuations, emerging fintech, and more, your credit union can expand its reach and the viability of your solutions for current and future members by keeping your business model agile and flexible to change.

Decision-making is part of a credit union leader’s core responsibilities, but how do you know what the right decisions are when there’s so much diversification and specialization happening in the financial industry right now? Automation and data analytics are two of the most powerful tools you have at your disposal.

By drilling into your credit union’s available data, you can often make more accurate plans, gain a better understanding of your position in the current market, and streamline processes to cut costs and improve margins.

Using Data Analytics to Mitigate Risk

While we are sure your credit union has several fraud detection policies and protocols, it’s also important to use data analytics for fraud prevention.

When you are familiar with the flow of data and the types of data you are sending and receiving on a regular basis, you will notice when things look slightly left of center. You can also see trends in data flow on a monthly, quarterly, and yearly basis. This helps you identify fluctuations in the marketplace and help your credit union prepare its staff and members for possible changes, like interest rate hikes, inflation spikes, related market trends (like housing crises, rising debt, etc.), and more.

You can also use analytics to help manage your member-related risks. Investment risk modeling and credit risk analysis can help you determine which members are struggling, which can easily afford loans with the latest interest rates, and other trends in member behavior and market fluctuation.

Using Analytics to Manage Supply and Demand

Supply and demand are two sides of the same coin, and you need a good understanding of both to succeed in any business venture. And you can use data analytics to help ensure things stay as balanced as possible for your credit union.

You can’t help your members and your community without great sales performance. Data analytics can help you decipher branch and online channel sales in ways that will benefit your operations and help you bolster the programs that need work and highlight the success of those that are already working well.

Just like you can measure performance over time, data analytics enable you to track and measure the results of different lending, credit, and debit initiatives over time.

You can also use insights from data analytics to inform your approach to chatbots and other AI solutions.

When measuring and capitalizing on member demand, personalized marketing is a fantastic way to create momentum with data analytics. By putting your data to work for you, your marketing efforts are more informed and targeted, which means you pay less to get more. You can expand your reach and increase your success with regional campaigns, limited-time offers, and more.

Analytics also show the big picture of your member life cycle – you can use it to predict the lifetime value of your members, based on the types of credit union products and services they use during different parts of their financial life.

Analytics is a vast recommendation engine. If you know how to aggregate and sort your data, you can learn so much about your operational efficiency, market value, member experience, and so much more.

Credit Union Data Analytics: The Big Picture

In a recent study titled “CFO Outlook for Financial Institutions,” Syntellis found that when surveying finance professionals at banks, credit unions, and financial services companies in the U.S., 62% of respondents identified “pulling data from multiple sources into a single report” as one of the three most challenging reporting tasks.

There are so many ways you can use your credit union data analytics practices to create a detailed and helpful “big picture.” Data-driven digital transformation can create positive change by improving member intelligence, creating more efficient and productive processes, highlighting new business opportunities, and optimizing compliance and market factors to create a seamless experience for your staff and members.

But you need credit union data analytics and discovery to do all those things. Your raw, unfiltered data isn’t helpful if you can’t use it to glean new insights and inform your future operations approaches.

With IMS’s data discovery tool, DataArchiver, you can take advantage of on-premise, cloud, and hybrid storage while also taking advantage of powerful features including restore and recover, data compression and de-duplication, multi-remote site management, data life cycle management, and more.

9 Top KPIs for Credit Unions

Written by

 

Credit unions are an important part of the financial services industry. As such, it is important to measure their performance and progress in order to maintain a high level of service and meet customer needs.

In the highly competitive world of credit unions, it is essential to measure performance using Key Performance Indicators (KPIs). Every organization should have KPIs specific to its organizational objectives, but there are certain KPIs that are important for all credit unions.

We recently discussed the essential network performance metrics for the financial industry. In this article, we will discuss the top KPIs for credit unions in order to provide guidance on how to measure success. We will examine how these KPIs can be used to assess operational efficiency and financial performance.

Why Are KPIs Important to Credit Unions?

KPIs, especially those that monitor sales performance and financial performance, can be great data to use and apply to your credit union’s current growth and opportunity initiatives.

But they offer more than just options for CU growth, KPIs are commonly used to:

  • Create a Culture of Learning – These metrics can help your departments and staff members collaborate and learn as they dive into KPI analysis.
  • Measure Goals – Business goals are complex. Familiarity with a KPI report that tracks your sales, marketing, or digital banking initiatives offers great insight into how you are measuring up against the goals you’ve set for your CU this year.
  • Improve Operations – Business goals and initiatives evolve over time. But your KPIs can help you with consistent measurements throughout every ebb and flow. Seeing financial systems and their cycles over time can create true operational efficiency. This is more powerful for the success of your credit union than reactionary measures or growth campaigns will ever be.
  • Provides Quantifiable Feedback – Credit union leaders know all to well the struggle of finding out “why” a certain product, service, or initiative was so successful (or so underwhelming). KPIs create data that tracks the state of your operations as you grow and change, and this can offer important feedback when you study the trends shown within your KPI reports. Now that you’re familiar with the importance of KPIs for credit unions, let’s look at some of the big ones your CU should be tracking.

Overall KPIs for Credit Unions

Your credit union has likely experienced some big changes in the last few years. And with those changes come other opportunities and obstacles you must address in order to continue growing as a business. Here are some of the top overall KPIs for credit unions.

Loan growth is the percentage change from period to period of your loans outstanding. While you can certainly drill down into the different types of loans and other lending products and services your credit union offers, keeping track of the overall trajectory of your lending programs is important.

Member growth is the percentage change of total credit union members from period to period. As big banks continue to try and use technology to wow their customers, your membership growth opportunities are going to come mostly from digital banking and customer service differentiation.

Return on assets is the annual net income divided by your average total assets. ROA is a top indicator of profitability in any business. This should, for credit unions, be more of a guide rather than an absolute indicator of success. Many credit unions are not working solely towards profitability – there are other factors and goals that may lead to less profitability but more community outreach and recognition within the geographical areas you serve.

The average member relationship is the average value of assets (loans, deposits, etc.) that an individual member has with your credit union. This KPI can be determined by analyzing your pricing strategy, underwriting policies, product mix, and more. This can also be affected by environmental factors, including the current job market and the economic environment of the areas you serve.

Digital KPIs for Credit Unions

62% of all consumers consider mobile banking apps an essential service, and nearly 3 out of 4 consumers use them as their primary form of money management. Digital banking becomes more important every year, and your credit union serves a very loyal member base (if you’ve done things right for them). That means digital banking KPIs are just as important as the traditional ones we mentioned above. Here are some of the top KPIs to watch.

Return on investment of your online platform should likely be at the top of your digital KPI monitoring. This shows you the relationship between the total amount of resources used for the platform and the total returns you’ve made from it. Upselling and cross-selling will be the drivers of most of your gains here. You can also use the reduction in cost you’ve realized since moving from paper or in-person products and services to digital solutions. It’s a great way to see the overall value of your digital programs, for your credit union and for your members.

Active clients is another strong KPI to track – this one shows you how many members are downloading and regularly using your digital applications and online banking services.

There are also several conversion-based KPIs that can help you monitor the effectiveness of your online programs. 

Number of conversions is just the total number of users who have begun the process of onboarding to digital banking apps and solutions. 

Conversion ratio is the number of members who complete the sign-up and onboarding process, and conversion time is how long the whole process takes per member. 

Abandonment rate is the number of members who have chosen not to complete the process.

These conversion KPIs can tell you a lot about which areas in your digital banking platform are performing well and helping your members the most, and which areas need to be improved upon to decrease the number of members who abandon the process altogether.

Your Data Is a Gold Mine – Keep Things Organized and Safe with IMS

The more you can use your data and the top KPIs for credit unions to glean insights on what your members, staff, and community need, the more opportunities you’ll find for growing your credit union services and membership base.

IMS offers a host of virtual private cloud services created specifically for credit unions like yours. From backups and data discovery to compliance, anomaly detection, and IaaS, we’re working hard to keep your data safe, secure, and organized. Reach out to us today or check out our website to learn more about our services.

Why Your Credit Union Needs Offsite Backup

Written by

 

Is your credit union considering implementing offsite backup services?

An offsite backup is a tool used to replicate your credit union’s (or any business’s) data and store it on a server or medium that is housed in a different location. While local backups are a good start, those backups stored on a hard drive or other media and are more geared toward protecting your data in the event of a small issue, like corruption of a single file.

Cybersecurity threats have been on the rise for several years, and the pandemic exacerbated that. Here’s why your credit union needs offsite backup.

Disasters & Storage Space

Your credit union is a financial institution that is dedicated to its members. That means the space in your branches and physical locations is better utilized when your data backups are housed outside of that location.

Offsite backups offer the benefit of keeping your office storage space to a minimum so you can house more staff members and member-inclusive areas like lobbies and private meeting rooms.

Storing your data offsite also means any natural or other disasters that affect your credit union operations will not affect your backups. Fire, tornado, hurricane, earthquake – your locations have their own specific weather threats that can disrupt or destroy data and data-housing hardware if all your backups are stored on-site.

Reduced Time & Cost

If you don’t have to pay for the technology that houses your data, and you don’t have to manage the backups, you can save time and money. That’s the beauty of offsite backup services.

You can outsource the purchase and upkeep of your data backup system by partnering with IMS to store your data safely offsite and to have it monitored and protected.

This also saves your IT staff and credit union managers and leaders time by removing some, if not all, of the data backup duties from their plates. Your credit union operations can continue efficiently and cost-effectively.

Increased Security

And speaking of protection, there are several benefits to offsite backup on that front, too.

Should your credit union or branch be hit with malware that affects your entire local network, your offsite backups are still safe. This can decrease the impact of things like ransomware and create great opportunities for near-seamless disaster recovery protocols.

You also remove the opportunity for human error by moving the data offsite. This way, files can’t be confused or stolen through employee error or malicious intent.

Offsite backups are disconnected from your main networks, so any issues you have with those networks will leave your backups completely unaffected.

Peace of Mind

Housing all your assets in one place is never a great business strategy, especially when those assets include sensitive personal and financial information. You and your members will be able to rest easy knowing that their information is protected in a data center with technology that was built to serve credit union needs.

Remote work and hybrid office spaces also mean that the availability of data has changed. Keeping all important backups in one place when your credit union may have people accessing it from unfamiliar homes and public networks has increased the chances of a malicious attack.

By incorporating offsite backup solutions into your business continuity and disaster recovery plans, you can ensure that the big disasters will have virtually no effect on the integrity of your data.

Cloud-Based Offsite Backup Solutions

IMS offers an automated, unattended backup solution that keeps your data from physical and virtual machines securely stored at an IMS data center.

Our could-based backup services are powered by Rubrik, the premier backup solution on the market. We provide fast and efficient backup that includes both on-premise backup and offsite replication.

Our Rubrik backup solution includes:

  • Backup & recovery
  • Continuous data protection
  • Ransomware Recovery Replication & disaster recovery
  • Virtualized environments
  • Windows & Unix protection

Your data is the digital backbone of your credit union operations. And more and more people are prioritizing security and continuity in their banking and other financial service providers. 

Disaster Recovery Dos & Don’ts

Written by

 

Credit unions have had their fair share of setbacks in the last year. However, the recent 4th quarter report from the National Credit Union Administration (NCUA) shows that assets, shares, and deposits grew during the last months of 2021. To capitalize on that momentum, your credit union must continue to provide more on-demand and real-time products and services while you grow your member base.

But you can’t do that without a top-tier disaster recovery plan. But what does a good plan look like? Let’s go through some disaster recovery dos and don’ts.

Do: Set Plans & Goals for Your Disaster Recovery

Every disaster recovery system needs to be tested. And for you to measure how well your test and disaster recovery system work, you need to have something to measure against.

The best way to do that is to identify and set goals for KPIs (key performance indicators). The most common include recovery time objective (the amount of time that can pass before your business has been impacted by the disaster) and recovery point objective (the maximum amount of data that can be lost).

Best practice is to test your disaster recovery and business continuity plans at least once every year. This includes emergency evacuation drills, walkthroughs, and risk assessment reviews along with your recovery plans.

Don’t: Rely on Protecting Just the Basics

It’s important to protect the core components of your business in your disaster recovery plan, including the items that you need for compliance reasons. But that should just be a starting point. As you work on your disaster recovery strategy, it’s important to look at all aspects of your credit union’s operations.

Are there contingencies in place that will allow you to communicate with remote or offsite staff members? Are your software, app, or plugin vendors considered in your plans? Do you have a detailed description of who does what during the disaster?

Even if you don’t prioritize everything on a scale from most important to least, thinking through the intricacies of your credit union’s operations can help you mitigate damage and mobilize support when it’s necessary.

Your disaster recovery plan can consist of several smaller plans based on your credit union’s branches, departments, and even the emergency type.

For example, your IT department may need to have different priorities in different disasters. This can be based on the potential threat to the physical components of your security system versus the digital ones.

Do: Make Your People a Priority

You’d be surprised how many disaster recovery plans go into exquisite detail about the operations and technology considerations, but they leave out the human element.

Many disasters are natural or physical in nature – and that presents many opportunities for your staff to be harmed. Here are a few things to think about as you create your credit union disaster recovery plan:

  • Where are the shelters or gathering areas for things like a fire, flood, tornado, hurricane, or another natural disaster?
  • What is the survival plan for your employees if there is an active shooter?
  • If people are injured, how do you want your teams to help? Which staff members should be prioritized? These questions and plans may need to be augmented by a medical professional’s opinion.
  • Who will contact the authorities in the event of a disaster, accident, or other harmful situation?

You can’t ensure business continuity if you aren’t protecting the ones who are doing that work for you. And don’t forget to make sure that all your employees are able to get to your designated areas without trouble. This includes people with physical disabilities (from limited mobility to deafness or blindness)

Don’t: Forget to Define the Impact of the Disasters You’re Preparing For

You can increase or decrease the scope of your credit union disaster recovery plan to include a business impact analysis.

A business impact analysis can help you measure and prepare for how each different disaster will actually affect your operations. This includes everything from employee tasks that are interrupted or rendered unusable, impact on credit union members and member services, data loss, and more.

Here are some examples.

Let’s say the disaster you are preparing for is a ransomware threat. In the business impact analysis, you’d list the impact of that disaster: data loss, employees unable to access files which lead to lost productivity, corruption of technology and other digital assets.

However, if the disaster is a tornado, the impact is much different: loss or damage of equipment, buildings, etc., potential data loss, information systems going offline, human injury, loss of productivity, member services and experience will suffer.

These impact areas may be different based on the size and operations of your credit union. But a good business impact analysis will not only prepare you for what to do in an emergency, it will also show you what areas will suffer. This gives you insight into what and how you should implement preventative and other measures to create a successful disaster recovery plan.

Worry-Free Disaster Recovery Services

Server crashes, human error, malicious activity, natural disasters – your credit union could succumb to any one of these disasters at any time.

Disaster recovery is an integral part of your business continuity. As more and more people rely on real-time banking technology, any downtime and data loss are major hits to your credit union.

IMS offers worry-free disaster recovery. We help you keep your credit union operational by ensuring your critical servers, branches, and third-party vendor communications are all recovered quickly.

Benefits of Cryptocurrency for Credit Unions

Written by

 

The emergence of cryptocurrency has created a lot of buzz in the banking and financial industries. Its very name evokes ideas of cryptic, mysterious doings. As the world becomes more familiar with the intricacies of these new types of digital currency, it’s important for your credit union to know what the buzz is about.

Cryptocurrency was born on the internet. And its virtually universal accessibility makes it attractive to younger and more digital-forward investors and other interested parties. Recently, new guidance was introduced to help credit unions forge a path in this new landscape. Let’s talk about the benefits of cryptocurrency for credit unions.

Cryptocurrencies for Credit Unions

The National Credit Union Administration (NCUA) has already begun sharing guidance on credit unions and cryptocurrencies. The goal is to create relationships between federally insured credit unions (FICUs) and third-party entities that buy, sell, and hold these digital assets.

A cryptocurrency is a form of digital money with no centralized authority. This means transactions are recorded on a digital ledger automatically. The increased interest in cryptocurrencies has led many banking experts to conclude that credit unions could generate some impressive growth by expanding into these new markets.

Cashless financial services have been the trend for several years now, even before COVID-19 came along. Demand for cryptocurrency access continues to grow as well.

The biggest problem with these new digital currencies is that they are not well regulated yet. When transactions take place, they’re logged into the blockchain – the database that monitors all cryptocurrency transactions. There’s no government regulating these transactions, and anyone who uses the blockchain can view it and the transactions therein.

Many people have been using credit cards to buy cryptocurrencies. But the speculative nature of these markets has caused some banks and credit card companies to deny these transactions.

Benefits and Risks of Offering Crypto Services

More and more businesses are embracing cryptocurrency. You can make Starbucks, Microsoft, Shopify, Home Depot, and Whole Foods purchases with crypto “coins.” The main benefit for those who deal in cryptocurrency is the ability to access and move their money without the use of a third party. They are digital files you can store in digital wallets and use anywhere online with participating merchants.

The regulations issues surrounding the crypto industry continue to be concerning for credit unions and other financial institutions that are more in tune with risk management best practices and compliance.

However, credit unions that wish to stay away from this trend may be missing a big market opportunity. In December 2020, a Cornerstone Advisors survey showed that almost 70% of cryptocurrency owners would use their primary banks for digital investments. However, very few financial institutions are interested in managing these transactions.

21 million adults already own some form of cryptocurrency, and this group offers a huge growth opportunity for credit unions willing to take the leap. This could be a big selling point for future member attraction and retention efforts.

Ways to Get Your CU Involved

There are several options for credit unions wishing to mitigate the risks that come with handling cryptocurrency.

First, you can work with a third-party business. Using mobile apps, you can create transaction opportunities for your credit union members, while running all of these assets (and the associated risk) through a third party.

You can also provide crypto custody services. This falls more onto the record-keeping side of things and includes services like safekeeping, analytics, asset servicing, lending, pricing and valuation, trading, payments and settlements, and collateral.

And positioning your credit union as an early partner for cryptocurrency lovers is a great way to banish the myth that credit unions are technologically challenged.

Offering crypto services is also a great way to reach specific members of the unbanked and underbanked audiences. These individuals love having the option to conduct business without having to create or maintain a bank account.

Cryptocurrency will soon be more regulated. Executives within government and financial compliance agencies, like the SEC, are announcing plans to use legislation and other methods to make cryptocurrency more regulated and mainstream.

Protect Your Members’ Assets from Cash to Crypto

Like many consumers, crypto holders are more likely to partner with financial institutions that offer crypto-specific services. Not sure about jumping into the cryptocurrency game? Credit unions can also offer custodial services, create crypto-forward debit and credit card rewards or interest enhancement, and more.

Credit unions are seen as trustworthy and member-forward. Being among the first institutions (and even beating fintechs to the punch) could be a great way to usher in a new generation of online investors.

As your credit union branches out into new digital territories, compliance becomes even more important. With IMS, you can create safeguards for even the most sensitive of data.

Polaris Sonar, our new SaaS application, applies machine learning to discover, classify, and report on sensitive data without impacting production. You will be able to:

  • automate with machine learning and policies
  • identify sensitive data exposure
  • accelerate compliance with privacy laws

Browse these and more offerings here on our website or contact us today!

Top 2022 Credit Union Priorities

Written by

 

We’ve previously shared some planning strategies for your credit union for 2022. Now that we’re past the holidays, the first months of the year will be dedicated to working through the best ways to address your top 2022 credit union priorities.

Resiliency was the word of the year for credit unions in 2021. In the first three quarters of the year, credit unions grew by 5 million member-owners and $230 billion in assets.

2022 Credit Union Priorities: Digital Advancement

Online offerings continue to lead the pack in terms of top 2022 credit union priorities. Your members want you to meet them where they are, without sacrificing any of the exceptional customer service credit unions are known for.

CUs overall have seen a 5.8% increase in lending year over year – another service that has expanded its online presence for many banking institutions in the last year or so. Maintaining that loan growth will largely depend on the accessibility of those loans to all members, from your regulars who come into your branches to do everything from depositing a check to take out a loan, all the way to the digital natives who want to be a member of your credit union without ever having to step foot inside your buildings.

And the rise of cryptocurrency, NFTs, and digital credentials have opened up new regulatory issues that the Federal Reserve, FDIC, and Office of the Comptroller of the Currency are working on identifying potential opportunities and risks to provide legal and institutional clarity on the role of banks in transactions involving these digitally-based assets.

Cybersecurity & Data Protection

Along with this digital growth come more cyber threats. Cybersecurity and data protection must also be priorities to ensure these new assets are protected from those who wish to sell or exploit your members’ personal or financial information.

There are many tools you can add to your digital toolbox that will safeguard your data and streamline your operations including data backup, core hosting, IaaS, virtual desktop, disaster recovery, and colocation services.

Financial Inclusion & Diversity

Many programs that were affected by and molded to better combat the issues caused by the coronavirus pandemic have actually created positive financial, personal, and business results for many credit unions and their members.

Financial inclusion is the availability and equality of opportunities to access financial services. Credit unions have always focused on serving those who are not being prioritized by big banks and their offerings, so it should be no surprise that this will be a great way to expand your credit union’s influence in 2022.

The pandemic has created many unsustainable solutions to temporary but very serious problems. Moving forward with more inclusive financial education and banking services will lead to stronger and more sustainable economic growth and development, and the stability that the whole world is craving this year.

Protect Your Momentum with Digital Backups and Disaster Recovery from IMS

IMS is your partner in virtual private cloud services for your credit unions. Our digital backup and disaster recovery solutions are perfect for safeguarding your member data at all times, even when the unthinkable disaster occurs. Our team has years of experience providing data center services to credit unions all over the U.S.

Browse these and other offerings here on our website or contact us today!

2022 Credit Union Planning Strategies

Written by

 

It’s that time of year: everyone is talking about the holidays and making their New Year’s Resolutions lists as we look forward with hope (and more than a little apprehension) to the things next year will bring. As your staff wraps up 2021, it’s time once again to dive right into your 2022 credit union planning strategies. And IMS is here to help!

COVID Isn’t Yet a Thing of the Past

The effects of the coronavirus pandemic are well-documented, and likely not going anywhere for 2022 or the following years. As much as we all wish desperately to put the past few years behind us for good, there’s still a lot to address and unpack, from the effects COVID has had on member habits to the labor shortages we are experiencing right now.

Recently, a CUNA Senior Economist spoke during a World Council of Credit Unions webinar, and we wanted to talk about some of the points covered.

In 2021, credit unions achieved pre-pandemic levels of economic output, says Senior Economist Dawit Kebede. Commercial loans and refinances are leading the pack in terms of loan growth rates.

And as vaccinations increase member confidence, there will also likely be a rise in loan and membership growth in the new year.

2020’s record highs in savings growth are now falling, likely to be 12% lower by the end of 2021, and expected to fall another 6% by 2022.

Branch Network Analysis

Before you rush off to start adding credit union branches or expanding current ones, we have to take a step back and look at the current picture for your CU. Just because the unprecedented declines of 2020 were followed by astounding growth and rebound in 2021 doesn’t mean 2022 will look the same.

If you want to use this organic growth to expand as part pf your 2022 credit union planning strategies, take a look at your current branches. Are they performing well across the board? Are certain ones struggling or seeing more online activity than branch business? And what does the entire system look like? Are your loan programs performing at forecast?

Having a clear understanding of your credit union’s network now will help you create a solid plan to target problem areas and expand successfully into the growth opportunities that 2022 will bring.

Upgrade Your Physical Spaces to Reflect the New Normal

According to Level 5, physical branches are “still at the forefront of customer engagement and retention, but due in part to digital channels, their role has become less transactional and more about onboarding and advisory sessions.”

That’s why part of your 2022 credit union planning strategies should include a thorough evaluation of the spaces each branch has, and the purposes they are being used for. You should focus more on making your branches friendly and helpful for new and potential members looking to open accounts, with lots of space to conduct advisory meetings with members – whether they are discussing mortgages or other loan options, financial education, and more.

Start Your 2022 Credit Union Planning with IMS

IMS is the leading backup, disaster recovery, and IaaS service provider for credit unions – this enables us to provide leading technology at a price you can afford. We want you to be able to serve your members as well or better than big banks and new fintech companies. Check out our virtual private cloud services.

Browse these and other offerings here on our website or contact us today!

The Future of Credit Union Technology

Written by

 

The last year or so has become the catalyst for credit union technology growth and change, driving member services toward digital solutions faster than they have ever done before.

Streamlined service and cutting-edge digital experience is no longer a luxury for businesses, it’s a necessity. Let’s discuss the future of credit union technology.

2021 Priorities: Cloud, Data, and Analytics

Cloud, data and analytics are the top priorities this year for credit unions looking to make big changes to their member experience standards, says the Credit Union Times.

Cloud solutions are quickly becoming vital to businesses across nearly all industries, as work-from-home opportunities increase in popularity. The ease of storing data in an easily accessible place no matter your physical location is a big boon to a credit union’s tech future.

And since so much activity has moved to online platforms, data and analytics are being collected and leveraged in more useful ways. For your credit union to better serve its community, you must know who you are speaking to and working with. Analytics offer hosts of great insights that can help with everything from choosing or updating hours of operation to running multi-audience marketing campaigns.

Bridging Accessibility Gaps

Credit union technology also proves advantageous for individuals who are differently mobile and more digital-minded. By offering digital credit union solutions, you are improving the accessibility and safety of your brand. Whether your members’ ability to come into your physical branch locations stems from a handicap or illness, lack of vehicle access, pandemic restrictions, or a preference for online dealings, credit union technology offers new ways for people of all ages and from all localities the opportunity to take advantage of your membership and services.

Kirk Drake of Credit Union 2.0 says this: “In the credit unions, not that they don’t want to make money, it’s about member service, we really want to get the member value in that ecosystem and they really speak a very different language about their mission purpose, values, and what they’re trying to do.”

Preserving the Partnership

Members don’t choose credit unions for the fancy tech or big bank offerings – they do it because being part of a credit union means you have a partner for your financial life and wellbeing. While technology is changing how that partnership looks, it’s not changing the impact partnership has on the member experience.

By partnering with technology, credit unions can provide end-to-end services for their members. Multimedia resources, chat and video conferencing appointments, and so much more can be built into your digital presence, to help ensure that your credit union and its partnership with your members remain meaningful and provide quality interactions.

Contactless Trends

Pymnts.com reports that credit union members have a high desire for contactless payments. And though this trend started long before the events of 2020, due to the rapid digitization happening across all industries, 98% of POS devices being shipped out now are enabled with contactless functionality.

For CUs, this means focusing on streamlining. It also means taking the time to understand member preferences and offer personalization that suits a wide variety of member habits and requests.

Upgrade Your Credit Union Technology

Your credit union’s member experience is paramount to your success. Information Management Solutions (IMS) has years of experience providing data center services to credit unions all over the U.S., and we look forward to serving your unique needs.

IMS has virtual private cloud services and solutions like core hosting, virtual desktop, disaster recovery, and more for your credit union. Contact us today for more information.