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.


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. 


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.


Important Credit Union Regulatory Hot Topics

 

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

 

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

 

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

 

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

 

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

 

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.