Credit Unions and COVID-19

 

The emergence and development of the coronavirus pandemic have impacted the world in ways that likely won’t ever go away. Credit unions are not immune to the pandemic, but what have they been doing differently since the COVID-19 outbreak started? 

Changes for Members

The changes for members go much deeper than just incorporating social distancing and expanding online options to curb the spread of the virus. Many credit unions offered (and continue to offer) things like loan repayment holidays, emergency loan guarantees, credit card interest rate reductions, fee waivers, and extensive financial counseling.

These changes, coupled with targeted government stimulus and unemployment relief has helped ease the financial burden on credit union members. According to a Credit Union Times article, credit unions paid out $9.6 billion in business loans through the Paycheck Protection Program, supporting 51 million jobs.

To slow the spread of the virus, many credit unions also relied on recommending members perform more cashless transactions. Credit and debit card use as well as limiting large cash deposits and withdrawals were also encouraged.

Changes to Credit Union Operations

While deciding how to help members continue their financial journey, credit unions were also navigating the transition from physical business to mostly virtual and digital operations. Many countries deemed credit unions (along with larger national bank chains) as essential, so new protocols were implemented at astonishing rates.

The room and building maximum capacities are being downsized and many CUs had at least part of their labor pool working from home during shutdowns and shelter-in-place orders, which created a need for cybersecurity tips and best practices.

The WFH measures are likely here to stay, and the limited room capacities will be in place for the rest of 2020. Some countries have gotten a handle on their COVID cases, but the US is a long way from being COVID-free. This means in-person meetings and transactions will continue to be lower than average, while online offerings will continue to be a preferred method.

Policy Changes

From a technical standpoint, many institutions even made changes to services like commercial underwriting processes. While the COVID-19 pandemic may be a once-in-a-lifetime event, the importance of a strong contingency plan could be a higher priority for lenders considering the merits of a small business loan application.

Post-COVID

Though this pandemic is far from over, credit unions have now stopped merely reacting to the crisis and are working diligently to adapt and move forward. Many businesses are taking this time to search for ways to streamline, digitize, and automate certain aspects of everyday operations. 

73% of employers, regardless of business size, are now considering keeping work-from-home positions, which means data security and easy online access will become a necessity. Larger businesses may need to make tough decisions concerning mergers and consolidations. For smaller CUs, this is a great time to trim time-consuming practices from employees’ workloads.

Contact us when you’re ready to help take some of the burden off your team so they can focus on growing your credit union during these unprecedented times.


Preparing for Hurricane Season

 

The official start of the 2020 Atlantic hurricane season starts on June 1 and runs until November 30, but there’s already a tropical storm developing off the coast of Florida. That means it’s time to take another look at your disaster recovery and backup systems to make sure you’re prepared for any storms.

According to the National Oceanic and Atmospheric Administration (NOAA) National Centers for Environmental Information, the U.S. South, Central and Southeast regions experience a higher frequency of billion-dollar disaster events than any other region in the country. Severe storms like hurricanes and tornadoes lead to extensive power and telecommunications outages, mail service disruption, facility damage and transportation restrictions that impact how people access their money. Credit unions are no exception and may have to shut down or move operations for safety. In these moments it’s crucial your members can rely on you to continue serving the community.

Our client Louisiana Federal Credit Union has experienced many storms over the years, including Hurricanes Katrina, Rita, Gustav and Isaac. During the aftermath of every storm, their community has relied heavily on Louisiana FCU to provide full financial services. Knowing they are located in a hot zone for natural disasters, the credit union decided to move their core system to a safer region in the Northwest. By upgrading their core system, they now have peace of mind during hurricane season knowing that their services will be available to its members in their time of need.

business people planning at meetingMajor storms can disrupt a financial institution’s operations, sometimes lasting a significant period of time. While some interruptions can be anticipated, others cannot. That’s why it’s critical to have a business continuity plan in place. This is how the DuGood Federal Credit Union was able to effectively begin its backup plan when their data center was in the direct path of a large-scale hurricane.

The credit union knew they needed to act fast for the safety of the business and their staff. Members would be evacuating soon and it was important they could access their funds. After contacting our team, we worked together in coordinating a graceful shutdown of their systems and implemented a remote backup solution. It took less than three hours to back up systems, recover servers and bring up third-party vendor services like the ATM and internet banking. Ultimately, we were able to help with other technical operations as the team evacuated to another office.

With a continuity plan in place, your credit union will be able to jump into action if there’s any disruptive event. Test your disaster recovery service and reassess how well your institution is prepared for threats across all levels. When working with our team, you can count on no-cost annual testing to verify the integrity of your data.

We cannot predict the severity of all disasters, especially when it comes to natural disasters, but there is practice and preparation. Know where to go, identify what critical functions are needed and develop planned responses. 

Don’t wait until a storm is on the horizon to start making plans for your credit union. Contact our team to talk about the disaster recovery solution your credit union has in place. When disaster strikes, you’ll want to focus more on your members, staff and service than on complex logistics.


The Difference Between Credit Union Disaster Recovery And Business Continuity Planning

Most people use the terms “business continuity planning” and “disaster recovery” interchangeably, but they are two completely different strategies that organizations use to protect operations and bounce back from a disaster.

What are the main differences between business continuity plans and disaster recovery plans anyway? While the exact answer varies depending on who we ask, the general rule goes:

  • A Business Continuity Plan (BCP) consists of a series of protocols made to make sure that an organization can continue operations during a disaster. It answers the question: “How can our credit union remain operational during a disruptive event?”
  • A Disaster Recovery Plan (DRP) is often a subset of BCP and refers to the processes and tech needed for recovering from a disaster. It specifically pertains to recovering lost data and restoring failed infrastructure. This answers: “How does our credit union recover when a disaster strikes?”

Think of a BCP as a general strategy that businesses put in place to be able to continue operations with minimal disruption during a disaster. A DRP is much more specific. It’s a plan to recover the applications, data and other components that allow your organization to operate should your servers or data center get damaged or destroyed. 

Why are both Business Continuity Plans and Disaster Recovery Plans important?

Now more than ever, credit unions have to guard against a number of threats that can hinder operations. Aside from natural calamities such as earthquakes, fires, hurricanes, or floods, you now have to protect yourself from man-made threats such as cybercrime and attacks from competitors or disgruntled employees. Without both of these plans in place, your credit union may face severe consequences.

According to a study by FEMA (Federal Emergency Management Agency), “following a disaster, 90% of smaller companies fail within a year unless they can resume operations within 5 days.” Without comprehensive plans for preparing for these events, financial institutions are wide open targets.

By focusing on creating and regularly updating both business continuity planning and disaster recovery planning, leadership can make sure that their credit unions can weather through these events.

How do BCPs and DRPs overlap?

In actual use, both plans are referred to when describing an organization’s disaster preparedness. However, it’s very important to remember that a comprehensive business continuity plan will always have a disaster recovery plan built right into it. Think of your BCP as a master document that covers all aspects of your credit union’s disaster prevention, management and response, including the necessary recovery protocols. You can’t have an effective business continuity plan without tackling how your credit union will recover from different kinds of disasters.

Are you ready to fully prepare your credit union for any potential disaster? IMS has your back. Learn more about our Business Continuity Planning and Disaster Recovery solutions!