Detecting and Preventing Financial Fraud: Safeguarding Credit Unions

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

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

Addressing the Rising Tide of Financial Fraud

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

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

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

The Current Financial Fraud Landscape

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

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

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

Enhancing the Credit Union Business Model

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

Technologies Tackling Financial Fraud

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

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

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

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

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

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

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

FedNow + Cloud: The Perfect Match for Credit Unions?

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The financial landscape is going through a significant shift with the launch of the Federal Reserve’s instant payments service, FedNow. Designed to enable real-time payment processing, this service is set to revolutionize the way financial institutions operate, driving them towards embracing cloud-based solutions, such as IMS’s Infrastructure-as-a-Service (IaaS). As credit unions try to keep up with the demands of real-time payments and deliver enhanced member experiences, the cloud is a key catalyst of innovation and growth.

Let’s dive into the impact of the FedNow launch on financial institutions and discover how cloud adoption can drive credit union evolution.

The FedNow Initiative: The Push Towards the Cloud

The FedNow service, set to revolutionize the payments ecosystem, has captured the attention of financial institutions across the United States. According to a recent report by PYMNTS.com, the launch of FedNow is pushing financial institutions to embrace the cloud. 

Real-time payment processing capabilities pose unique challenges and opportunities for credit unions. With payments happening instantly, credit unions must ensure their infrastructure can handle the volume of real-time data and transactions without disruptions. 

Here’s how the launch of FedNow is driving credit unions to embrace cloud-based solutions:

Scalability for the Modern Digital Landscape

Cloud computing empowers credit unions with a highly scalable infrastructure, tailor-made to meet the demands of real-time payments. With the ability to dynamically adjust resources based on transaction volumes, credit unions can ensure a seamless experience for their members, even during peak times.

Cost-Effectiveness and Resource Optimization

Cloud-based solutions offer credit unions a cost-effective approach to adopting cutting-edge technology. Unlike traditional on-premises systems that require significant upfront investments, cloud services such as IMS’s IaaS follow a pay-as-you-go model. This allows credit unions to allocate resources efficiently, focusing on providing value-added services to members without compromising their financial stability.

Enhanced Security and Fraud Prevention

Data security is critical. The FedNow service requires robust security measures to protect against fraud and data breaches. Cloud service providers invest heavily in security protocols, offering advanced data encryption and continuous threat monitoring. By leveraging cloud-based security solutions, credit unions can bolster their fraud prevention capabilities and safeguard sensitive financial data, earning their members’ trust.

Seamless Integration and Simplifying Member Experiences

Credit unions thrive on personalized member experiences, and the cloud’s seamless integration capabilities enable them to deliver just that. By connecting core banking systems and payment platforms with cloud-based solutions, credit unions can facilitate real-time payments through FedNow with minimal disruptions. This frictionless integration enhances member experiences and fosters loyalty.

Innovation and Future-Proofing Credit Unions

Beyond instant payments, the cloud opens doors to innovation for credit unions. With a flexible cloud infrastructure, credit unions can experiment with emerging technologies, such as artificial intelligence and machine learning. These technologies empower credit unions to optimize operations, personalize member interactions, and proactively detect and prevent fraud. Embracing the cloud future-proofs credit unions, ensuring they stay relevant and resilient.

Pioneering FedNow & Real-Time Payments with IMS’s IaaS Solution

After the official launch of FedNow last July 2023, credit unions find themselves on the verge of a digital revolution in real-time payments. While only a small portion of banks have taken the lead, credit unions can seize the opportunity to redefine their member services.

By embracing cloud-based technologies like IMS’s Infrastructure-as-a-Service, credit unions can leverage scalability, cost-effectiveness, enhanced security, and innovation to meet members’ growing expectations.

Connect with IMS today and revolutionize your credit union’s real-time payment capabilities.

Is Your Credit Union Aware of These Bank Secrecy Act Violations?

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Financial transactions are increasingly digital and global. The importance of protecting credit unions from threats such as Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) violations cannot be overstated. These violations can undermine the integrity of financial institutions, erode trust, and expose credit unions to severe penalties. Understanding these violations, recognizing their signs, and proactively addressing them is critical.

The BSA and AML regulations were established to prevent and detect financial crimes, primarily money laundering and terrorist financing. These crimes are constantly evolving and your members trust you to protect them while serving their needs. To keep your credit union compliant and your members safe, it’s essential you understand these financial threats well.

Let’s dive in!

Common Bank Secrecy Act and Anti-Money Laundering Violations

BSA and AML violations can take many forms within a credit union. Here are 5 of the most frequent violations:

  1. Late 314(a) Searches: Credit unions often fail to complete 314(a) searches in a timely fashion. It’s essential for credit unions to keep their U.S. Patriot Act contacts up-to-date and verify these profiles whenever changes occur. They should also have clear policies outlining the process for handling Financial Crimes Enforcement Network (FinCEN) requests, filing suspicious activity reports (SARs), and conducting independent testing of 314(a) compliance.
  2. Inadequate BSA Training: Not all credit union board members and BSA officers receive proper BSA training. It’s crucial for new staff to be trained as soon as possible, including tailored examples of money laundering and suspicious activity monitoring. All training must be documented, including attendance records and corrective actions for those who fail to attend.
  3. No Independent Testing: Finding qualified in-house staff to conduct independent testing can be challenging. The National Credit Union Administration (NCUA) encourages credit unions to utilize BSA resource sharing as allowed by the Interagency Statement on Sharing Bank Secrecy Act Resources.
  4. Lack of Written and Approved BSA Compliance Program: BSA/AML compliance programs need to be written, approved by the board, and documented in board meeting minutes. These programs should include internal controls, independent testing, a designated BSA officer, appropriate personnel training, member due diligence, and a customer/member identification program.
  5. Noncompliant SAR and CTR Filings: Currency Transaction Reports (CTRs) are often not filed within the required 15 calendar days or for every cash transaction over $10,000. Similarly, SARs are frequently not filed within the mandated 30 or 60 days, and they often lack completeness and accuracy, particularly in the narratives.

Remember, BSA and AML violations can have serious consequences. By understanding these violations and taking proactive steps to prevent them, credit unions can provide a secure environment for their members while ensuring regulatory compliance.

Need more detailed information on BSA and AML regulations and how to avoid violations? Refer to these resources provided by CUNA and NCUA! Stay informed, stay compliant, and continue to serve your members with confidence and integrity.

Strengthen Your Bank Secrecy Act Compliance Strategy with IMS

Adhering to BSA and AML regulations is more than just a compliance requirement. It’s a crucial part of maintaining the trust of your members and preserving the reputation of your credit union. By understanding these regulations and taking proactive steps to prevent violations, you can protect your institution from hefty fines and damage to your reputation.

At IMS, we specialize in helping credit unions maintain compliance. Using Polaris Sonar, we apply machine learning to discover, classify, and report on sensitive data without impacting production. 

By partnering with IMS, you can focus more on serving your members and less on regulatory compliance worries and data security concerns. Contact us today if you have any questions or let us walk you through our services and their features, all made specifically with your credit union in mind!

Embracing Costovation: How Credit Unions Can Adopt Lean Business Practices

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In today’s rapidly changing financial landscape, credit unions face increasing competition from traditional banks and fintech companies. To stay relevant and continue providing exceptional member experiences, credit unions must find innovative ways to streamline their operations and reduce costs while maintaining high-quality services. One approach that has gained traction is costovation — a strategy that combines cost reduction with innovation. Let’s discuss the concept of costovation, its benefits, and why credit unions should embrace it to enhance member experience and stay competitive.

What is Costovation?

Costovation refers to the process of reducing costs while simultaneously improving products or services, resulting in an enhanced customer experience. It is about doing more with less, finding creative ways to deliver value without compromising quality. This approach can help credit unions differentiate themselves from competitors while maintaining efficiency and financial stability.

Benefits of Costovation for Credit Unions

By focusing on cost-effective innovations and streamlining processes, credit unions can offer better products and services tailored to the specific needs of their members. This can result in higher satisfaction levels and increased member loyalty.

Implementing costovation strategies can also help credit unions identify inefficiencies and optimize workflows. This can lead to reduced operational expenses and improved resource allocation, allowing credit unions to focus on member-centric initiatives.

As credit unions embrace costovation, they can develop unique offerings that set them apart from traditional banks and fintech companies. This differentiation can help credit unions attract new members and retain existing ones. But with the vast amount of data available, credit union data analytics and discovery is essential. Raw, unfiltered data is unhelpful because you’re unable to use it to discover new insights and inform your approach moving forward. 

This Credit Union National Association (CUNA) article goes into more detail on how costovation can help businesses innovate without the high price tag.

5 Ways Credit Unions Can Implement Costovation

  1. Embrace Digital Transformation: Adopting digital solutions can help credit unions automate manual processes, reduce costs, and enhance member experience. For instance, investing in Infrastructure-as-a-Service (IaaS) allows credit unions to leverage a flexible, scalable, and cost-effective infrastructure by outsourcing their computing resources, storage, and networking components to a third-party provider. 
  2. Leverage Data Analytics: Utilizing data analytics can help credit unions gain insights into member behavior and preferences, enabling them to develop targeted products and services. This can lead to increased member satisfaction and reduced operational costs by eliminating offerings that do not resonate with the target audience. It can also help credit unions avoid the pitfalls of bad data.
  3. Optimize Branch Operations: Credit unions should evaluate their branch networks to identify areas for improvement, such as consolidating underperforming branches or adopting lean staffing models. Additionally, implementing self-service kiosks or video teller machines can help reduce staffing costs and provide members with faster, more convenient service.
  4. Collaborate with Fintech Companies: Partnering with fintech companies can enable credit unions to access innovative solutions at a lower cost than developing them in-house. These collaborations can help credit unions enhance their product offerings, streamline operations, and improve member experiences.
  5. Invest in Employee Training and Development: By investing in employee training and development, credit unions can equip their staff with the skills and knowledge necessary to identify cost-saving opportunities and implement costovation strategies effectively.

Costovation in Action for Credit Unions

Some credit unions have simplified their loan application processes by leveraging digital platforms and data analytics, resulting in reduced processing times and improved member satisfaction.

Another common example of costovation is the introduction of remote deposit capture technology, which has allowed credit unions to reduce costs associated with processing paper checks while providing members with a convenient way to deposit funds.

By participating in shared branching networks, credit unions can offer their members access to a wider range of services and locations without incurring the costs associated with operating additional branches.

Costovation is an innovative approach that can help credit unions reduce costs, improve efficiency, and enhance member experience. By embracing costovation strategies, credit unions can differentiate themselves from competitors, attract new members, and ensure long-term financial stability. Ultimately, adopting costovation can lead to the development of lean businesses that people love, fostering a strong sense of community and loyalty among credit union members.

Costovation for your Credit Union with IMS Infrastructure-as-a-Service (IaaS)

Infrastructure-as-a-Service (IaaS) can play a vital role in helping credit unions implement costovation strategies. This approach eliminates the need for credit unions to invest heavily in on-premises hardware and maintenance, resulting in reduced capital expenditure and operational costs. By adopting IaaS, credit unions can allocate their resources more efficiently, focusing on member-centric initiatives and delivering better services without compromising on quality.

In addition to cost savings, IaaS also promotes innovation by providing credit unions with the agility and flexibility to quickly scale their infrastructure as needed, enabling them to respond to market changes and member demands more effectively. With access to state-of-the-art technology and tools, credit unions can develop and deploy new products and services faster, enhancing their competitiveness and member experience. 

By embracing IaaS with IMS as part of their costovation strategy, credit unions can build leaner, more agile organizations that are better equipped to adapt to the evolving financial landscape and deliver exceptional value to their members. Connect with us today if you have any questions or let us discuss our solutions tailored to your credit union!

The Impact of Recent Changes to SBA 7(a) and 504 Lending Programs on Credit Unions

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The Small Business Administration (SBA) recently made changes to the 7(a) and 504 lending programs, which have the potential to negatively affect credit unions and their borrowers. These changes aim to increase participation in the programs but experts believe it may inadvertently create challenges for credit unions and small businesses. Today we’ll be diving into the recent changes, their implications for credit unions, and the importance of staying informed about these developments.

Understanding the SBA’s 7(a) and 504 Lending Programs

The SBA’s 7(a) and 504 loan programs are designed to help small businesses access capital for various purposes, such as starting or expanding their businesses, purchasing equipment, or refinancing existing debt. The 7(a) program provides loans with flexible terms and conditions, while the 504 program focuses on financing fixed assets like real estate and equipment.

Recent Changes to the SBA’s 7(a) and 504 Lending Programs

The SBA has finalized a rule that introduces several changes to the 7(a) and 504 programs. Some of the key changes include expanded eligibility criteria, updates to ownership requirements and improvements to debt financing options.

The SBA has expanded the eligibility criteria for the 7(a) program, allowing more businesses to qualify for loans. Additionally, the agency has modified the affiliation rules for determining a borrower’s size, which could result in more businesses being considered small and eligible for SBA loans.

Under the new rule, a change in ownership involving a partial buyout of an existing owner’s interest in a business will no longer require SBA approval. This change streamlines the process and reduces the administrative burden on borrowers and lenders.

The SBA has also made improvements to the debt refinancing options available under the 504 program. These changes aim to make it easier for small businesses to refinance their existing debt and access additional capital.

Impact on Credit Unions and Borrowers

While the changes to the SBA’s 7(a) and 504 lending programs may seem beneficial at first glance, they have the potential to negatively impact credit unions and their borrowers. Here are some of the key concerns:

  • Increased Competition: The expanded eligibility criteria may result in increased competition among lenders for SBA loans. This could make it more difficult for credit unions to compete with larger financial institutions, particularly when it comes to offering competitive rates and terms to borrowers.
  • Higher Risk for Credit Unions: As more businesses become eligible for the 7(a) program, credit unions may face higher risks associated with a larger pool of borrowers. This could lead to potential financial challenges for credit unions, especially if borrowers struggle to repay their loans.
  • Challenges for Small Business Borrowers: As credit unions face increased competition and potential financial challenges, small business borrowers may find it more difficult to obtain affordable loans through these programs. This could hinder the growth and success of small businesses that rely on SBA loans for financing.

The recent changes to the SBA’s 7(a) and 504 lending programs have the potential to create challenges for credit unions and their borrowers. By staying informed about these developments and adapting accordingly, credit unions can continue to support small businesses and foster economic growth in their communities.

Optimize Credit Union Lending Processes with Data Archiver

As credit unions face increased loan limits and altered eligibility criteria, efficient data management becomes crucial for maintaining compliance with SBA requirements, tracking loan performance, and optimizing lending practices. IMS’s DataArchiver can play an essential role in helping credit unions adapt to these changes by ensuring secure storage, organization, and retrieval of vital information. By offering a secure and centralized platform for managing data, DataArchiver allows credit unions to easily access relevant information, generate reports, and make informed decisions based on historical data.

Aside from data management, mitigate potential risks associated with the changes to the 7(a) and 504 lending programs by providing robust data backup and disaster recovery features. In the event of data loss or system failure, IMS solutions ensure that credit unions can quickly recover crucial information, minimizing downtime and potential financial losses.

By leveraging comprehensive cloud solutions by IMS, credit unions can confidently navigate the challenges posed by the changes in the 7(a) and 504 lending programs, maintain compliance, and continue to support small businesses in their communities. Let’s talk about how we can serve your unique needs!

The Cost of Bad Data

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Good data is essential for businesses, especially credit unions. But what many credit unions need to realize is that bad data can come with a hefty price tag. From decreased operational efficiency to missed opportunities to grow your business, the cost of bad data is real and often underestimated.

To help you understand these costs and how they can affect your credit union, we’ll examine the cost of bad data quality, how to identify it, and how you can prevent it from happening in the first place.

Data Quality: Why Bad Data is So Bad

We’ve featured bad data insights previously on the IMS blog in a past article about the ways bad data can harm your credit union. But the world is increasingly data-driven, and businesses are more reliant on intelligent data analytics, backups, recovery, and targeted solutions than ever before. And the amount of data being processed by financial institutions continues to grow in volume every year.

Improving data quality is a concern for businesses across all industries, and businesses in the financial sector are often under higher scrutiny than others. Because of this, keeping accurate data banks is so important for compliance items and for the reputation of your brand.

Bad Data Main Causes

You can’t escape bad data, you can only minimize it. And that means recognizing the causes of poor-quality data.

One of the most common causes is incorrect and incomplete data from members and/or employees. Miss one number in a member’s address on their loan application – that’s bad data. And that bad data can live on in a system for years if it’s not caught and corrected. Everyone knows the prevalence of the typo – in fact, if your surname isn’t one of the common ones in the USA like Smith, Johnson, or Williams, we can all but guarantee you’ve gotten one medical bill, marketing email, or other official correspondence with your name spelled wrong. Even when people are copying data or collecting information slowly and deliberately, missed keystrokes happen.

This is also true with incomplete data. There’s a reason why almost every form you fill out online has the little “*” next to items that are required, and every missed box triggers a “you missed something” notification that prevents you from even moving forward with the form submission. These are commonplace now because it’s a great and proactive way to make sure the bad data doesn’t come from someone submitting an incomplete document or request.

Bad data is also easily propagated through poorly maintained vendor and third-party files. This data is vital in helping your credit union learn more about financial trends across organizations and understand more about the current markets and business climate. But it also comes with the added knowledge that everyone stores and manages their data a bit differently.

This point leads us to another big cause of bad data – lack of standardization. Because handling and managing such massive amounts of electronic data is fairly new, especially for credit unions, there’s a lot of room for error in execution. And when your data is keeping track of people, it’s easy to create duplicate entries for the same person.

Think about it – even just one woman can be in your system several times – once with her maiden name, once with her maiden name and middle initial, once with her married name, and on and on it goes.

This Credit Union Times article goes into more detail about some of the most common causes of bad data.

The Cost of Bad Data for Your CU

Bad data management is a lot like learning how to drive a car, but never getting inside one. You can understand the value and benefits that knowing how to drive can give you, but you can’t reap any of those benefits, and if you don’t interact regularly with the car, you can’t improve your driving skills.

The same is true with data – if it’s not accessible, it’s not useful. Having all the data and not using it (or not investing in high data quality measures) is the same as not having it, in many cases.

When it comes to the monetary value of bad data costs, the figures are in the trillions, and that’s just for certain singular business ventures. Recently, IBM reported a loss of $3 billion due to bad data, and Gartner reports that poor data quality costs organizations $12.9 million on average.

And because bad data means a loss of trust in your credit union, the monetary losses are compounded by the decline in member numbers. And because banking services are necessary for nearly all facets of work and life, those members then turn to big banks and fintechs to house and store their financial and personal data. And younger generations aren’t messing around with their brand loyalty – they are more than willing to leave banks that break their trust.

Discover, Classify, Report: Positive Data Management

Bad data come in all shapes and sizes. Without a quality data management strategy, your credit union could fall

down a rabbit hole of data corruption, misplacement, and ultimately, member dissatisfaction.

To help combat bad data practices, IMS has an amazing SaaS application that uses machine learning to discover, classify, and report on sensitive data without impacting your day-to-day. We do this through our Polaris Sonar compliance technology.

With Polaris Sonar, you can use machine learning to automate processes and policies, identify exposures of sensitive data, and stay in compliance with all applicable privacy laws while mitigating the cost of bad data.

Reach out to us today to learn more about this and other IMS tools that are expertly tailored to promote higher data quality in your credit union.

 

4 Powerful Credit Union Brand Strategies

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Having an effective brand strategy is essential for credit unions to stay competitive in the marketplace. Strong credit union brand strategies can help to differentiate your business, attract customers, and make your institution stand out from the competition.

Let’s explore some powerful credit union brand strategies that you can use to create a successful and recognizable brand. From creating a unique identity to integrating digital marketing tactics, there are numerous ways for credit unions to build a powerful brand presence.

Aim for Loyalty and Recognition

Many brands and credit union marketing strategies place too heavy an emphasis on a basic idea of “growth” they hope to achieve. And while growing your member base should be a part of your brand strategy, you also need to build out the strategies that will earn you those members month after month, year after year.

Because growth isn’t linear and you can’t expect to add members every single month, we would recommend focusing on ways to improve loyalty and brand recognition. More and more, consumers are hearing about brands from friends, family, social media marketing, and other influencers long before they are choosing to seek out a product or service.

And, for a number of personal and psychological reasons, your prospects are going to choose the brands and names they’re most familiar with. Even if they aren’t familiar with your services, a prospect is more likely to choose your service if your credit union’s name and reputation are familiar to them.

That’s why big banks can still get new members even after they’ve been embroiled in a scandal or massive data loss event.

Websites with Personal Touches

According to a recent article from CUInsight, “there is nothing that compromises a unique brand identity more than a heavy reliance on generic stock photos.”

This is a really interesting concept because there are millions of businesses across thousands of industries that are using stock photos for their websites and relying on them to create positive marketing experiences.

And that is the problem.

When someone visits your website and sees the same photo of a diverse group of people sharing an experience, a young person on their phone, and a perfectly manicured patron in the middle of a banking transaction at “your” credit union’s teller station, they can be easily bored and equate your credit union with a lazy brand redesign.

It’s also highly likely that your stock photos are being used by other banks and credit unions that are trying to appeal to the same target market that you are.

What your members and prospects want more than anything is to see the personality of your credit union brand reflected in your photos. Do you have team events? Share those on social media and your web pages. Hire a photographer for a day or two to take photos of your real staff helping real members in your real offices.

That personality and “realness” is something all consumers are craving more of. The manufactured photos of perfectly done-up models doing mundane tasks aren’t as appealing as they were 10 or 15 years ago.

Visual storytelling – through your brand images, colors, logos, and other signage and marketing strategy items – is one of the only things you can use to make sure your credit union’s brand is top-of-mind for your target audience.

Highlight Your Values

More and more, people are straying away from big box stores and looking for brands that can promote and stick to their core values.

Since credit unions are the financial institutions that most heavily rely on value and personal touch to reach their target market, this entry on our list of credit union brand strategies should feel very familiar.

Authenticity in brands is a big draw – and in a world where every interaction is scrutinized and often even recorded, people are shedding light on those brands that may have talked the talk but aren’t walking the walk.

Reach out to community leaders to see what kinds of needs your credit union could help meet in the area. And make sure to highlight when you have positive and negative interactions with your brand. Accountability is a big part of creating a believable brand reputation.

Use Your Data to Drive Brand Growth

Your target market isn’t made up of a group of undefined, mysterious people you have to try and connect with. Your target audience looks a lot like your current member base. And since you are already collecting tons of personal information, financial requests, and other data, you should be using it to inform your brand strategies.

You can use almost every one of your business operations to help inform your credit union’s brand strategies. Here are a few examples of questions to ask as you work on rebranding or even just honing your current brand to reach more prospects in a meaningful way.

When you create new product lines, what are your members resonating with? What are they disliking?

Do you have community events? What feedback are you getting from members and non-members?

Are there non-member concerns that could create opportunities for improvement and ultimately turn those non-members into members?

These and other market research questions can often already be answered with a thorough analysis of data your credit union already possesses!

Your Brand Is Only as Powerful as Your Data

One of the best credit union brand strategies is business continuity. In a world of “I want it now,” you can’t have downtime in your systems or glitches that create issues with data access. IMS is the premier backup solution and disaster recovery expert for credit unions.

You can rest assured knowing that no matter where your branches are located or what kinds of disasters and cyberattacks may come your way, you are covered with IMS and our offsite data storage and backup solutions. Reach out to us today with questions. We want to help you protect your credit union so you can better serve your members.

Data Quality for Credit Unions: Best Practices

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Data quality for credit unions is an essential component of effective CU management. Keeping accurate and up-to-date records, such as member information, enables credit unions to provide the best services to their members.

To ensure data quality, it is important for credit unions to employ best practices in data handling and regularly review existing procedures.

Let’s discuss the various data quality best practices that credit unions can adopt in order to remain competitive and be prepared for future growth.

Keep Your Small Data a Priority

Many of the biggest issues credit unions and other financial institutions run into when it comes to data quality and management stem from the small data.

Addresses, zip codes, name changes – these member data items are considered minute details until they become inaccurate. Maintaining accurate addresses is a great way to ensure your credit union communications don’t get sent to the wrong people. Anyone who has sent invitations via snail mail – for weddings, anniversaries, birthday parties, and other formal events – knows that even if you are only planning to send the invitations out two or three months in advance, there will be at least one address change on your list.

Because more of your members are renting than ever before, it’s important to request periodic confirmation of names and addresses so you can make sure you are reaching as many of your members as possible in an accurate and helpful way.

One way to ensure you are capturing the most accurate information and storing it correctly is to have systematic and periodic backups of your credit union data.

Define Your Goals

There are hundreds of ways to improve data quality at your credit union. But it’s important to start your process by defining the goals you hope to achieve within this effort.

What is the main issue you are trying to solve? Do you want to be able to update data faster? Are you trying to cull unnecessary data from your systems? Organize your data so it’s more accessible?

While all of these goals are worthy of your CU’s time and resources, you have to start somewhere. Many credit unions fall into this trap where they are overwhelmed by their current data and the vastness of their spread-out systems, and they want to start with a clean slate. But you’ll want to start working through those systems in manageable chunks, which then allows you to gain some momentum as you are choosing your new data solutions and crafting a future operation plan to maintain that data quality.

Track Your Data Quality Strategy

When professionals create strategies aimed at improving data quality for credit unions, it’s important to stick to that strategy and evolve as it evolves.

There is no end to data quality work. Much like there is no moment when you can stop optimizing your cybersecurity protocols and infrastructure, your data needs are constantly evolving.

And the only way to keep track of that evolution is to create a living, breathing document that tracks your strategies and performance, and allows for internal review and feedback. Of course, your first data quality effort may be massive, in scope and in project hours. But your periodic maintenance of that new data integrity must be maintained, and the best way to do that is to track your progress even after your initial undertaking is complete.

Work in Layers

You offer your credit union members a whole host of services, from in-person classes and financial counseling to online solutions, mobile banking apps, and more.

If you look at each of your services and features, you’ll often see linear member data trends based on usage, demographics, and more. We mentioned above that working in manageable chunks is always helpful. The same is true when you are trying to improve data quality.

You can use things like gender, age, economic status, location, and more to tailor your data efforts by building a strategy that captures and stores the data you need within specific parameters. Those parameters can be based on your efforts and services, rather than just being thrown together in a massive data catch-all location, and then working backwards to pull out the specifics you need for each service or effort.

Start with Personalization

Data is how you figure out what your members’ needs, behaviors, and preferences are. You can use your member relationships to initiate and expand on the personalized experiences you want each member to have when they work with you and your team.

By creating a data-driven culture with personalization at the heart of your operations, you can tailor each interaction with your member to make it memorable and efficient, without losing any of that stellar customer service quality that credit unions are known for.

IMS – Ensuring Data Quality for Credit Unions

Data quality will continue to be a hot topic in the credit union industry as we transition more and more operations to digital locations. And in a world full of increasing data storage and consumption, you’ll want the best tools to help you archive, restore, discover, and protect your members’ precious information.

That’s why IMS has a whole host of private cloud services that were created by professionals for the credit union industry specifically, including:

Reach out to us today and let us help you learn more about data quality for credit unions. 

2023 Lending Trends for Credit Unions to Watch

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The lending landscape (especially when it comes to digital lending) is constantly shifting, making it hard for credit unions to keep up. As we look ahead in 2023, there are several emerging trends within the credit union industry that credit unions should be aware of.

From new technologies to more traditional methods of attracting and retaining members, understanding the most up-to-date lending trends will help ensure the success of your credit union in 2023.

For credit unions, staying ahead of the curve can make all the difference. Understanding the 2023 lending trends is key for any credit union looking to take its lending operations to the next level.

2023 Lending Trends Landscape

According to a recent forecast from CUNA Mutual’s Trend Report, banks and credit unions should expect a “mild recession in the second half of 2023 as consumers’ excess savings dries up.”

It wouldn’t be surprising if we see the Federal Reserve raise interest rates another 50 to 75 basis points to reduce the pressures of inflation in the coming year.

There are several factors that make a recession likely this year, including these higher interest rates as well as lower prices on stocks and homes and very “satiated consumer demand for many durable goods.”

2023 Credit Union-Specific Lending Numbers

In November of 2022, that same report from CUNA Mutual stated that throughout the third quarter of that year, credit unions with assets that totaled more than $1 billion reported a 20.3% increase in loan balances, and those credit unions with assets fewer than $20 million reported a smaller loan growth (6.9%) in the same period.

The report states that overall credit union loan growth is expected to rise to 8.0% during the 2023 calendar year.

Auto Loan Trends

In the past few years, the price of used cars has risen due to the shortage of new cars coming into the consumer markets. But as that shortage shrinks and more new cars become available, used car prices will see a small decline this year, CUNA Mutual reports. This creates a great opportunity for members looking for 2023 lending trends that help them make the most of their car payments.

This fluctuation will continue at least through the rest of this year, with hopes that prices and inventory will normalize in 2024.

Home Loan Trends

When you think about the word “recession,” many of us remember the housing crisis in 2007 and 2008. During that time, many people lost equity and their homes altogether because certain mortgage lending practices ended up far overextending the loan recipients as more and more layoffs took hold around the country.

And while we will likely see a mild recession this year, the housing market isn’t nearly as unstable as it was back then. There are rising numbers of consumers and credit union members with delinquencies and unsecured loans, but even amidst these uncertainties, 52% of Americans are optimistic about their financial future in 2023.

And as younger Millennials and Gen Z continue their trend of being debit-loving, credit-averse individuals, it’s easy to see why they carry the highest levels of optimism. They work diligently to stay within their means whenever necessary, rather than extending lines of credit in hard times and struggling to decrease those debts over time.

The Rise of the Union

Amazon, Starbucks, and more – 2022 gave us a lot to consider when it comes to how Americans feel about unionization. These movements, coupled with the economic downturn, rising prices, and stagnant wages have created a perfect climate for more union efforts to take hold across industries.

Because of this, it’s important to focus on employee rights and protections as you move through 2023. There are too many open positions at your competitors and other community businesses for you to let employee relations suffer this year.

Even if you run a business in an “at will” state, there are likely several employee protections under the Fair Labor Standards Act that could affect how you manage, hire, and terminate employees in the near future.

Employee changes can directly affect the efficiency and success of your loan programs, among other things. This is why online initiatives like digital lending practices and web loan applications are becoming so popular from the credit union as employer perspective.

Data, Data, Data: Information as Investment in the Future

With rising cybercrime and distrust in institutions that hold personally identifiable information (PII), your data, both its usage and storage of it, are going to become more and more important.

Many people are sharing posts and videos about how their personal information, photos, and other data are being used without their consent based on a corporation’s terms and conditions or their privacy policy.

Because these policies are often lengthy and hard to understand, few people read them. And that gives your credit union members pause – they don’t want their personal information being used without their knowledge, and you don’t want your credit union not to be in compliance with the latest state, local, and federal edicts as well as other banking regulators regarding your business’s usage, storage, and protection of this data.

When you are thinking about your data in 2023 and beyond, we’d recommend you ask yourself the following questions.

Who has access to your members’ data? This includes third-party vendors, employees, credit union branches, and sister or partner locations.

Why do these specific people and entities have access to sensitive and member banking data?

How long do they need access to this data?

What precautions are in place to safeguard this data? This can include multi-factor authentication, levels of clearance, automatic timeouts, temporary access, retiring disparate legacy banking systems, etc.

Navigate 2023 Lending Trends and More with IaaS from IMS

Just like you can’t hop on any viral trends without a social media account, your credit union can’t navigate financial industry trends with ease or optimize lending services unless your data storage and security are in place and functioning properly.

That’s why IMS offers infrastructure-as-a-service (IaaS) to help you create and configure the resources you need to store and protect your data in secure, offsite servers. 

Green Finance as a Growth Opportunity for CUs

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As the world grapples with climate change, we’re seeing a growing demand for green finance solutions. This is an opportunity for credit unions to capitalize on this growing market and benefit from potential growth opportunities.

By embracing green finance, credit unions can increase their profile as responsible lenders and be part of the fight against climate change. Green finance involves offering financial products that support environmental sustainability and combat climate change – such as renewable energy investments or financing eco-friendly projects.

This type of finance also has the potential to generate significant returns by investing in businesses that prioritize environmental responsibility. Credit unions can take advantage of these economic opportunities while simultaneously helping to create a greener future.

Inflation Reduction Act Spurs Green Finance in 2023

Recently, community development financial institutions (CDFIs) and minority depository institutions (MDIs) will be using provisions from the Inflation Reduction Act to expand their green lending.

This is just the latest in a number of green finance initiatives that we are likely to see grow in 2023 and beyond. But what is green finance and how can you leverage these initiatives at your credit union to create the growth you can feel good about?

The Future of Banking

As interest rates climbed and then plateaued in 2022, so does short-term profitability. But if the last few years have taught us anything, it’s that nothing is certain even in the short term.

This is where green finance makes its move.

So much of the financial forecasting we previously relied on has garnered mixed results as of late. Because of this, credit unions and banks are looking for ways to diversify their services and appeal to members who have their eyes on the future.

In McKinsey’s “Global Banking Annual Review 2022,” analysts go through some of the major factors driving banking into a “new era.” The review recommends for banks and credit unions to evolve from “more traditional business models to more future-proof platforms.”

These future-proof business models include focus areas like differentiated customer relationships, new customer access, and revenue sources, and innovation based on truly entrepreneurial endeavors. But one of the biggest ways to future-proof, according to McKinsey, is to target “environmental transformations.”

These transformations are led by the growing need for sustainable and green finance initiatives.

CU Growth & Green Lending

According to the 2022 McKinsey report, “the volume of sustainable syndicated loans, including green loans and sustainability-linked loans, totaled $683 billion in 2021, up by more than 200 percent from 2020.” The volume of sustainable bonds was up by 80% from 2020.

Financial industry changes are often valued below many other industries, and that is partially due to the net losses that are recorded by certain subsections of the industry overall. Despite all that, sustainable debt markets fared better than the overall debt markets. This upward movement is not likely to slow in the coming years, as initiatives around the globe are harnessing green finance as a way to expand sustainable initiatives.

These initiatives also help credit unions share in the investment and building of resiliency in the communities they serve. As consumer behavior and green initiatives gain traction, it also creates opportunities for credit unions to be on the front lines, supporting and financing those changes in areas that need it the most.

Why CUs Should Promote Green Lending Now

The McKinsey report goes on to talk about how the growing market for green finance also shows that few banks and credit unions have the short-term ability to finance some of the largest green initiatives that are gaining popularity including infrastructure, green hydrogen, green fuels, biomass, and carbon capture and storage.

But this creates a unique opportunity for credit unions, especially those in IRA-qualifying spaces, to start working with local community initiatives and small businesses on loans for these great green ideas.

Solar and wind power have been the topic of green finance and green lending for several years, even in areas that are not densely populated. These areas, where many credit unions thrive, will see an uptick in interest for these renewable energy resources, and that is a great opportunity to start working on offering sustainable loan packages and other programs that speak to this interest in businesses and infrastructures going green.

As more and more businesses and governments lean towards these green initiatives, it’s important that your credit union already has the infrastructure and capacity to serve this audience in the near and distant future.

Use Your CU Data to Pave the Way Forward with IMS DataArchiver

Data discovery is a great way to see what your credit union history looks like when it comes to green finance initiatives. The IMS DataArchiver is your SaaS solution for exploring rapidly growing amounts of data from on-premise storage to cloud storage and everything in between. It protects your data and also gives you helpful tools for finding specific data types with data visualization and e-discovery features.