How Can Credit Unions Prepare for Regulatory Changes?

 

The effects of the COVID-19 pandemic have not only changed daily life but also many industry futures. As credit unions take stock in the amazing transformations that took place in 2020, many regulatory bodies are taking a hard look at their best practices through the lens of a global crisis.

Let’s discuss how credit unions can prepare for regulatory changes.

Preparing for Regulatory Changes

Recently, Credit Union Business News featured an article by Joel Schwartz, Founder & Co-Chief Executive Officer of DoubleCheck Solutions. This article highlights the ways credit unions will be facing regulatory changes as the world moves out of the pandemic.

Many expect consumer protection and financial transparency regulations to take center stage.

Consumer Protection & Empowerment

The Consumer Financial Protection Bureau is waiting on a Congressional vote to institute Rohit Chopra as Director, and if that happens, consumer protection and empowerment regulations are likely to be more heavily enforced. But what does that mean?

It means more guidelines will be put forth to promote more financial transparency for consumers, thus empowering them to make better-informed decisions regarding their banking and other financial activities.

This enforcement comes on the heels of heavy amounts of class-action lawsuits being filed against credit unions. Many of these lawsuits stem from “deceptive practices in assessing non-sufficient fund (NSF) fees.

Minimizing Operations Impact

This push for financial transparency is spearheaded by a goal of providing straightforward financial services without drastically impacting credit union operations.

This push will most heavily impact language and operations surrounding things like overdraft programs, to cut out excessive fees and vague language. This change, however, could easily wipe out a credit union’s main source of non-interest income: NSF fees.

These changes would affect your core system and its operations related to checking account structure. Alerts, notifications, and fee assignments would all have to be modified to reflect more transparent and specific situations and guidelines.

Your credit union would also have to put time and labor hours into alerting your customer base about these changes – what they are, who and what they apply to, and when they take effect.

This also means employees will spend more time auditing and ensuring compliance with the new, stricter regulations.

This would also have a financial impact. Members will love paying fewer overdraft fees, but bounce fees and late payments could be steeper, which negatively affects your credit union’s bottom line.

The Good News

Credit unions can get ahead of the curve by implementing better technology that can handle these regulatory changes now. Partner with a fintech or software provider that can customize your operations surrounding NSF fees before the government starts mandating it. This will help you work out operations kinks and train your staff on the new system before you are expected to have these protocols in place. It also gives your credit union reputation a boost, positioning it as member-centric and forward-focused.

Be sure to look for a fintech or software provider that already has a solid foundation in the banking industry. Or partner with a company that has solutions tailored to credit unions specifically, like IMS.

Get Your Revamped CU Solutions from IMS

IMS can help with the tech upgrades that will make your next regulation-based transitions easier on your credit union team and your members.

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


Why Having the Right Core System Is Important

 

2020 does not look like anyone could have ever imagined, and having the right core system for your credit union is paramount. Innovation, rapid adoption of digital solutions, and finding ways to keep our customers without allowing them to visit brick-and-mortar locations as they have always done are just a few of the huge pivots the year has brought us so far.

Your core system is the foundation by which you serve your loyal customers and your community. Is it time to consider changing or upgrading it?

Areas for Growth

With the need for digital solutions at an all-time high, credit unions are faced with the need to update their online offerings. As a whole, credit unions serve smaller communities and customer bases than many banks, but the personal service and helpful staff are what sets them apart.

Since the in-person visits are lower than ever and many employees are working from home, offering web portals and apps for doing credit union business in a safe and socially distant manner will potentially create an influx of new, younger clientele.

Your Core System

The Credit Union Journal  reports that “more than 20% of members surveyed expect a permanent decrease in the frequency of their branch visits once post-COVID-19 life begins.” As we shift and adapt to this new normal, perhaps it’s also time to see what technologies your credit union employs, and how they could be optimized to better serve you and your customers.

Many credit unions have a historically well-rated core system, but that doesn’t mean the standard core system from years ago is still the best option. In a world full of technology solutions, flexibility and customization rule the day. And while change is hard, the last few months have proven that when push comes to shove, a business can adapt rapidly.

Core systems have all the power that a large corporation needs to run its business for decades. But what happens when a smaller institution using that same core system runs into problems? These smaller businesses, like credit unions, don’t have the resources or manpower to justify having a team of people available to monitor and fix these systems. As with hiring, payroll, and other departments, credit unions have to streamline their business to offer the same valuable services at a fraction of the scale.

Opportunities

Your core system is the lifeblood of your business. And when it’s implemented correctly, it saves your credit union time and money by taking some of the tedium out of your employee’s hands so they can focus on serving your customers. In these uncertain times, analyzing your core system could help keep costs down and streamline processes that are difficult to perform with some or most of your workforce conducting business from home.

Core Hosting with IMS

IMS offers core hosting. If your credit union is considering a core move, let us share how we can save you significantly and provide peace of mind knowing you have industry experts maintaining and managing your most valuable assets.

Contact us to see what solutions we can create for your credit union.