Legislative, regulatory approach to ensuring CU innovation needed

More needs to be done to ensure credit unions have the tools and mechanisms to reach new consumers who are not currently being served, CUNA and NAFCU wrote to a House Financial Services subcommittee prior to its hearing on financial innovation. The organizations also noted recent positive steps, including NCUA’s recent loan participation proposal.

“We urge this Subcommittee and regulators to work with the credit union industry to pursue an approach, both legislatively and regulatorily, aimed at ensuring credit unions can use technology to continue to serve their millions of members across the country,” the letter reads.

The organizations note that—without regulatory and legislative relief—they are concerned credit unions will be obstructed in their ability to invest in appropriate technology and perform in the increasingly competitive consumer finance sector.

“The federal charter must keep pace with changes in state laws, technology, and the services and practices of a digital financial services industry,” the letter reads. “To that end, the NCUA must take every regulatory opportunity to streamline and simplify FOM requirements to ensure the long-term health and survival of America’s credit unions, including through meaningfully incentivizing and facilitating credit union investment in mobile and online technologies.”

CUNA and NAFCU both strongly disagree with the NCUA’s board’s push for direct supervisory authority over third-party vendors and credit union service organizations, noting the agency effectively manages risks with its current regulator authority.