Six 'New Realities' Facing CUs and Core Processors

The growing compliance burden tops the list of issues CUs must contend with.

August 25, 2010

A panel discussion during Harland Financial Solutions’ 2010 Connections user conference last week identified “six new realities” facing credit unions and core processors:

1. Growing compliance burden

The pace of change is quickening, regulators are becoming more vigilant, and credit unions must contend with more rulemaking—the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CARD Act, Reg E, and so on.

As a result, credit unions are seeking new efficiencies, even in the compliance function. This will require some level of automation and outsourcing of the compliance process to keep staff from bogging down.

2. The need for continuous efficiency

Economic and regulatory pressures require cost cutting “beyond low-hanging fruit.”

This will require in-depth organizational and process reviews, deployment of shared services, and ongoing process improvements.

There are no silver bullets, panelists said. The quest for continuous improvement needs to be part of a credit union’s DNA, not just a project.

Lending integration—integrating loan origination, documentation, and servicing—is one key area requiring improved efficiencies. Document imaging can help in this area, and it’s also a “green” practice.

3. Risk management

This has become more important due to the recent credit crisis.

Credit unions need to reduce exposure to fraud now and in the future, build capital, and improve loan portfolio data transparency/quality via stress-testing and analyzing the loan portfolio.

4. Agility to differentiate

Regulatory and market pressures have increased the need for credit unions to be agile.

This will require “near real time” strategic planning and information, and the flexibility to develop unique approaches to business.

Having an open database improves credit unions’ agility, by allowing them to look at performance and extract data needed to run the institution more effectively.

5. Creative sourcing

This entails leveraging the organization’s expertise and outsourcing certain information technology (IT) tasks, to allow redirection of valuable IT resources to more important initiatives.

6. Increasing reach

This requires outreach marketing to improve member retention and better understanding of members’ behaviors to identify opportunities for growth.

Mobile banking and bill pay are maturing technologies that hold appeal for younger members. Online account opening is an effective way to reach new members.