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CURRENT Newsletter | 23 February 2021

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Compliance / Regulatory Affairs

Financial Services / Economy

Risk Management

Headlines

League Hosting Virtual ‘Hike The Hill;’ 7 Lawmakers Now Participating

Join us March 2-4 for your League's virtual Hike The Hill event for an opportunity to meet with Virginia's Congressional delegation and advocate for our federal legislative agenda.

To date, we've scheduled the following meetings, with Rep. Ben Cline being the most recent addition:

After you register for an event, your confirmation email will contain a direct link to the meeting's web location/URL.

We also hold a pre-event briefing on March 1! Stay tuned for details!

Learn more

FISERV Hosting Free Fraud Trends Webinar Feb. 25

As 2021 begins to take shape, the pandemic has seen consumers move to and embrace e-commerce channels. As the payment shift continues, what are the impacts to fraud and what can credit unions continue to do to mitigate their risk? FISERV, your partner in payments, will continue its exploration into fraud trends that matter to your credit union during our Feb. 25 webinar.

The start time for the free, hour-long webinar is 10 a.m.

Register here

Diversity, Equity and Inclusion: Beyond the Buzz

Join Us March 18 for Webinar with NCUA Diversity Communications Specialist Marty Raines

Diversity, Equity, and Inclusion, or DEI, have been popping up in conversations, in the media, and on meeting agendas with increasing frequency lately. But beyond buzz words and catchphrases, what do they really mean?

In this March 18 webinar presentation (10 a.m.-11 a.m.), NCUA's Diversity Communications Specialist Marty Raines will define diversity, equity, and inclusion, and more importantly, share what they mean for our credit unions. Join us to learn how DEI contributes to talent, growth, and innovation, and to find out what the NCUA is doing to help you enhance your DEI efforts.

Register

Virtual Front-line, Teller Training Coming March 10; Register Now!

Your League is offering a dynamic, after-hours virtual training for your front-line employees on March 10. This interactive, virtual program focuses on six modules that remind the teller how important their job is, how significant their actions are, and tips on improving how they interact with members. This teller-training program is information-packed and attention-grabbing! Employees will leave this workshop with a renewed commitment to excel on the job.

DATE: March 10.
TIME: 5:30 p.m.-7:30 p.m.
EDUCATIONAL INVESTMENT: $39 for CUs less than $10 million in assets; $69 for CUs $10 million-$100 million; $99 for CUs with more than $100 million in assets.

Learn more

Registration Opens for Mid-Level Management Leadership Series

Focusing on mid-level managers is important to your credit union’s success. Your credit union's mid-level managers, branch managers, and department leads are often the primary point-of-contact for employees. Their management style, good or bad, has a tremendous impact on employee performance and workplace well-being. It is extremely important for credit unions to invest in the professional development and personal growth of their mid-level leaders.

The Mid-Level Management Leadership Series is a four-part virtual learning experience (March 10 & 11, April 14 & 28) specifically designed to provide mid-level leaders with the skills and tools they need to lead effectively, remove barriers and optimize performance.

Educational Investment: $425 per person. This series is hosted by our TRGroup partner, the Kentucky Credit Union League.

Learn more

Compliance / Regulatory Affairs

CUNA Submits Comments to the NCUA on Overdraft Policy Proposal

Comments were submitted to the NCUA in response to the proposed overdraft policy as part of the agency’s proactivity in adapting rules, regulations, and policies to ensure credit unions can meet evolving needs of their members.

Specifically, the proposal would remove the prescriptive 45-day limit for a member to cure each overdraft and replace it with a requirement that the written policy establish a specific time limit that is both “reasonable and applicable to all members.”

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NCUA’s SAR Proposal Should Be Adopted ‘As Soon As Reasonably Practical’

NCUA’s proposal to issue exemptions from Suspicious Activity Report (SAR) regulations could benefit credit unions and should be adopted “as soon as reasonably practical,” CUNA wrote to the agency Monday.

“We support this proposed rule, as we believe it will enhance the NCUA’s ability to provide flexibility to credit unions in regard to SAR filing requirements under the NCUA’s regulation,” the letter reads. “We recognize that the rule would impact exemptions from the SARs regulation in order to grant relief to credit unions that develop innovative solutions to meet the requirements of the BSA. Even so, we believe the rulemaking has the potential to provide meaningful relief to certain credit unions in some instances.”

This proposal would allow NCUA to issue exemptions from the requirements of its SAR regulation. The agency would determine whether the exemption is consistent with the purposes of the BSA and with safe and sound practices, and may consider other appropriate factors.

Learn more
Related: CUNA Supports NCUA’s BSA Proposal

Financial Services / Economy

4 Trends From 2020 Are Highlighted, Including a New Milestone for Checking Accounts

With fourth-quarter data now in on credit union performance, 2020 concluded with four trends that deserve attention, according to an analysis released by Callahan & Associates.

Overall, said Callahan’s, credit unions played a “key role” in helping members to recover during a difficult economic year, and “year-end numbers show just how much members turned to their financial cooperatives in these trying times, setting new records for deposit and loan growth and more.”

During a Trendwatch webinar hosted by the company, Callahan & Associates said whole-year 2020 NCUA data offer four trends that are worthy of note, including:

  • Credit unions helped members take advantage of historically low rates, lowering monthly payments at a time when managing cash flow was critical for many. Fueled by a 62.6% surge in mortgage originations, loan production among the nation’s credit unions reached $680.3 billion in 2020.
  • Consumers turned to their credit union accounts when stimulus money hit. The industry saw share balances grow a record 20.4% and $272.9 billion in a single year, with regular shares, share drafts, and money market accounts all posting record growth rates and only share certificates showing a decline.
  • The percentage of members with checking/share draft accounts – considered a key measure of engagement – hit 60% for the first time as consumers continue to turn to credit unions for a no/low fee checking option.
  • Total membership reached 125.9 million, up 3.4% from 121.7 million at the end of 2019 and showing that American consumers trust and rely on credit unions for their financial needs.

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Pandemic Has Made Consumers Better Money Managers, According to Several Reports

The pandemic is making consumers better money managers, as savings have increased for many during the health crisis, while overall credit card debt falls, according to a number of new reports.

Moreover, now a new poll reveals people are better prepared to address an unexpected expense.

Bankrate’s February Financial Security Poll finds that 54% of Americans have more emergency savings than credit card debt.

“Despite the tough economy, this is five percentage points higher than in last year’s pre-pandemic survey and the highest percentage since 2018,” Bankrate said.

Learn more

What Should Credit Unions Expect From a Renewed Federal Focus on Cybersecurity?

Cybersecurity has become an increasingly critical federal priority, due in a large part to the recent SolarWinds attack. Thus far, the breach has impacted up to 18,000 organizations – including government agencies and financial services firms – and it’s possible that more affected companies will be discovered in the coming months.

With this in mind, let’s take a look at some credit union-specific security challenges – and what a renewed federal focus on cybersecurity might mean for them.

Supply Chain Vulnerabilities

The SolarWinds attack illustrates the domino effect that a breach at one vendor company can have across many others. Given the wealth of sensitive data to which financial services organizations have access, these companies’ supply chains are frequently targeted by hackers with the ultimate goal of accessing the bank or credit union’s system. Of course, this isn’t new information. In fact, it’s one of the reasons why credit unions typically select software providers with a large financial services customer base. But just because a vendor has extensive industry expertise doesn’t necessarily mean that the organization is abiding by the most stringent cybersecurity standards.

Acceleration of Digital Banking

According to a 2020 survey from FIS, 45% of consumers have changed how they interact with their banks since the start of the pandemic. As Mike Mayo, an analyst at Wells Fargo Securities, put it in an American Banker interview, “What we’re seeing is the greatest acceleration of digital banking in history … What’s taken place over the last few months may have taken place over two to 10 years [had the pandemic not hit].” This acceleration of digital banking offers credit unions numerous benefits – increased options for personalization, new service offerings and cost reduction, to name just a few. At the same time, however, the trend also introduces some security concerns.

Security Education

This final trend is less of a challenge than it is an opportunity. Many credit unions increased their electronic communication as branches closed in response to the pandemic, and there is no reason these digital correspondences should cease when life returns to normal. A key credit union value proposition has always been the personal member relationships, and they now have the opportunity to strengthen them by educating members on the security landscape.

Learn more

Powell Says Inflation is Still ‘soft’ and the Fed is Committed to Current Policy

Inflation and employment remain well below the Federal Reserve’s goals, meaning easy monetary policy is likely to stay in place, central bank Chairman Jerome Powell said Tuesday.

Despite a sharp rise this year in bond yields that has accompanied heightened concern over inflation, Powell said price pressures remain mostly muted and the economic outlook is still “highly uncertain.”

“The economy is a long way from our employment and inflation goals, and it is likely to take some time for substantial further progress to be achieved,” the Fed chief said in prepared remarks for the Senate Banking Committee.

He added that the Fed is “committed to using our full range of tools to support the economy and to help ensure that the recovery from this difficult period will be as robust as possible.”

However, Powell’s statement did not mention the market’s most pressing concern: the jump in 2021 of longer-duration government bond yields to levels not seen since before the Covid-19 pandemic. The 30-year bond, for instance, is up more than half a percentage point and the benchmark 10-year yield has risen 44 basis points.

Learn more
Related: Janet Yellen on What a Successful Economic Recovery Looks Like

Risk Management

2021 Will Put Credit Quality to the Test for CUs

Last year tested credit unions’ ability to preserve income, and this year will test their ability to manage their loan risks, according to Nathan Powell, who analyzes banks and credit unions for Kroll Bond Rating Agency of New York.

Powell, a managing director at KBRA, said the fourth quarter marked a transition from the peak of the pandemic as returns on average assets began to improve and provision expenses fell to more normal levels.

“2020 was all about the income statement as forbearance activity was pervasive across all financial institutions,” he said. “As you transition into the vaccine phase in 2021, now it’s going to become a credit risk story. We’ll have to judge institutions going forward on how well they’ve managed risk in their loan portfolios.”

Learn more

Consumers Generally Confident in FIs’ Ability to Resolve Fraud, But Confidence Differs by Generation

While consumers have been targeted by increased fraud during the coronavirus pandemic, new research has found consumers expressing confidence in their primary financial services organizations’ efforts to resolve and mitigate fraud issues—although responses differed by generation.

According to research conducted BAI as part of its BAI Banking Outlook program, BAI surveyed financial services leaders and consumers to understand their recent dealings with fraudulent activity. BAI said it found the majority of respondents indicated an increased or equal amount of concern regarding fraud over the past six months, but there were generational differences, with Millennials reporting the greatest increased concern among the generational groups at 55%.

When asked about the frequency of fraudulent activities, Generation Z and Millennials reported higher instances than members of Generation X or Baby Boomers, BAI reported. Furthermore, 68% of all financial services leaders surveyed said fraud challenges have increased, with hacking attempts ranking first and credit card and malware attempts tied for second.

Learn more
 

 



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