Threats Bigger Than Debit Cap Loom as CUs Strive to Survive
This article could be called “Beyond Interchange Fees.” The changes that may come with a cap on interchange fees will be mastered by most credit unions. What this article zeroes in on are the very real threats that may imperil the very existence of many credit unions.
Some experts see the number of credit unions tumbling by as much as 20% in the next decade. What will kill off those credit unions are the threats from demographics, the government, obsolete business models, failed mergers and from within the industry, say the experts.
Compliance Challenges. Ripple effects from the Dodd-Frank Act, especially involving heightened disclosure and transparency, are certain to have significant impacts on credit unions, especially smaller ones, said CUNA’s Colby. “I see this hitting credit unions sized $250 million and smaller.” Colby stressed that the issue is not just the costs of compliance but also the strains on leadership, who suddenly have yet another hat to wear.
New rules from the NCUA add to the compliance challenges, as do a variety of credit-related federal laws (each with its own disclosure and transparency requirements). Compliance, suddenly, has become a major challenge for every credit union but especially smaller ones. “The strain definitely will be on the smaller credit unions,” said Heather Czermak, an executive with Wolters Kluwer Financial & Compliance Services. “They have to do as much as bigger credit unions but with fewer resources.”