Heard in the Halls at the GAC: Editor/Publisher's Column
Credit unions’ rite of spring, CUNA’s Governmental Affairs Conference, has now come and gone. Many credit union volunteers and professionals have scurried home for warmer climes or colder ones in the case of credit union Mecca–Madison–where they were expecting several inches of snow on top of what they already had. Here in Washington during the GAC, there were warm and cold moments as well.
Compliance, compliance, compliance. Credit unions are settling into the fact that it’s simply a part of doing business, but that doesn’t take care of the logistics. Credit unions are concerned about how to keep up with all of the regs coming out of Washington. Fortunately, technology has become a great efficiency driver in this area. Ultimately, a credit union is responsible for ensuring compliance with any regulation, so ensuring you have a partner with a strong compliance department is key to making that mountain a molehill. CUNA’s recently released exam survey results found 43% of respondents receiving at least one document of resolution during their last exam. Reactionary or not, it’s there and must be handled.
Obamacare is a new area of compliance for everyone, and it’s not going to go away no matter which political party is in charge. The court challenge failed. (Note that Chief Justice Roberts, who wrote the opinion, is also the lawyer who lost the Supreme Court case that required hurried passage of H.R. 1151. Just a fun fact.) Choosing not to offer health care is an option but could significantly shrink a credit union’s talent pool, a position credit unions cannot afford to be in.
Credit unions complain now about their regulatory load, but the CFPB is just getting warmed up, and the NCUA will have more to come as well. Consumer protection has been a hot-button topic since the Democrats regained control of the White House four years ago, which was only punctuated by the housing and economic crises brought on by unscrupulous lenders. While the classic overreaction and sweeping regulatory reform is SOP in Washington, griping after the fact won’t solve the problems credit unions will have to deal with.
Outsourcing back-end work, such as compliance and certain operations, can help credit unions compete on a larger scale. Business lending is a crucial area where credit unions might not have the resources in-house (or the payroll) to handle but can outsource for the necessary expertise. Again, it’s essential to have a partner you can trust after performing thorough due diligence. The “oh, so-and-so uses them” or “so-and-so buys participations from them” is not going to cut it, which we saw with the downfall of some significant credit unions in recent years.
Credit unions have experienced tremendous growth in their mortgage business over the last few years and using someone else to take them off your books is a great way to continue growing. Retaining the servicing provides even greater revenue opportunities. Jill Peterson of CU Members Mortgage shared a funny metaphor, quipping, “Servicing has become a contact sport.” So true with so much nonmember facing income as interest income remains tight.
Using a credit union-centric vendor for any service often means it is more in-tune with credit union-specific needs. Smart vendors that support credit unions have become much more responsive to member needs and can build a nice portfolio of products for clients. At the same time, it also keeps the risk in the industry, a lesson learned from the corporate credit union crisis, which was a wake up call to pay attention to risk diversification, trends and deals that seem too good to be true. So long as proper business ethics and oversight are applied, as well as the cooperative credit union philosophy, this risk can be mitigated.
Now is the optimal time to nudge members toward self-service options. Grandma is becoming more comfortable with the Internet, viewing pictures of the grandchildren or Skyping with family halfway across the country because that’s the only way to see family on any regular basis. Gen X feels that evolving with technology is not only efficient but makes them look cool. Gen Y doesn’t really know any other way. But it’s important to ensure that every member contact through every channel is as friendly and efficient as it is through any other channel. Credit unions will come to find that digital lead generation can be even more meaningful than the conversation in the branch. Harland shared with me that its online account opening usage continues to grow at a fast clip. Members are ready.
So there you have it. Compliance, keeping up with technology and loan growth were the themes of hallway conversations and sessions at CUNA’s 2013 GAC.