The Triple Threat Shaping Credit Union Deposits
Positive credit union growth in membership and product penetration per member have been trending for the better part of this last year, putting intense pressures on P&L managers. Left at the intersection of deposit swell and member retention, the road leading to the best bottom line results can be unclear – if not seemingly blocked.
In the last six to 12 months, credit unions overall were aggressively diversifying their product portfolios and expanding service options in response to that steady growth. For some it means getting back into the card game or targeting small businesses, while deploying mobile functionality and leveraging cloud-based solutions for in-house efficiencies tops the list for others.
It is fair to say that changing regulatory requirements on top of rising examiner oversight influence credit unions’ deposit strategies. Just looking at Reg CC, or the Expedited Funds Availability Act, the guidance around check holds opens up vulnerabilities to check fraud. Under Reg CC, credit unions must allow personal checks to be withdrawn within two business days of being deposited unless there is reasonable doubt of collectability.
But unfortunately, many times the credit union does not know if an off-us check was counterfeit, remotely deposited multiple times at a variety of financial institutions or written from insufficient funds until after those funds are made available. The problem is that risk exposure to the institution as well as the member is heightened under this rule with the ease of creating counterfeit documents.
Financial institutions are under close watch regarding their efforts to fight money laundering. A more than $2 billion problem, the biggest hurdle is perhaps appeasing examiners with sufficient AML policies while actually being effective in the money laundering fight.