WASHINGTON — NCUA Vice Chairman Rodney E. Hood recently addressed CUNA's Payment Systems Conference, focusing on the evolving electronic payment systems as it relates to enterprise wide risk management.

Hood highlighted both the challenges and opportunities in moving toward a cashless society–from remote deposit capture to money services businesses–and the role of NCUA in regulating these technological advances. He stated that “at current growth rates, experts predict credit and debit cards will both individually surpass the paper check, in terms of total annual transactions by year-

end 2007.”

The vice chairman reminded his audience that as payments systems continue to evolve, NCUA faces the same challenges as credit unions. “NCUA recognizes and encourages credit union CEOs/managers to evaluate their business model regularly. By understanding their member-owners' needs, identifying new technologies and payment methods, and implementing more innovative and cost effective ways of serving their member-owners, credit unions can remain competitive,” Hood said.

Adoption of remote deposit capture, for example, has been slowed due to inadequate software and internal controls, he said. “Although most seasoned, experienced participants have now implemented mitigating controls, duplicate items are still the biggest obstacle financial institutions face,” Hood said. Despite the hurdles, the industry is seeing more “checkless” checking accounts and credit unions must keep on top of what is happening in the payments industry, how to position themselves, and how to leverage for success.

He added that increased use of automated clearing house processing has made “payments clearing and settlement is becoming more efficient, which is resulting in payment settlements accelerating. This will have an impact on a credit union's daily funding needs because settlement is occurring more quickly, and may mean less float and investments benefit.”

Amid the rapid developments in the payments system, he noted, the U.S. continues to operate a safe, efficient, and reliable payment system. “As your Vice Chairman, I will do my part to ensure that our credit unions remain safe and sound as they embrace new technology,” Hood said.

Instant Insights /

NCUA Vice Chairman Addresses Role of Electronic Payments in Enterprise Risk Management

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