Credit Unions at the Crossroads (Must Reading)

FOR IMMEDIATE RELEASE

Media Contact:
Janine Williams, Vice President of Marketing
UVA Community Credit Union
434-964-2008

“Credit Unions at the Crossroads Symposium” Held at University of Virginia’s Darden School

August 25, 201l, Charlottesville, VA…The University of Virginia hosted 65 credit union leaders and academics from across the nation Aug. 10-12, at a unique gathering designed to help chart a course for the movement's future.

The Credit Unions at the Crossroads Symposium encouraged candid discussion on how to address the system's most-pressing issues, including slow growth in market share, reaching today's youth, addressing capital needs, key regulatory issues, and cooperation within the system.

"We all see the harsh realities of the marketplace," said Alison DeTuncq, CEO of the University of Virginia Community Credit Union, one of the Symposium's sponsors. "Many of us are painfully aware that our memberships are aging, that our regulatory burdens are growing, and that the traditional credit union business model poses its own unique challenges. The Symposium sought to lay a foundation on which we can build a research-based framework that answers the question: What's next for America's credit unions?"

During the coming months, the event's co-sponsors -- the University of Virginia's Darden School of Business and the McIntire School of Commerce -- will work with the Filene Research Institute to analyze information and audio recordings from the event, identifying current research from Filene that best speaks to the "credit union of the future," as well as topics that beg for new or additional research.

"Credit unions emerged from the financial crisis and the recession with a sense of urgency to better position themselves as a force within the financial services industry," said Dr. Ronald T. Wilcox, a professor at the University of Virginia's Darden School of Business. "The consumer finance landscape was changing long before the turmoil of the past few years; that change will only accelerate, forcing financial services providers to prove themselves by being innovative, responsive and adaptable. The credit union industry seems eager to accept that challenge and test its own limits."

Symposium presenters and panelists covered a wide variety of topics, including financial and market share trends for credit unions, the characteristics of top-performing credit unions and community banks, current credit union research that best speaks to the system's future, legislative and regulatory issues, credit unions' ability to adapt to the marketplace, marketing, the role of credit union service organizations and trade associations, staff development, governance and more.

Symposium participants were also strongly encouraged to offer their own unique insights on the system's future, and to examine and analyze their own ideas and opinions about the credit union system with a more informed and critical eye.

"The credit union industry has matured to a point that it needs answers to fundamental business questions," said Dr. George A. Overstreet Jr., a professor at the University of Virginia's McIntire School of Commerce. "Some of the industry's core values are being challenged; its business model faces real and significant threats; and credit unions are struggling for relevance among the next generation of Americans. Credit unions understand the stakes, and fortunately, there's neither a shortage of passion within credit unions, nor a shortage of capable leaders ready to blaze the trail for the industry's future."

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Comments from a former League President:

THE TITLE OF THE ARTICLE IS VERY APPROPRIATE. CU'S HAVE BEEN AT THE CROSSROADS FOR A NUMBER OF YEARS. IN MY HUMBLE OPINION, MANY HAVE TAKEN THE WRONG ROAD.


BACK IN THE "OLD DAYS" OF THE MID 90'S I WAS A MEMBER OF CUNA'S "RISK COMMISSION". IT WAS A HIGH LEVEL THINK TANK OF CU LEADERS FROM ACROSS THE COUNTRY CHAIRED BY ADMIRAL JOE SCOGGINS, FORMER CEO OF NAVY FEDERAL. ( NEVER DID FIGURE OUT WHY I WAS ON IT.) WE MET EVERY 6 MONTHS OR SO TO IDENTIFY THE KINDS OF RISKS THAT COULD POSSIBLY BRING DOWN THE SYSTEM. E.G. FAILURE OF HUGE AMERICAN BANKS, FAILURE OF U.S. CENTRAL, FAILURE OF EUROPEAN MONETARY SYSTEM, STOCK MARKET CRASH, HUGE POWER FAILURES, ETC. ALL GLOOM AND DOOM.

WHILE ALL KINDS OF EVENTS WOULD SEVERELY DAMAGE CREDIT UNIONS, AT THE TOP OF OUR LIST--EVERY TIME WE REPORTED TO THE MOVEMENT--THE GREATEST RISK TO THE CREDIT UNION MOVEMENT WAS ...IF WE LOST OUR SENSE OF PURPOSE. THE NON-PROFIT, MEMBER FOCUSED PURPOSE OF A CREDIT UNION WAS FUNDAMENTAL TO SURVIVAL. TOO BAD THE MOVEMENT DIDN'T HEED THE ADVICE OF OUR COMMISSION.

CREDIT UNIONS NEED TO RETURN TO FUNDAMENTALS. GO BACK TO BEING MEMBER DRIVEN--NOT REGULATOR AND BOTTOM LINE DRIVEN.

THEY NEED TO RE-LOOK AT THE SIGNS AT THE CROSSROADS... AND CHOOSE THE RIGHT ROAD.

HAGERBAUMER on Interest Rates

Comments from Jim Hagerbaumer, Economist

Concluding remarks and food for thought.

• It now becomes inconceivable that the Fed will hike anytime before 2013.

• Monetary and fiscal policy are out of ammo. There will be no cavalry riding to the rescue.

• The Dow has wandered all over the reservation today – a sign of confusion and of what to expect in the months ahead.

• The country is bereft of any leadership whatsoever that understands what is going on.

• Growth of 2% or less the next year and beyond absolutely implies a rising unemployment rate.

• You are going to see a flurry of badly-designed, incoherent, counterproductive policies floated by this White House and Congresspersons on both sides of the aisle who want more than anything to get reelected as the reality of what I am saying here sinks in.

• Never in your business career has it been more important to access the creativity of your own brain and those of your staff. Hard prudential running of “the bank” will be well served and complemented by ideas you never entertained before. But so it must be to prosper in an environment you never before have experienced either!

Jim Hagerbaumer, Ph.D.
hagerbm@tampabay.rr.com
813-792-7624

Voice Biometrics Planned at Desert Schools FCU

This set-up screen asks the member to call in and make the initital recording of the voice to be verified later. The $2.8 billion Desert Schools FCU in Phoenix is the first financial institution to use a new voice biometrics solution from Finivation Software of New York City.

The VoiceVerify solution can be used to verify a caller’s identity either through an IVR or when working with a live agent, and will be used for high-risk transactions such as wire and ACH transfers and password re-sets, the company and credit union said.

“We plan to use VoiceVerify in several ways – initially for 24/7 password resets for online banking followed by out-of-band authentication for transfers. We also hope to leverage the technology to make it faster for members to authenticate in the contact center while simultaneously reducing the chance for social engineering,” said Gary Laieski, CIO for the 342,000-member Desert Schools FCU.

“Voice biometrics’ advantage over other biometric and security solutions is the fact that a person can be verified remotely, so it is perfect for the contact center as well as online and mobile banking,” said Finivation CEO Brian Bodell. “Users don’t need any special hardware or software, and they don’t need any training to use their voice.”

Desert Schools said it plans to begin using the service this fall. The added security also will help it meet new FFIEC guidance for expanded authentication, the company and credit union said.

Firms enlist smartphones to provide cyber security

Companies are enlisting smartphones as another layer of protection, say security professionals, because they are cheaper and their widespread popularity makes it easier for firms to reach a broad swath of customers.

“People can forget their keys and lunch at home, but no one forgets their phone,’’ said Ward Howell, director of security solutions consulting at Q2ebanking, an Austin, Texas, firm that provides banking services to regional banks and credit unions.

Software can turn smartphones into security tokens that spit out new passwords frequently like RSA’s popular SecurID key fobs.

Companies are taking a closer look at how they guard access to data after hackers broke into RSA, Hopkinton-based EMC Corp.’s security division, and used the stolen information to hack into computer networks at defense contractor Lockheed Martin Corp.

Adding to the urgency are new federal guidelines that require financial institutions to tighten security around online banking.

Lenders, such as Bank of America Corp. and JPMorgan Chase & Co., already send texts to consumers on their mobile phones.

These messages may notify credit card users of account activity or flag big ticket purchases; consumers may also use their smartphones to pay bills.

But a smartphone can do more, say security professionals. Using one like a security key fob is as simple as downloading an app, said Brendon Wilson, a senior product marketing manager of user authentication at Symantec Corp., a computer security software maker in Mountain View, Calif. “And for the company, there’s no expenditure on a separate token.’’

This allows companies to do away with traditional physical tokens, such as SecurID key fobs. After the March data breach, RSA offered to replace a portion of the SecurID tokens or provide security monitoring. The company said some customers are showing an appetite to replace their security tokens with virtual ones on smartphones.

The cyberattack on RSA had a silver lining. It fueled “new conversations with customers, and it’s not a conversation on just security tokens - it’s a conversation on security,’’ said Sean Brady, director of RSA’s identity management and protection group. “We are at a market inflection point for companies as they review user identification strategies.’’

Read more at: http://www.boston.com/business/technology/articles/2011/08/03/firms_enlist_smartphones_to_provide_cyber_security/