Peak efficiency and rock-solid security are brass rings on the lending technology carousel this year.
Some credit unions are grabbing on to new work process solutions to tie together disparate systems, striving to make the back office more fluid. Others have credit card security initiatives underway. That includes EMV for card-present fraud as well as innovative ways of addressing card-not-present security issues in the online channel.
Here’s a look at how three credit unions are tackling these technology trends in 2015.
1.United FCU And Member Business Lending
Member business lending has become big business at United Federal Credit Union ($1.8B, St. Joseph, MI). United’sMBL portfolio has grown nearly eight-fold in the past five years, to $242.8 million at the end of fourth quarter 2014. That’s about twice the average for the 228 billion-dollar credit unions across the country, according to Callahan data.
To help handle that growth, United uses a cloud-based business lending software that coordinates sales documentation, loan life cycle tracking, document management, business intelligence, and more with the credit union’s core processing platform.In the first full year of using the nCino Bank Operating System from January 2013 to January 2014 the credit union more than doubled its assets under management per underwriter, a key metric at United. The software’s work distribution functions extend beyond the credit union’s member business lending into its branch staffing as well as other uses the credit union is exploring, but the coordination element remains vital.
The real benefit of this is the coordination of the sales effort with workflow automation, says Jeffrey Curry, United’s vice president of operations. The right hand knows what the left hand is doing.
Those hands reach into seven far-flung states in which United currently operates but could soon include more as the credit union dives into loan participations, Curry says.
Member business loan balances
All U.S. Credit Unions | Data as of12.31.14
Callahan & Associates | www.creditunions.com
Source: Callahan & AssociatesPeer-to-Peer Analytics
2. Genisys Credit Union And EMV
Ensuring members their financial institution has adopted best practices in card security is part of the 2015 growth strategy for many credit unions. Chip-enabled EMV technology is central to that.
EMV cards create a digital token for each transaction and require either a PIN or signature most American financial institutions are going with the latter at the point-of-sale. And EMV cards are going mainstream this year as FIs beginissuing the card-present security plastic ahead of an October liability shift deadline.
Genisys Credit Union($1.7B, Pontiac, MI) is serving as a beta tester for CO-OP Financial Services and MasterCard and launched its EMV credit card in January. Like many issuers, Genisys is providing EMV cards for new accounts and to replace expired cards. Genisys had sold its cards portfolio several years ago and since bringing them back in-house in 2013, balances have sharply exceeded its peer group, according to Callahan data.
MasterCard has said it expects to see half of all debit and credit cards in the United States, as well as half of all terminals, to be EMV-enabled by the end of the year.
We can easily make a shift to an all-EMV card base if merchant adoption increases before the liability shift date, says Genisys CEO Jackie Buchanan.
credit card growth
All U.S. Credit Unions | Data as of12.31.14
Callahan & Associates | www.creditunions.com
Source: Callahan & AssociatesPeer-to-Peer Analytics
3. The Southern Credit Union And The On-Off Card
The Southern Credit Union ($321.9M, Fayetteville, GA) is rolling out a digital on/off switchapp that allows members to use their smartphones and other devices to control, approve, restrict, or even shut down credit card use.
We learned about this when it was in the development stage and felt it might be the tool we needed now to complement our future EMV rollout, Jim Phillips, CFO at the Georgia credit union, said of Fiserv’s CardValet. EMV willbe a great deterrent for card-present purchases, but it doesn’t address online card purchases.
The branded app is available for Android and Apple devices, and users can set up a range of alerts and permissions, including specific merchant categories, geographic locations, dollar amounts, and PIN and signature transactions.
A number of other vendors that also offer the on-off switch for debit and credit cards tout the feature’s ability to help card holders manage family spending as well as protect against fraud. According to Phillips, The Southern Credit Union willconsider adding debit cards if the credit card app is a success.
Such alerts should help assuagesurprises, and consequently delinquencies, but that’s not an issue at The Southern Credit Union. The credit union has approximately 5,400 open credit card accounts, of which 10 to 20 on average are delinquenteach quarter. In third quarter 2014, that number even dipped to zero.
We believe CardValet will be well-received by our membership, Phillips says.
Credit Card delinquEncy
All U.S. Credit Unions | Data as of 12.31.14
Callahan & Associates | www.creditunions.com
Source: Callahan & Associates’ Peer-to-Peer Analytics