A Matrix To Temper Risk And Break The One-Size-Fits-All Approach To Funds Availability

Nusenda Credit Union’s funds availability formula boosts member service by exceeding regulated minimums and treating outliers as outside the norm.

Top-Level Takeaways

  • Nusenda created its funds availability matrix to provide a uniform experience across delivery channels.
  • The proprietary formula eliminates the one-size-fits-all approach and goes beyond funds availability dictated by Regulation CC.


Nusenda Credit Union
Data as of 03.31.19

HQ: Albuquerque, NM
strong>MEMBERS: 202,533
ROA: 1.57%

As credit unions push to raise deposits, they might also find members pushing back to quickly access those funds, regardless of the service channel they’re using.

Nusenda Credit Union ($2.4B, Albuquerque, NM) has a well-vetted methodology for dealing with funds availability, one that balances risk to the credit union and rewards the member with a consistent user experience.

The New Mexico credit union uses what it calls its Funds Availability Matrix, a set of conditions that determine how much and how soon it will make available funds from any deposit.

Tom Hagan, Chief Risk and Administrative Officer, Nusenda Credit Union

The matrix was created to move us away from a one-size-fits-all approach, to improve the member experience, and to create operational efficiencies, says chief risk and administrative officer Tom Hagan.

Along with allowing funds availability beyond the minimums dictated by Regulation CC, the matrix provides a consistent experience across Nusenda’s growing list of delivery channels, which now includes mobile deposits, person-to-person transactions, and video teller machines along with traditional branch teller encounters.

Here, Hagan details how his employer of 18 years decides deposit availability daily through its own version of the matrix.

In a nutshell, describe Nusenda’s Funds Availability Matrix.

Tom Hagan: The Funds Availability Matrix is an internally developed decision tree that measures member risk for funds availability limits. The matrix is tiered, fluid, and allows for human intervention when required. The matrix can be modified to change with the financial climate, changes in risk appetite, or fraud experience.

How did you identify the need for the matrix? What problem did it solve?

TH: Member feedback led to its creation. Before this, we had a blanket policy. Everybody received the same level of funds availability, based on Regulation CC, with exceptions only allowed to be made in person, at a branch. That approach didn’t make sense for us anymore.

Now, for example, if a member gets a regular direct deposit and never overdrafts, the matrix allows us to put no hold, or a partial hold, on the funds through any channel. Having a different hold policy when funds are deposited through other channels results in a bad member experience as well as the loss of potential transactional income those funds could be generating and the inefficiencies created when members ask to get funds released.

How much detail can you provide about the terms you use?

TH: Our matrix is based on a proprietary formula, but some of the data points we factor and weigh differently include length of membership, delinquent payments, deposit activity, amount of non-sufficient funds or days an account is in a negative balance, and average daily balance.

We also have a miscellaneous field that helps us immediately identify any potential issues. We teach staff to recognize scenarios that might cause us to immediately lock down an account.

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What opportunity does the matrix provide?

TH: The matrix helps us ensure we look at our members’ whole relationship when considering risk with funds availability. It’s not a one-size-fits-all approach we have something that’s customized to our membership. It allows us to balance risk with relationship to flex and bend as we need to in service of our members beyond regulatory requirements.

When did Nusenda create, and deploy, the matrix?

TH: We created the first version of the matrix approximately 12 years ago. It took us a good year and a half before we felt comfortable with the data points, weighting, beta testing, and training. Then we introduced it.

What modifications have you made to the matrix?

TH: We’ve added data points, tweaked the amount of availability by tier, and changed matrix scoring and weighting.

Please describe the process of its creation.

TH: A team of employees had the directive to address common member feedback captured through our delivery channels. That team created the matrix in concert with representation from many departments. We tested it on a cross-sectional control group of members to make sure it was properly gauging risk.

How do you deploy the matrix? Who uses it? How do they use it?

TH: We deploy the Funds Availability Matrix through our automated systems where we can load the parameters. Front-line retail employees use it. And, our branch leadership has the option to override the matrix based on relationship, circumstance, or type of item presented.

Make Your Own Matrix

Here, Tom Hagan, chief risk and administrative officer at Nusenda Credit Union, offers four best practices for credit unions considering launching a funds availability matrix.

  • Have the staff resources to support the project. Consider the time and project constraints on the information technology department. Building a matrix takes a lot of data and a strong understanding of the credit union’s systems.
  • The more eyes the better. Obtain buy-in and feedback from diverse groups of people, including branch staff, deposit processing, marketing, risk, fraud, and collections teams.
  • Don’t copy. Don’t take someone else’s matrix and try to use it. There might be similarities in membership or asset size, but dissimilarities such as geography or field of membership matter, too.
  • Test it first. Apply it to a subset of members for which the credit union already knows the risk and is comfortable. Remember, spending is often seasonal, so allow for a long period of time to get a good sense of activity don’t use a single month or three.

What risks did you take on by deploying this system? How have you mitigated them?

TH: Both fully automated and human-involved decisions carry risks and rewards. Good members can have trouble, and there’s nothing you might be able to do to prevent that experience.

But, don’t treat outliers as the reason to keep a one-size-fits-all approach. By identifying a level of transaction risk you’re willing to take and developing a system to guide decisions or make them automatically, a credit union can increase trust and strengthen member relationships.

What have been the results?

TH: The best results I can point to are the high member satisfaction survey results we receive, our high checking account and electronic services penetration and usage, and our low fraud and loss experience. Our ability to keep fraud losses low is the result of both our matrix and human intervention.

What has been the biggest surprise since you began using the matrix?

TH: Members are pretty consistent in how they do business, and there really are only a few members who have challenges.

Gone are the days when members used to walk into a branch with a payroll check. Thanks to technology and new banking methods, members will do business electronically if you are meeting their needs for access. Our branches are now for one-on-one interactions that serve specific needs, such as lending or personal financial advisement and counseling. It has helped us help members to self-serve whenever possible.

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What’s the biggest lesson learned since you began using the matrix?

TH: We must be aware of the latest tactics, like social engineering, that fraudsters are using to game systems and deceive members.

Also, members can be a good risk today but might not be a good risk tomorrow or vice versa. Risk level can change for a variety of reasons job loss, medical issues, or falling victim to a scam.

What challenges should credit unions be ready for if they launch a similar initiative?

TH: It’s key to develop the right matrix with the right data points specific and relevant to the membership. That’s only followed by making sure there is a strong team rollout so employees can educate members.

Another challenge for Nusenda was cracking the perception that members don’t get the same level of service using an electronic tool like mobile deposit, person-to-person transfers, and ATMs that they do when they come into a branch. ATMs are a great example a member doesn’t have to walk into a branch and wait in line. They can complete their transaction quickly, which facilitates loyalty, trust, and a general feeling that we know and get them.

This interview has been edited and condensed.


July 23, 2019

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