Big News, Bigger Opportunities for Small Credit Unions
The National Credit Union Association (NCUA) Board recently approved an increase in the asset ceiling for "small entity" credit unions from $50 million to $100 million. The move aims to provide support for more credit unions, as the NCUA estimates 77 percent of all federally insured credit unions may now be eligible for future regulatory relief and other cost-free assistance from the NCUA Office of Small Credit Union Initiatives.
Barb Lowman, senior vice president of account processing solutions for the small market credit union portfolio at Fiserv, says the NCUA's proposal is "good news" for the industry – and an important opportunity for small credit unions. The Point talked to Lowman about the outlook for this market segment and the unprecedented focus on small credit unions planned for Fiserv Forum 2015.
What are the unique challenges faced by small credit unions?
Over the past decade, consolidation among credit unions under $100 million in assets has increased considerably. Compared to other market segments, small credit unions tend to have slower membership growth and slower loan and deposit growth – and they're burdened with higher operating expenses and a disproportionate regulatory burden. Many small credit unions also face the replacement of outdated technology in order to provide innovative member services.
In light of the NCUA's proposal, what is the outlook for small credit unions?
Although they face challenges, I'm optimistic this segment is poised to grow and thrive. A change in the asset ceiling will strengthen their position and bring tremendous regulatory relief and additional assistance to small credit unions, which will position them for the type of growth they need to stay relevant. The NCUA's proposed changes may include financial assistance to help more small credit unions deliver the products and services members are demanding – and help keep them from going to the financial institution down the street or an alternative provider.
How should small credit unions with limited budgets prioritize technology investment?
Budgeting for technology is obviously top of mind for every credit union, regardless of size. With financial headwinds always present, small credit unions especially must seek affordable technology that doesn't sacrifice features, functionality and the member experience. Fiserv is working with these organizations to deliver technology that positions small credit unions to compete with other financial institutions – at a price that makes sense. With limited in-house IT resources, small credit unions must leverage a technology partner's invaluable expertise, scale and support. By doing so, smaller organizations can cost-effectively provide key products and services to retain or attract members, especially younger consumers.
How are small credit unions impacted by compliance issues?
The compliance burden is formidable across the industry. However, in smaller credit unions, compliance officers often have multiple roles and responsibilities, making it difficult for them to find time to manage pending regulatory changes and lead compliance initiatives. The buzz in the industry around the NCUA proposal has centered on regulatory relief. What kind of relief is coming – and in what timeframe? Those questions will quantify the real benefit of this change in segmentation.
What can small credit union professionals expect at Forum?
Fiserv is focused on being a champion and strategic partner for our clients. In response to the NCUA's actions and this mission, Forum will offer exclusive sessions to help small credit unions connect with their peers, discuss particularly relevant topics and dig a little deeper into specific content.
Industry experts will discuss NCUA grants and loans available to assist credit unions in launching key technology platforms, as well as cost-effective developmental training for staff members and leaders. A panel of credit union CEOs will share best practices and lessons learned through success in building well-balanced growth strategies. Additional discussions will center on safeguarding members' data, free training available to small credit unions across the industry and information on when small credit unions can expect to see regulatory relief. Forum is a golden opportunity for small credit unions to access key resources and information.