THE NAFCU JOURNAL SEPTEMBER–OCTOBER 2022 “ We are showing our members that we are innovators, and we offer them a chance to learn more about digital currency. ” CYNTHIA SCHROEDER, SENIOR VICE PRESIDENT OF DIGITAL ASSETS, VISIONS FEDERAL CREDIT UNION Underlying Technology Promises Greater Efficiencies While credit union members may enjoy and focus on access to cryptocurrency, it is only a small part of the innovative opportunities the technology provides. For years the digital assets team at Visions has focused on educating themselves to better understand the underlying technology for cryptocurrency and how it can apply to more than digital wallets, said Schroeder. “We’re excited about the efficiencies blockchain technology can provide in other areas by automating processes in activities such as payment processing or escrow analysis.” The NCUA also recognizes the opportunity presented by technology and in May 2022 issued a Letter to Credit Unions clarifying expectations for credit unions contemplating the use of new or emerging distributed ledger technologies. “Credit unions need to recognize the significance of cryptocurrency’s underlying technology and begin evaluating how it can be applied in their organization,” said Keller. “Learning about it now while the opportunities are emerging and identifying how it will help members and the credit union is critical.” Overall, the credit union industry is still in the very early adopter stage of cryptocurrency, said Greg Varnell, vice president of product and development for the Q2 Innovation Studio. “NYDIG, which is integrated to the Q2 digital banking platform, offers credit union members a way to buy, sell and hold assets in a way that complies with NCUA guidelines,” he said. “Unlike other exchanges that require passwords, certificates or keys that can be easily lost, access to the cryptocurrency account is handled through the member’s online account or mobile app, creating a closed interface that adds an extra layer of security.” When evaluating fintech partners for cryptocurrency, Varnell suggests: ■ Look for a company that focuses on a “compliance-first” approach to development. This is essential as the regulatory environment is evolving as technology evolves. ■ Evaluate the features that mean the most to your members, such as ease of use, security and real-time transactions. These features can differentiate the credit union from other financial institution offerings. ■ Understand the cost of integration, operation, and support. “The interesting thing about costs is that a lot of programs are financially positive—they are not a cost center, they are a revenue-producer,” said Varnell. “There are no upfront costs for implementation and transactional fees from member purchases go to the fintech and the credit union.” As credit unions expand their use of digital tools, it does affect staffing, but Varnell has not seen any additional staff required to implement a cryptocurrency service offering. “I have seen credit unions look for expertise and industry knowledge related to digital services as they add to their staff and leadership teams,” he said. “This is a trend that will continue as credit unions innovate and add more digital services.” References 1. A Brief History of Cryptocurrency. https:// www.cryptovantage.com/guides/a-briefhistory-of-cryptocurrency/ “ The interesting thing about costs is that a lot of programs are financially positive—they are not a cost center, they are a revenue producer. ” GREG VARNELL, VICE PRESIDENT OF PRODUCT & DEVELOPMENT, Q2 INNOVATION STUDIO 21
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