I think they need to make sure that they’re looking at how they are battening down their defense mechanisms. How are they also looking at their systems issues? What are their internal processes around fraud detection? Also, what are the board members doing? How active is your supervisory committee, how are you looking at your governance policies and procedures? Those are all the things that we are helping credit unions identify and address in today’s dynamic environment. I think another issue that’s worth noting is that we have a lot of smaller credit unions, as small as $300,000 to $400,000 [in assets]. So, when I talk about internal controls and fraud mitigants, many of them may not have the staffing in place to really embrace a lot of these types of activities. So, what we’ve done at NCUA is we have a fraud protection website that people can use. If you go to NCUA.gov, you can look at some of the tools and some of the things that you and your credit union can do to really have a strong and effective fraud protection and identification program mechanism. We believe that credit unions of all asset sizes should have the tools in place, commensurate with their asset size and complexity. But the main frontline of defense is a strong supervisory committee and an internal fraud control function. …We must continually educate our people and we must always strive to stay a few steps ahead of the bad actors. …But also, Greg, I think another piece that I know that you all at NAFCU have talked about a lot is the payments space. And again, with payments, we are continuing to monitor what’s happening with issues surrounding Regulation E. Reg E is certainly designed to help our credit unions if they’ve had members in other activities that have had fraudulent activity. But with some of the fintech issues and breeches that we’re seeing, we are going to pay close attention to what happens with CFPB and the courts as it relates to Zelle and some of the others engaged in this space. And as you and I know, fintech can really help us. I certainly am fully supportive of financial technology, but this is one area where we do need to be even more mindful around things such as the payment system piece and again, with things such as Zelle. Mesack: NCUA is always so innovative and adaptive, and they recently created the provisional charter. That provisional charter aims to make the formation of new credit unions easier, but ongoing industry consolidation remains a challenge and that will likely require additional strategies to address the consolidation. It’s driving the industry. How is the NCUA thinking about the field of membership in a broader sense? Is there any desire to revisit the concept of online facilities or other tools we can use to help credit unions grow and so that consolidation is less of a pressure? Hood: One of the things that I really was delighted to work with my board members on in 2021 when I was still chair, was around how do we expand the service facility, especially with our multiple common bond credit unions. As you know, one of the things we were able to do was to allow those credit unions the opportunity to adopt underserved areas without having to build a costly new branch facility. One of the things that I think really will continue to pay dividends from that policymaking decision from the board is that credit unions can now be a part of the shared branching network. And you no longer have to have an ownership stake in that shared branch. You can still have access to that and count that as one of your service facilities. I really did want [mobile phone] technology to be considered as a service facility. So, while we were not able to do that, I think again, the fact that we can have the automatic teller machines, the ATMs, the video teller machines those can all be considered as a part of the service facility. And one of the other things that we’ve recently done, Greg, is that we have tried to simplify the process for creating new credit unions. As you’ve mentioned, the provisional charter rule that we just discussed at the last board meeting is always trying to address the chicken or the egg issue. …We are trying our best to simplify the process for creating a new credit union. We’re trying to make it possible, again, to streamline the application process, trying to get a lot of that information on our website, such that when you are wanting to create a new institution, you can have a cafeteria style approach of charter types and Field of Membership options, through our Office of CURE, that stands for Credit Union Resources & Expansion, they are looking at these issues. They’re marshaling a lot of resources to the credit unions. I just hope that we have new credit unions coming into existence. And Greg, if I can, we’re talking about provisional charters and things of that nature, but you also asked me earlier about small credit unions. I want you to know that we have dedicated resources to our small credit unions. We are investing in them through grants. We typically have provided grants to our community development financial institutions and our low-income designated credit unions. But now we’re making those grant funds available to the [minority depository institutions (MDIs)] and those are funds that can be used for technical assistance, cybersecurity, fraud protection and identification, maybe they can invest in some software and tools along those lines. We also are going to be looking at a different examination style approach for our smaller credit unions. A tailored approach to looking at the risks by asset size of the credit unions so that you’re looking at them not as a one-size-fits-all “ My main advice to credit unions is to do what they do best, and that is continuing to display the people helping people ethos. ” 13 THE NAFCU JOURNAL September–October 2023
RkJQdWJsaXNoZXIy MTY1NDIzOQ==