MADISON, Wis., and WASHINGTON (1/5/10)--A decade has ended and in the tradition of newshounds everywhere, the Credit Union National Association's News Now
staff took time out to mull the impact the first decade of the 21st century presented credit unions. Staff sniffed out 10 events of the decade that changed the way credit unions operated and their strategies. The list, not ranked according to importance, includes:
* Y2K. The year 2000 was supposed to bring computer glitches that would bring computers to their knees. 1999 had credit unions scrambling with data processing service providers to shore up and protect their computer systems when the data hit. What turned out to be a nonevent--perhaps due to good preparation--also served notice to credit unions that their strategies should include preventive measures to ensure business continuity and safekeeping of the sensitive records they keep. Y2K helped usher in a new computer era with more sophisticated data processing. * Sept. 11, 2001. The attacks on the World Trade Center proved that the nation's financial system could survive when institutions take measures to back up their data and processes. Credit unions directly involved in the tragedies met members' needs because they had business continuity plans in place. 911 turned the Web and cell phones into significant instantaneous channels of communication that changed the way credit unions get their news and communicate with each other. And, years after the attacks, credit unions still are dealing with the new, more demanding regulations. In 2009, the Bank Secrecy Act's anti money laundering and other provisions remained the single most challenging compliance issue. * Bankers' attacks. Bankers stepped up their rhetoric against credit unions in state after state, in the courts, state legislatures, and Congress. They also took the battle public, often attacking credit unions' tax exemption in the media. These resulted in credit unions taking aggressive steps to educate the public and lawmakers about the credit union difference. The attacks changed the way credit unions promote their issues and brought forth a decade of advocacy that, combined with other issues, has significantly increased the visibility of credit unions in the media and in Congress. As a result, CUNA's and the leagues have become one of the most respected lobbying groups in the U.S. * Hurricane Katrina. A series of hurricanes in 2005 brought business continuity challenges of nightmare proportions to credit unions along the Gulf Coast, testing their very existence. But credit unions shone in their service. Hurricane Katrina especially gave a huge boost to the unique credit union cooperative concept of shared branching, which enabled credit unions to step in and serve others' members in trouble. Katrina directly affected more than 600 credit unions and millions of members. The disaster changed the way credit unions and their members gave to charity and helped each other, via online resources. And the Web showed what it could do as a communications medium in keeping members informed. And credit unions saw new, improved backup systems such as mobile units dispatched to help keep branches' business open. * The Web, the Internet, and online banking. These were just gathering speed when the decade began but look at them now. They have changed the way credit unions communicate with each other and their members. They have changed how transactions are made and how products and services are delivered. Today members can get a loan application approved online. Today most credit unions have integrated these into their strategic plans as well as their communications and marketing plans. * Data breaches. In the past 10 years, hackers and cybercriminals have become a fact of life. A series of sophisticated breaches in 2007, 2008 and early 2009 compromised thousands of members' credit and debit cards and hit home the message that one's system is only as good as its weakest link--which could be a merchant's computer or a third-party providers' processes. Through no fault of their own, credit unions have had to spend time and expense reissuing cards and beefing up security of their networks, dealing with fraudulent transactions and assisting upset members. Many credit unions have turned these into educational opportunities to provide education to members about protecting their data. * Electronic funds transfers (EFT). EFT has come a long way, so much so that paper checks are dwindling in favor of debit cards. EFT has changed the way basic financial services are delivered and how they are paid for. With these have brought an array of compliance rules, disclosure proposals and more regulatory burden for credit unions. * Younger members. Generation X and Y's infatuation with their iPods and cell phones and blackberries has prompted credit unions to consider innovative marketing strategies via social networking. Credit unions are tweeting on Twitter, blogging, and making friends via LinkedIn and FaceBook. Right now, many credit unions and leagues are trying to figure how best to use the new devices. * Changes in credit union leadership. Credit unions have been warned that Baby Boomer CEOs will be leaving about a third of credit unions as they reach retirement age, and it's already happening. A new wave of younger successors are taking their place and are testing the traditions taken for granted by most credit unions. *The global economic crisis. Last, but not least, the crisis triggered by banks in 2008 and the ensuing recession have tested the very nature of the credit union system with regulatory reform and corporate stabilization making significant changes that will alter the business. The impact on credit unions has been severe. Some will take years to earn back the funds they lost in shoring up the corporates and their insurance fund or through member delinquencies. But the backlash against huge banks instrumental in bringing on the credit crisis also has provided credit unions a huge opportunity to strut their stuff. Credit unions are being heralded throughout the nation for their conservative lending, and their willingness to take on more loans. As a result, they've seen strides in membership that can position them well for the next 10 years.