California Workers Balance Deposits, Inflation, & Employment Opportunities

​Local household “savings” in checking and all other combined deposit accounts across California are hitting their highest levels ever experienced at credit unions, with the total figure skyrocketing 35 percent from pre-pandemic second quarter 2019 to second quarter 2021 (see graph down below).

THE LATEST TREND
This trend represents an unprecedented two-year increase according to the latest California Credit Union Industry Snapshot report released today by the California Credit Union League (click snapshot report for data and chart-graphs).

Collectively, deposits made by 13.1 million California credit union members rose from $172 billion to $233 billion during the June 2019 to June 2021 period at 286 locally headquartered credit unions in the state — a statistically significant barometer of local banking activity.

No other two-year period in recent history has experienced such a boost in California credit union deposits by members and households to the tune of a net-positive $61 billion (35 percent growth).

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WOCCU 2020 Statistical Report also shows depth of credit union gender gaps

Improved supervision and data reporting in the world’s second-most populous country combined with continued growth across the globe resulted in a 29% year-to-year increase in international credit union membership, according to World Council of Credit Unions’ (WOCCU) newly released 2020 Statistical Report.

As of December 31, 2020, there were a total of 375,160,065 credit union members in 118 countries.

The big jump in membership is largely the result of improved data collection and reporting in India, which shows the country has more than 91 million credit union members. WOCCU reported Indian credit union membership of roughly 20 million in 2019, based on more limited data available at that time.

The rest of the international credit union movement grew by more than 14 million members in 2020, despite COVID-19 restrictions and lockdowns across the globe.

“On all six continents, credit unions continued to grow our movement last year despite incredible challenges by working to keep frontline staffers and members safe from infection at branch locations, while rolling out special financial assistance and relief measures to keep members solvent. Many credit unions also ramped up their digital services to make sure members could access their accounts and make payments remotely. All those efforts helped credit unions keep existing members and add new ones,” said WOCCU President and CEO Elissa McCarter LaBorde.

With the large jump in India, Asia saw a membership increase of 114% in 2020. Latin American credit unions grew at a rate of 10%, while African and Caribbean credit unions both saw membership increases of 7%.

Assets and savings increase; loan growth stagnant in much of the world

Financial data featured in the 2020 Statistical Report shows credit union assets grew by 23% in 2020, surpassing the $3 trillion mark for the first time, while member savings grew at a much faster rate than credit union loans. This follows global trends in weaker demand for credit as well as increased risks in credit portfolio quality.

Globally, the total dollar amount of member savings went up by 24% from 2019, with loans increasing by just 11%. That difference was even more pronounced in emerging and developing markets. Savings among credit union members in Africa grew by 65% while the total dollar amount of loans increased by just 7%. In Latin America, savings grew by 14% as loans decreased from 2019 levels.

New in 2020: demographic data shows large gender gaps

For the first time in 2020, World Council included demographic data in its Statistical Report. The data was compiled from 34 member associations that answered survey questions about the makeup of their credit union membership and leadership—specifically as it relates to age and gender.

The responses show large gaps exist in the number of women involved in the credit union movement compared to men, both in terms of membership and in chief executive or board director positions.

In Asia, Africa and Europe, men account for roughly 60% of all credit union members. The numbers are more balanced in Latin America, where women make up nearly half of all members.

In terms of leadership, Europe is the most gender equitable, with women accounting for more than 60% of credit union board directors and 51% of chief executive officers (CEOs). Women are least likely to serve in either role in Asia, where more than 70% of CEOs and board directors are men. The numbers in Africa, Latin America and North America, also show men hold more than 60% of leadership positions.    

The survey results also revealed that credit union members worldwide are over 45 years of age on average. North American credit union members are the oldest on average, at 53 years of age. Africa has the youngest membership base, at 39 years.

“There is no question credit unions have work to do when it comes to attracting more women as members and leaders. Our movement must also examine new ways to make credit unions more relevant and appealing to young people. World Council looks forward to working with our members to address these challenges and improve outcomes in these areas,” said McCarter LaBorde.

World Council reports data based on country responses to its annual survey and does not make estimates for non-reporting countries. The Statistical Report provides the most comprehensive data on the global credit union movement available and is cited widely by governments, international institutions and analysts as an expert resource.

You can view the full 2020 Statistical Report here.

World Council of Credit Unions is the global trade association and development platform for credit unions. World Council promotes the sustainable development of credit unions and other financial cooperatives around the world to empower people through access to high quality and affordable financial services. World Council advocates on behalf of the global credit union system before international organizations and works with national governments to improve legislation and regulation. Its technical assistance programs introduce new tools and technologies to strengthen credit unions' financial performance and increase their outreach.

World Council has implemented 300+ technical assistance programs in 90 countries. Worldwide, 86,451 credit unions in 118 countries serve 375 million people. Learn more about World Council's impact around the world at www.woccu.org.

Attendees of the Northwest Credit Union Association’s Enchanted Northwest gala and auction at MAXX Convention Wednesday night, did a long-time fundraising tradition proud. They wore out their arms raising their bidding paddles again and again for Credit Unions for Kids, a now-national charity founded decades ago in the Northwest.

As a result, eight Children’s Miracle Network hospitals in the region will have more funds to support research, medical equipment, and life-saving care for young patients and their families. Bidding on deluxe getaways to wine country inns, world-renowned resorts, and electric cars to be donated to each of the hospitals, contributors raised $1,001,720 – all in a single night. The fundraising total was announced from the MAXX Convention mainstage in Boise Thursday afternoon.

A steer named Karen and a horse named Cat

Bidding was inspired by the event’s “Miracle Child,” Brinley Oldham. Brinley was unable to attend the Enchanted Northwest Gala in person, but video produced by the hospital detailed a horrific day in 2019, when Brinley, then 9, was helping her family brand the herd on their remote Idaho ranch. She was trampled by a cow and suffered life-threatening injuries. Fortunately, St. Luke’s Children’s Hospital in Boise had opened a pediatric trauma center just 12 days before Brinley’s accident. All of the child-specific medical equipment was in place, and the well-practiced team of healthcare workers was ready. Brinley’s life was saved, and less than a month later, she was back at the ranch.

Idaho Central Credit Union served as Brinley’s sponsoring credit union. In a video conversation with CEO Kent Oram, Brinley shared that the steer she showed at 4-H this year, was named “Karen.” And the horse she has mastered riding? Its name is “Cat.” That exchange brought laughs. Brinley’s career choice also won applause from attendees.

“When I first got out of the hospital, I thought I wanted to be a nurse or doctor, so that I could help other kids like me,” she said. “But now I kind of want to be a vet because this year, we’ve had quite a few animals get hurt, and it just seems cool to watch the process of them healing.”

Healing is what Credit Union for Kids is all about

“The credit unions’ generosity is once again going to make a difference for CMN hospitals as they help families and young patients through the most difficult of times,” said Troy Stang, President and CEO of NWCUA. “We appreciate the hard work of the Enchanted Northwest’s volunteer committee, all of the sponsors, the generous donors for gift packages, and the credit union family for its friendly, but competitive, bidding for the kids.”

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The National Credit Union Foundation (NCUF) announced the honorees of their 2022 Herb Wegner Memorial Awards, highlighting a range of personal and organizational achievements within the credit union industry. Among the winners, National Association of State Credit Union Supervisors (NASCUS) President and CEO Lucy Ito will receive the Outstanding Individual Achievement Award. 

Rose Conner, Chairperson of the Board of Directors stated “I have had the great pleasure of working with a true credit union professional in Lucy Ito. She has been dedicated and successful in enhancing NASCUS and the credit union system. The honor is well-deserved. Thank you and congratulations Lucy!”  

"Throughout her career, Lucy has been committed to building bridges and opening doors to collaboration between credit unions, state regulators, federal agencies, and industry partners. She is a true champion of the credit union motto "people helping people." It's been an honor to work with her and we congratulate her on this extraordinary accomplishment.” commented Mike Williams, Chairperson of the Credit Union Advisory Council. 

As President and CEO of NASCUS, Ms. Ito advocates on behalf of state agencies that supervise more than 2,000 state-chartered credit unions and just over half of all U.S. credit union assets, as of June 30, 2021. 

“I am incredibly humbled to receive this prestigious recognition. It takes so many people for any organization to be successful. At NASCUS, our ‘secret sauce’ is our tireless staff combined with our Regulator Board of Directors, Credit Union Advisory Council, and our membership of both state agencies and credit union industry stakeholders. Together, we are more and better. I am deeply grateful to the nominators and the Herb Wegner Awards Selection Committee for recognizing the work of NASCUS, the California and Nevada Leagues, and the World Council of Credit Unions.” stated Ms. Ito.  

Having previously worked for the California and Nevada Credit Union Leagues and the World Council of Credit Unions, Ito has spent her career championing credit unions’ uniqueness, bringing differing viewpoints to an objective table. 

During her extensive tenure, Ito played a critical role in: 

• Advocating for policies that foster balance and equity between state and federal credit unions, such as the National Credit Union Administration’s (NCUA) Overhead Transfer Rate methodology. 
• Tirelessly working to create an environment for state regulators and credit unions to work together to reach common-sense solutions. 
• Establishing a network of engagement and collaboration for state regulators through committees and events, such as the National Meeting for State Credit Union Regulators, launched in 2016 and held each spring. 
• Constructing idea-sharing platforms such as The Exchange—a dialogue for state regulators and $10B+ asset-based state and federal credit unions to anticipate future challenges facing the credit union system. 
• Working with the NCUA as a partner, re-committing to the Document of Cooperation between NASCUS on behalf of state regulators and NCUA in 2019 for the first time in more than a decade. 
• Increasing donations to NASCUS’ education foundation, the National Institute for State Credit Union Examination (NISCUE), and expanding scholarship opportunities for state examiners. 
• Launching a cohesive and collaborative, member-focused engagement strategy and building a nationwide trust in the NASCUS brand. 

Katie Averill, Superintendent, Iowa Department of Commerce, Division of Credit Unions stated “Lucy has a professionally unique way of bringing regulators and credit unions together that will positively impact the collective credit union industry for years to come. She leaves behind an uplifting legacy of collaboration; all in the best interest of credit union members, partners, and colleagues. I offer my most sincere congratulations to Lucy for this honor.” 

“These awards celebrate the innovators and modern-day pioneers of the credit union movement,” said Gigi Hyland, executive director of the Foundation. “These are the individuals and institutions revolutionizing the credit union system through living and embodying our founding principles and values. Their tireless work ignites and inspires all of us in our journey to make financial freedom achievable to all through credit unions. 

Accolades will be presented at the annual NCUF Dinner on Monday, February 28, 2022, in Washington, D.C., held in conjunction with the Credit Union National Association’s Governmental Affairs Conference. 

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WASHINGTON, DC – The National Association of Federally-Insured Credit Unions (NAFCU) Chief Economist and Vice President of Research Curt Long issued the following statement after the Bureau of Labor Statistics released the September Jobs Report:

“Payroll gains disappointed in September, failing to hit the 200,000 mark for the first time in the calendar year,” said NAFCU Chief Economist and Vice President of Research Curt Long. “However, there were positive signs buried below the headline number. Much of the weakness was concentrated in local education, which is likely due to faulty seasonal adjustments."

Meanwhile, restaurant and retail employment picked up at a time when COVID cases were cresting, which bodes well for the October report.

As compared to August, job gains in September were skewed toward full-time work, and average hours worked per employee picked up. Wage growth accelerated to 4.6 percent versus the prior year, which should help blunt the impact of strong inflation.

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By Roy Urrico
Finopotamus

Finopotamus aims to highlight white papers, surveys, analyses and reports that provide a glimpse as to what is taking place and/or impacting credit unions and other organizations in the financial services industry.
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A BeyondTrust report and an CISA, FBI, and NSA alert on ransomware threats; and a Juniper Research study about robocalls highlight a roundup of cybersecurity analyses. 

BeyondTrust Labs Analysis of Ransomware and Phishing Trends

Atlanta-based BeyondTrust, which provides privileged access management, in its BeyondTrust Labs Malware Threat Report 2021 found malware-as-a-service (MaaS) and human-operated ransomware campaigns continue as a major cybersecurity threat. This research provides insights and analysis into threats and privileged account misuse on Windows devices across the globe based on real-world monitoring and analysis of attacks discovered in the wild by the BeyondTrust Labs team between the first quarters of 2020 and 2021. 

The research also dives into reoccurring threat themes and maps out tools, techniques, and procedures using 58 techniques in the MITRE Adversarial Tactics, Techniques, and Common Knowledge (MITRE ATT&CK) Framework, a globally accessible knowledge base of adversary tactics and techniques based on real-world observations, reflecting the various phases of an adversary's attack lifecycle and the platforms.

“For decades, enterprises have made significant investments in security solutions in an attempt to strengthen their cyber defenses,” said James Maude, lead cybersecurity researcher at BeyondTrust. “Many of these investments have proven to be ineffective, particularly with changes brought on by the pandemic. Security perimeters have dissolved, creating an exponential growth in attack surfaces, and rendering network monitoring and firewall technologies less effective. Endpoint privilege management solutions enable enterprises to reduce their attack surfaces, while gaining greater control over their digital infrastructure.”

Key report findings:

• Absent the right protection, malware will disable endpoint security controls and undermine security investments.
• The use of native tools to perform fileless attacks in the initial stages of attack is a growing trend, enabling attackers to gain a strong foothold by establishing a persistence mechanism with security controls disabled.
• The MITRE ATT&CK Framework effectively distills a wide range of malware strains and cyberattacks into mitigatable component techniques.
• BeyondTrust Privilege Management for Window’s out-of-the-box policies proactively disrupted all 150 different, common attack chains tested.
• Removal of admin rights and implementation of pragmatic application control are two of the most effective security controls for preventing and mitigating the most common malware threats.

The report noted while ransomware has clearly evolved, the fundamental needs to execute code and leverage privileges have largely remained consistent. Whether it is ransomware hitting a single endpoint, or a sophisticated, tailored attack, the benefits of proactively reducing attack surfaces by removing admin accounts and controlling application execution are highly effective.

BeyondTrust pointed out threat actors work ceaselessly to evolve its operations and have matured significantly over the past year. Also observed is that a ransomware attack can be comprised of multiple threat actors, tools and platforms. And as threat actors seek to maximize the disruption to organizations and extract the highest ransom payments, the ransomware model is shifting towards human-driven, enterprise-wide attacks. 

Parallel to legitimate software companies trending towards software as a service (SaaS), threat actors are shifting to MaaS with specialists emerging in areas including enterprise credential sales, initial access to a target organization, lateral movement capability, and payload delivery. 

Joint Cybersecurity Advisory on Conti Ransomware 

The Cybersecurity and Infrastructure Security Agency (CISA), the FBI, and the National Security Agency (NSA) recently released a joint cybersecurity advisory alerting organizations of increased Conti ransomware attacks aimed at stealing sensitive files from domestic and international organizations. In typical Conti ransomware attacks, malicious cyber actors steal files, encrypt servers and workstations, and demand a ransom payment.

The warning said Conti, observed in more than 400 attacks on U.S. and international organizations, differs from other ransomware-as-a-service (RaaS) models in that developers pay the ransomware deployers a wage rather than a percentage of the proceeds from a successful attack. 

According to the alert, “Conti actors are known to exploit legitimate remote monitoring and management software and remote desktop software as backdoors to maintain persistence on victim networks. The actors use tools already available on the victim’s network. In some cases, the actors also use TrickBot malware to carry out post-exploitation tasks.” The warning also referenced a recently leaked threat actor “playbook,” in which Conti actors also exploited vulnerabilities in unpatched assets. 

Conti actors often gain initial access to networks through:

• Spearphishing campaigns using tailored emails that contain malicious attachments or malicious links.
• Malicious Word attachments often contain embedded scripts used to download or drop other malware—such as TrickBot and IcedID, and/or Cobalt Strike—to assist with lateral movement and later stages of the attack life cycle with the ultimate goal of deploying Conti ransomware.
• Stolen or weak remote desktop protocol (RDP) credentials.
• Phone calls.
• Fake software promoted via search engine optimization.
• Other malware distribution networks (e.g., ZLoader). 
• Common vulnerabilities in external assets.

CISA, FBI, and NSA recommended that network defenders use multi-factor authentication, implement network segmentation, filter traffic, scan for vulnerabilities, keep software updated, remove unnecessary applications and apply controls, implement endpoint and detection response tools and limit access to resources over the network, especially by restricting RDP.

Robocall Fraud to Cost Consumers $40 Billion Globally In 2022

A new study from Hampshire, U.K.-based Juniper Research, Robocall Mitigation: Emerging Strategies, Competitor Leaderboard & Market Forecasts 2021-2026, found that consumers will lose $40 billion to fraudulent robocalls globally in 2022; rising from $31 billion in 2021. 

Fraudulent robocalls pose threats to consumers by encouraging the disclosure of personal information that fraudsters use for identity theft. In most robocall fraud cases, fraudsters impersonate a genuine brand or enterprise to gain the call recipient’s trust.

Research co-author Charles Bowman remarked: “Even if the fraudulent attempt is unsuccessful, subscribers will still be subject to nuisance calls. In 2022, we predict over 110 billion unwanted robocalls will be made globally; significantly diminishing the value of mobile voice channels.” North America is the region most affected by fraudulent robocalling; accounting for 45% of global losses next year, despite representing just 5% of mobile subscribers. 

The study predicts that emerging mitigation frameworks will combat fraudulent robocalls by creating an ecosystem to verify brands and enterprises. However, it noted that standardizing services across all stakeholders, including mobile operators, brands and mobile operating system developers, will be essential to creating a service that mitigates fraud in real-time.

The report identified brand authentication technologies as a critical element of these frameworks. Brand authentication services provide mobile subscribers with information on the smartphone screen before answering the call, including the verified identity of the calling enterprise and purpose of the call.

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by
Evan Siegel
VP of Financial Services AI
eGain Corporation

Why should a person open an account or apply for a loan with a credit union? Google “why choose a credit union.” The most cited reasons from experts such as NerdWallet and U.S. News are that credit unions have stronger customer service and more competitive interest rates. In 2021, however, the customer service differentiator is debatable, and the interest rate advantage is not compelling.

The days where great bank service meant short branch lines and a staff that knows the member’s name are gone. Today, the digitally native millennials and generation Z, the largest demographic, define winning service as leading technology. Innovations such as “cardless” ATMs, Wells Fargo’s Control Tower, and BofA’s Erica trump relationship banking. In fact, for younger generations, calling customer service or walking into a branch is “too much effort and forced person-to-person interaction” (how terrible!).

Credit unions face a systemic scale disadvantage in the technology acquisition race with mega and regional banks that have multibillion-dollar IT and innovation budgets. It is no wonder that the University of Michigan American Consumer Satisfaction Index (ACSI) has ranked banks ahead of credit unions for the last two years. With the pandemic depressing branch traffic, most likely permanently, credit union’s member service disadvantage will only grow.

With their key competitive differentiators neutralized, credit unions face an existential crisis. But they need not panic. There is a defensible, winning strategy that builds upon credit unions’ historic strength in deeper relationships and better member service.COVID dealt the credit union movement another strategic blow – historically low interest rates. With savings account interest rates at a measly 0.04% and mortgage rates below 3%, credit unions are left with no room to offer a rate that presents a compelling reason to buy. And the collective wisdom of the bond market, with ten-year treasuries yielding below 1.5%, means that the “smart money” is betting that low interest rates are here to stay for the foreseeable future.

With their key competitive differentiators neutralized, credit unions face an existential crisis. But they need not panic. There is a defensible, winning strategy that builds upon credit unions’ historic strength in deeper relationships and better member service.

That strategy, however, requires credit unions to double down on their stated mission, which usually says something like “a lifelong partner in member financial success” or “committed to member financial well-being.” Building a long-term relationship and delivering guidance to help members achieve their financial goals is the ultimate customer service. A recently released J.D. Power study noted that overall customer satisfaction increases 229 points (on a 1,000-point scale) when customers are offered advice that completely meets their needs. Member receptiveness to financial guidance is likely high since, according to the Financial Health Network, 60% of credit union members are financially struggling.

Building a long-term relationship and delivering guidance to help members achieve their financial goals is the ultimate customer service.When it comes to helping people achieve their financial goals, credit unions are better positioned than banks to deliver that promise. Credit unions, with their nonprofit structure, exist to serve their members, who are the organization’s owners. In my current role as a technology executive, I speak with dozens of credit union leaders each month about their financial wellness efforts. It is clear to me that the deep commitment to member financial wellness and goal achievement is in the credit union DNA. They are quick to invest in financial wellness and education efforts. U.S. News agrees, noting that credit unions lead in financial counseling and financial literacy resources. By contrast, the largest banks, which command the majority of market share, are shackled with Wall Street’s quarterly earnings yoke.

Prior to my current role, I ran a team of financial health coaches at a megabank. Even though the team was beloved by customers, earning sky high satisfaction scores, and was featured in the bank’s brand advertising campaign, I had to battle to keep the team alive. Finance executives wanted proof of a positive short-term ROI, while compliance executives worried that bankers could go off-script, introducing too much risk. Ultimately, the team was disbanded.

Ensuring that products and channel touch points support member financial goal attainment is a heavy lift, but one that does not require credit unions to recklessly throw resources at the objective. Firms can make major strides implementing this defensible strategy by deploying the latest technologies, a member segmentation strategy, and the unique capabilities of each channel.

• Advise priority segments in branches – Credit unions can exploit their member relationship advantage by delivering ongoing in-person advice and guidance to their priority member segments (e.g., affluent or emerging affluent). Staff turnover, compliance risks, and the inherent complexity of ongoing financial guidance has made this a difficult strategy to execute – until now. Advances in AI-powered digital engagement solutions by companies such as eGain enable a credit union branch specialist to execute a flawless financial check-up. The AI guides the specialist, based on key member CRM data and check-up answers, to ask the next best question. The result is a succinct, yet holistic assessment where the AI recommends the next best product to help that member achieve their financial goal. Equally beneficial, all branch specialists execute like top performers.
• Reimagine your digital channel with Virtual Advisor – The banking industry’s sales strategy for the digital channel is to create online brochureware and require consumers to read all the copy and determine the best product for themselves. Just as in the branch channel, AI solutions from firms such as eGain offer a better member experience. The same tool that guides staff in the branch channel can serve all members as their Virtual Advisor, delivering financial check-ups and next best product recommendations.
• Provide Financial Well-Being for all via Virtual Financial Coach – CUNA recently approved a Unity Statement on the credit union movement’s commitment to advancing financial well-being for all. The good news is that AI-powered digital engagement solutions are changing the landscape and enable credit unions to meet the CUNA challenge. These low cost and quick-to-implement solutions deliver advice that is personalized (driven by conversational AI), ongoing, and always compliant (bots do not go off script). They incorporate gamification and A/B tested behavioral change tactics inspired by behavioral science. Moreover, the digital solutions enable targeted marketing at those key moments of member need and provide full journey reporting.

Will people use a fully automated digital solution to improve their financial situation? Looking at the available data, the answer is an emphatic yes. A recent Aite Group survey of 2,413 consumers found that 58% are interested in using a virtual financial coach to help them meet financial goals. Commonwealth, a non-profit organization working to strengthen the security of financially vulnerable people, had concluded in its new research that conversational AI plays a pivotal role in improving financial security. It found that people who experience financial hardship are three-times more likely to use a financial app than people that did not encounter financial difficulties. Finally, 69% of the individuals who use GreenPath Financial Wellness’s Virtual Financial Coach to help them review their credit report find an error and use the coach to dispute the error, proving that digital solutions are not only used, but also deliver tangible value.
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The environment has possibly never been more threatening to credit unions. The good news, however, is that they can use their current strategic disadvantage as a case for action to boldly move to a more defensible strategy -- one where the credit unions lead the financial industry with a value proposition that delivers the advice people need to secure financial wellness and achieve their long-term financial goals. Given advances in AI and digital engagement solutions, the investment to implement such a strategy is manageable, while inaction is unimaginable and may result in the credit union movement slowly withering.

Visions Federal Credit Union has partnered with LemonadeLXP, a learning experience and digital adoption platform for credit unions, to train staff and support members as they migrate to digital banking.

Visions Federal Credit Union has partnered with LemonadeLXP, a learning experience and digital adoption platform for credit unions, to train staff and support members as they migrate to digital banking.

Visions selected LemonadeLXP for their specialization in financial services, engaging learning experience, and ability to drive digital fluency.

Visions is also using LemonadeLXP’s integrated digital adoption platform, Digital Academy, to provide staff and members with a risk-free environment in which to test drive their digital banking products and services.

Thomas P. Novak, VP/Chief Digital Officer at Visions Federal Credit Union states, “Digital transformation in financial services and fintech partnerships to accelerate that transformation are integral to our continued success in serving our members and communities. At the center of digital transformation is the human element and that is why our first key partnership in our digital transformation roadmap was LemonadeLXP, because they specifically address the most crucial part of our efforts, engaging and educating all of our stakeholders.”

“Partnering with Visions Federal Credit Union is really exciting,” said John Findlay, CEO of LemonadeLXP. “We built LemonadeLXP specifically to help financial institutions with the human side of digital transformation, so Visions is really the perfect fit for us. They’re innovative and forward thinking and they value positive employee and member experiences.”

About Visions Federal Credit Union
Visions Federal Credit Union is a not for profit financial institution completely owned by its members. Established in 1966, Visions proudly serves over 220,000 members in communities throughout New Jersey, New York, and Pennsylvania. Services include banking as well as auto, home, personal, and business loans. Visit http://www.visionsfcu.org for more information.

About LemonadeLXP
LemonadeLXP is an award-winning digital adoption and learning experience platform for credit unions. Using the digital adoption platform, credit unions can quickly author an online hub with technology walkthroughs, app simulations, application guides, and videos to support staff and members as they migrate to digital channels. The learning experience platform combines game-based learning, technology walkthroughs, role-play scenarios, and social learning to upskill remote and on-site employees faster. For more information, visit http://www.lemonadelxp.com/for-credit-unions or contact us at hello@lemonadelxp.com.

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Source: TransUnion
By Roy Urrico, Finopotamus

Scammers shifted focus in mid-2021 from financial services to travel and leisure, and other industries; and more than a third of consumers suffered COVID-19 related digital fraud. Those are findings in two separate studies from Chicago-based information and insights company TransUnion.

For its quarterly analysis, TransUnion monitors digital fraud attempts reported by businesses in varied industries, such as financial services, gambling, gaming, healthcare, insurance, retail, and travel and leisure, among others. The conclusions are based on intelligence from billions of transactions and more than 40,000 websites and apps contained in its flagship identity proofing, risk-based authentication and fraud analytics solution suite: TransUnion TruValidate.

​“It is quite common for fraudsters to shift their focus every few months from one industry to another,” said Shai Cohen, senior vice president of Global Fraud Solutions at TransUnion. “Fraudsters tend to seek out industries that may be seeing an immense growth in transactions. This quarter, as countries began to open up more from their COVID-19 lockdowns and travel and other leisure activities became more mainstream, fraudsters clearly made this industry a top target. The immense growth in gaming fraud also can be attributed to the shifts in focus of fraudsters as this growing market becomes a larger target.”

The sudden shift in focus of fraudsters impacts financial services in a way. Global financial services online fraud attempt rose 149% compared to the first four months of 2021 and the last four months of 2020. However, when comparing the second quarter of 2021 with the second quarter of 2020, the rate of suspected online financial services fraud attempts still climbed, but at a much lower rate of 18.8% globally and 38.3% in the U.S.

Across industries, the rate of suspected digital fraud attempts rose 16.5% globally when comparing the second quarter 2021 with the same quarter of 2020. In the U.S., the percentage of digital fraud attempts increased at a similar rate (17.1%) during the same time period. Gaming and travel and leisure were the two most impacted industries globally for the suspected digital fraud attempt rate, rising 393 and 155.9% in the last year, respectively. In the U.S., this rate rose 261.9% for gaming and 136.6% for travel and leisure.

Fraudsters are also quickly adapting to target desperate travelers. Recently, the U.S. State Department temporarily shut down its online booking system for all urgent passport appointments in response to a group of scammers using bots to book all available appointments and sell them for as high as $3,000 to applicants with urgent travel needs.

​“We are seeing because of the reopening of the economy, people have more disposable income,” said Melissa Gaddis, senior director of customer success, Global Fraud Solutions at TransUnion. “We are seeing significantly more traffic in some of those industries where you'd need disposable income, specifically the travel and leisure and the gaming industries. And because we are seeing so much more transactions there's of course, opportunities for fraudsters.”


It does not mean financial institutions are off the hook, they are just not the only mark. Targeting credit unions and banks is always a lucrative business for fraudsters because of what they can do with the Personally identifiable information (PII), noted Gaddis. Even though fraudsters now also target the gaming and travel industries, the primary fraud perpetuated is credit card fraud, which still falls back on financial institutions. 

More than One of Three Become Pandemic Targets
TransUnion’s quarterly Consumer Pulse survey in June 2021 explored the impact of the COVID-19 pandemic on consumers’ personal finances. TransUnion’s found that approximately 36% of global survey respondents said fraudsters targeted them in COVID-19 related digital schemes during this year’s second quarter. Fraudsters targeted 39% of U.S. respondents. 

Gaddis pointed out, “We're doing this (study) specifically because of (COVID-19) and the impact that the pandemic has had on the digital world and all the digital transactions, both from a, fraud perspective, but also all the businesses that had to shift.” 

For the second quarter of 2021, the study discovered phishing was the No. 1 type of COVID-19 related digital fraud impacting global consumers. Stolen credit card or fraudulent charges were the second most cited COVID-19-related online fraud among those targeted, affecting global consumers at a 24% rate. Phishing was also first in the U.S. at 35% followed by stolen credit card or fraudulent charges at 31%. 

“One in three people globally have been targeted by or fallen victim to digital fraud during the pandemic, placing even more pressure on businesses to ensure their customers are confident in transacting with them,” said Gaddis. “As fraudsters continue to target consumers, it’s incumbent on businesses to do all that they can to ensure their customers have an appropriate level of security to trust their transaction is safe all while having a friction-right experience to avoid shopping cart abandonment.”

The Consumer Pulse survey also measured changing consumer attitudes and behavior based on the dynamics of income, debt and identity theft. Highlights reveal that: 

• The U.S. appears to be at a crossroads on the COVID-19 road to recovery. Fewer consumers (32%) report having income currently negatively impacted by the pandemic, a 16% improvement from the first quarter of this year. For consumers who reported reduced income during the pandemic, household finances have not improved, and in some instances, worsened since the first quarter. 
• Recent graduates are more likely to find alternative income through gig work (21% compared to 9% overall population), selling goods informally (17% vs. 8%) and starting a small business (18% vs. 6%). 
• Households with children are seeing improved income. However, 43% reported having their income currently reduced compared to 26% of those who do not have children. Nearly three-quarters of consumers with children (73%) said they are optimistic about the future compared to 58% without children.
• Consumers who are or plan to get fully vaccinated are optimistic and will increase spending. Two-thirds (67%) of fully vaccinated consumers and 71% of those who plan to get fully vaccinated are optimistic in comparison to 52% of those who do not plan to get fully vaccinated. 

This story originally seen on Finopotamus. ​Finopotamus aims to highlight white papers, surveys, analyses and reports that provide a glimpse as to what is taking place and/or impacting credit unions and other organizations in the financial services industry.

By Roy Urrico
Finopotamus 

When it comes to loan origination systems, Inovatec Systems wants to be an outlier, not the elephant in the room. The lending platform helps financial institutions, including credit unions, differentiate from other direct and indirect lenders by providing faster processing, a better user experience, greater ROI and overall consistency.

“We really have been on a mission to help our lenders achieve those goals,” said Vladimir Kovacevic, founder and chief technology officer at Burnaby, British Columbia, Canada-based Inovatec, which provides cloud-based loan origination and loan management solutions. 


Kovacevic noted that a big part of positive borrower-lender interactions ultimately rests on what end users and the financial institutions gain from the lending experience. Whether a consumer applies for a loan at a dealership, credit union or website, it should be a consistent rate, process and experience. “As a lending institution, you do not really have a proper connection with a consumer until the loan is actually booked.” He explained, “We allow our customers to blend channels seamlessly as consumers often switch channels throughout the process. You might start on the website by filling out a direct application but then end up at a dealership.”

Inovatec, which focus on everything except mortgage and credit cards, includes a portal, a loan origination system and a loan management system. Kovacevic pointed out that while automotive lending is a major component, the company has many customers who require financing for power sports, recreational vehicles, marine equipment, as well as various types of consumer lending.

Kovacevic noted, “From the moment I started the business (in 2006), the entire auto finance process, at that time and even to some extent today, had a lot of fragmentation of data not being properly stored and managed, not even leveraged to the full extent that it could be.” He added, it is Inovatec’s job to bring its customers, who are lending institutions, all the products available into one environment. “We work with an open API to bring in all that data and structure it properly, and ideally even automate that for you.”

Lending Help

Inovatec set out to create a best-in-class infrastructure, systems and processes designed to facilitate all aspects of online loan origination and loan management workflows quickly and securely and protect against what it says is “book-to-look” erosion. The company’s loan origination system (LOS) and loan management solutions offer a highly customizable list of optional features, such as electronic document management, leasing support, and third-party vendor management. Its “success based” pricing structure, requires lenders only pay for the transactions booked, compared to per-application pricing models favored by other loan originators.

Inovatec Systems lending solutions include:

• Javelin Direct Portal (formerly Compass Direct Portal), allows vendors and lenders to communicate in real-time from the point of an application’s submission, all the way to booking the transaction. The portal can work as a standalone module or as part of a complete lending platform. “We'll obviously connect to major origination portals like Dealertrack and Route One, but it really enables you to take your credit union and connect your website into the same flow,” said Kovacevic.

• Javelin LOS (formerly Compass Asset Financial) offers crediting, auditing and income verification for financing applications, and supports self-configurable credit decisioning, tolerance limits and risk parameters with full auto decisioning and scorecard capabilities. The LOS works as a standalone module or as part of a complete lending platform. Kovacevic noted, “We will do your traditional gathering of all the application data; and manage your documents digitally and electronically so that we have all the paperwork and everything that goes with it for compliance and audit purposes.”

• Javelin LMS (formerly Compass Loan Management), a loan and lease management system with loan servicing and after-care for loans, leasing, consumer/commercial customer service and collections, and third-party vendor management. “(The LMS) takes care of that customer life cycle from the point of onboarding all the way to however the loan or lease may play out,” Kovacevic said.

“When we onboard a new lending institution, we look at their lending policies and procedures. We take those and we configure those within the system,” Kovacevic said. “When a new application comes in the system, we take the data received, pull in additional data points, and run it against those predefined limits.” It typically goes one of three ways: either an automatic approval, an auto decline; or something in between that needs a manual review. “Depending on what we do for the credit analysis, we help guide (the lending institution) to make the decision within policy.”

Flexibility With Lenders and Borrowers

When it comes to credit unions, Inovatec noticed a tendency to put more focus on the member experience and not so much about the profitability necessarily. “It's more about consistency of the experience and making sure members are getting the best possible deal,” Kovacevic said. 

In addition, Inovatec wants to offer flexibility. One Canadian credit union Inovatec worked with saw a 100% shift of application volume from indirect to direct lending. Kovacevic held, “We didn't force them to choose one or the other. We have allowed them to find the right balance that works for them between direct and indirect, and manage it all.”

As the pandemic grew and affected financial services overall it highlighted the difference between having the right system and not having the right system, according to Kovacevic. Inovatec’s online portal allowed consumers to make payments, check loan balances and receive payout quotes. “It was also flexible enough that we can do payment deferrals and do it in such a way that there’s no negative impact to the consumer.” Inovatec even added a special program in the pandemic’s first 30 days that allowed financial institutions to mark an account that COVID-19 affected and transmit that update to credit bureaus. 

Delivering the Right Loan Solution

“Our forward-looking approach got us to the point where in Canada about 50% of all auto loans go through us,” Kovacevic said. “We know how to work with regional banks, large national banks, credit unions, dealer groups and loan aggregators.”

Inovatec’s credit union clients include the $25.4 billion Surrey, British Columbia-based Coast Capital Savings, which is Canada’s largest credit union by membership with nearly 600,000 members and 51 branches. Besides financial institutions and loan aggregators, original equipment manufacturers, such as Yamaha, use the Inovatec system. An individual can apply and receive credit approval on the Yamaha website (usually within 15 to 20 seconds), then shop at any Yamaha dealership. “It’s all connected and tied in,” Kovacevic stated.

Inovatec, which started its business growth in Canada, recently turned its attention toward the U.S. market. “It was always just a matter of right timing. We are very much aware that the two markets work very similarly. It’s not a 100% the same, but the majority of the processes and procedures are very similar if not identical,” Kovacevic said.

Kovacevic maintained, “Having the right kind of systems in place, allows lenders to offer that level of transparency that’s expected and needed in today's world, no matter how they communicate with you, whether it’s through your website, through a dealership or a broker, or regardless of what product (they pursue).”