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CUNA
ENVIRONMENTAL SCAN REPORT// 2020-2021
CR
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IT UN
ION
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L ASSO
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T // 2020
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CONTENTS 3
CONTENTS
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04
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TOP TRENDS
TREND 10:CONSUMER MINDSET
TREND 02:ADVOCACY
TREND 03:WORKPLACE CULTURE
TREND 04:GIG ECONOMY
31 TREND 05:INCLUSIONCONTENTS
TREND 06:CYBERSECURITY
TREND 07:FINTECH
TREND 08:COMMUNITY CONNECTORS
TREND 09:ARTIFICIAL INTELLIGENCE
TREND 01:COVID-19
Copyright © 2020 Credit Union National Association Inc.
All rights reserved. The contents of this report are copyright protected and are considered confidential by Credit Union National Association (CUNA). This report, or any of the data contained in the report, may not be printed, forwarded, shared, reproduced, copied or otherwise redistributed to anyone or any entity outside of the recipient’s own organization.
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This product is endorsed by the CUNA Councils.
TM
1. COVID-19 AND STRATEGIC PLANNINGAll facets of operations, business, and financial
planning for some time to come will need to exist
amid the uncertainty of the coronavirus (COVD-19)
global pandemic.
Credit unions are now reopening offices to mem-
bers with new screening and social distancing pro-
tocols. What’s defined as “normal business opera-
tions during a global pandemic” is taking shape.
Your vision of improving the financial lives of every
member is clear. It’s your north star. To determine
the appropriate path for your credit union team and
members, consider the critical issues and questions
our experts lay out for you. The result will be a plan-
ning process that is flexible but responsive in these
remarkable times.
2. WORKPLACE CULTUREThe employee experience is as important as dig-
ital, member, and user experiences. Consider the
financial results that come from advancing your
credit union’s human capital.
Leaders must build a culture where employees
feel valued and can see a path for development.
You can accomplish this by providing employees
with professional growth and leadership opportu-
nities, asking for and using employee feedback to
make changes, developing a positive culture, and
living your credit union brand.
3. THE GIG ECONOMY The way we live, work, and spend money is chang-
ing at an extraordinary pace. In fact, most new
jobs created since the Great Recession, are “alter-
native work” or gig jobs, according to Marketplace.
While they benefit from flexible schedules and
independent work, they face challenges such as
income volatility, no employer-provided benefits,
and no income insurance or other worker protec-
tions.
Gig workers’ financial needs differ from those of
traditional workers. This has important implications
for the financial services industry, which designed
the bulk of consumer products and services to
meet the needs of the 9-to-5 payroll workforce.
4. FINTECH IS MATURING Fintech has driven growth and innovation for the
past decade. The intersection of finance and tech-
nology has reshaped the industry’s status quo.
No longer simply disrupters, fintechs have
matured beyond startups to mature companies that
operate at scale. At the same time, big firms both
within and outside the financial services industry
have become major fintech players.
The dynamic between fintechs and credit unions
is shifting from disruptive competition to innova-
tive collaboration. The level of credit union/fintech
collaboration must increase dramatically in the next
decade for credit unions to avoid further disruption
from the innovations fintech providers offer.
5. AI IS SMARTER AND FASTER While the technological understanding to enable
artificial intelligence (AI) has existed for decades,
only in recent years have we had access to the
computing power to realize its benefits. With that
potential realized, AI is ready to deliver value now.
AI can learn virtually any intellectual task a human
can. What’s more, it can process information much
faster than humans can.
Driven by consumer data that fulfills the potential
of this processing power, AI allows us to develop
business applications credit unions can deploy at
both functional and strategic levels.
6. ADVOCACY: COVID-19 IS FRONT AND CENTERMonths into the COVID-19 crisis and after three
breathtakingly large stimulus and recovery bills,
three overarching questions face policymakers:
Did the government do enough? Was it done well
TOP TRENDS
4 CUNA E-SCAN REPORT
Management Dayna Johnson Schmitt
Editor Ann Hayes Peterson
Design and production Diane Long • Ron Jooss • Bill Merrick • Jennifer Plager • Michelle Willits
Contributors John Best • Ryan Donovan • Jared Ihrig • Jason Lindstrom • Kevin J. Martin • Idrees Rafiq • Jeff Rendel • Samira Salem • Mike Schenk • Mark Sievewright • CUNA Councils
enough? Will temporary measures be in place
long enough?
With so many changes, credit unions must
stay on top of compliance responsibilities and
engage with CUNA, leagues, regulators, and
elected officials.
7. CYBERSECURITY READINESSWith data breaches increasing in size and fre-
quency, partly due to the COVID-19 pandemic,
financial institutions are more likely to fall victim
now more than ever before.
Rising cyberthreats call for collaborative solu-
tions. By engaging in a collective network to share
threat information, we can build a community that
benefits all credit unions.
Using shared resources, credit unions can
enhance their security posture by leveraging the
knowledge, experience, and capabilities of their
partners in proactive ways.
8. INCLUSION Building an inclusive culture requires credit unions
to consider their unique community, location,
membership demographics, organizational strate-
gy, and leadership.
SchoolsFirst Federal Credit Union in Santa Ana,
Calif., started its inclusivity journey as a way to
better serve members, employees, and the com-
munity. Along the way, it created teams of inclusion
champions, learned from diversity experts, and
determined how diversity, equity, and inclusion
support the organization’s mission and values.
9. CONSUMER MINDSET Big, disruptive events magnify and accelerate
change. The coronavirus (COVID-19) pandemic
and related economic crisis have underscored that
point in many ways.
For one, consumer behaviors have changed
quickly and significantly. Credit union operations
and interactions with members are much different
today. In some cases, long-standing processes have
completely transformed.
Many credit union employees have fundamen-
tally adjusted how they work, and many have been
thrust into completely new and different roles.
While the epidemic may soon be a historical event,
your credit union must continue to adapt to signifi-
cant and longer-term changes in the months ahead.
10. COMMUNITY CONNECTOR The COVID-19 pandemic has made community
connections more important than ever. Evergreen
Credit Union in Portland, Maine, responded quick-
ly to the crisis because it had already built strong
partnerships with local organizations. Being a con-
nector benefits the community and positions the
credit union as a partner to be counted on.
ANN HAYES PETERSON
is vice president of publishing and
editor-in-chief at Credit Union
National Association.
Contact her at 608-231-4211 or
TOP TRENDS 5
The essential professional communities for credit union executives.
Insightful resources.Valuable connections.
Be part of a credit union-specific, member-run professional network of more than 7,300 credit union leaders. CUNA Councils connects passionate people, great ideas, original content and relevant resources.
Why join CUNA Councils?
• Connect with peers who share your concerns and interests
• Stay current with trends and topics impacting your credit union and your work
• Unlock fast and easy access to trustworthy information, advice and solutions
• Proactively expand your network of credit union professionals and grow in your career
• Find new energy and enthusiasm for your role
Join at cunacouncils.org/membership
CouncilsOverall_AD.indd 1CouncilsOverall_AD.indd 1 3/13/20 1:59 PM3/13/20 1:59 PM
TREND
01COVID-19
ANN HAYES PETERSON
AT A GLANCE
When deciding which brands to support,
76% would consider a company’s actions during COVID-19.
35% of consumers have considered delaying a major purchase.
54% of CFOs plan to make remote work a permanent option.
Sources: Ipsos/USA Today, Good.Must.Grow., PWC
7
“BE COMFORTABLE with uncertainty.”
Attorney David Reed, partner with Reed and Jolly,
delivered this advice to credit unions during a
CUNA compliance roundtable about returning to
work amid the coronavirus (COVID-19) pandemic.
Being comfortable with uncertainty will certainly
be a part of all facets of operations and strategic
planning for some time to come.
No one had “responding to a global pandemic”
at the top of their to-do
list in January 2020. Yet
that’s what credit unions
faced not even one
quarter into this year.
And while most of you certainly had detailed plans
for business continuity regardless of the disaster, the
length of the current pandemic—with no vaccine in
sight—makes any plan a day-to-day challenge.
At the outset, credit unions provided a safe work-
place for employees and quality service to mem-
bers as states issued shelter-at-home orders while
essential financial services stayed open.
Many employees operated from home, requiring
teams to exercise creativity and innovation in a virtu-
al environment. Credit union leaders drew on com-
passion and empathy in ways they might never have
thought necessary while rallying to support their
members and communities through emergency
loans and waivers, donations, business loans, finan-
cial education, and virtual events.
By July, most credit unions slowly reopened offices
to members by appointment amid new screening
and social distancing protocols. Many staff continue
operating remotely.
What’s considered “normal business operations
during a global pandemic” is taking shape—being
comfortable with uncertainty.
That’s because preparing for
the future during one of the
sharpest economic downturns in
history and record unemployment
and a global pandemic is uncom-
fortable for businesses and strategic leaders.
Futurist Amy Webb says many companies are suf-
fering from the “tyranny of tiny decisions.” If you have
no long-term vision for how your company will evolve
in a post-pandemic world and a path for that trans-
formation, “leaders become fixated on what feels
familiar and comfortable,” she says.
Credit unions’ vision of improving the financial lives
of every member is clear. To determine the appropri-
ate path for your credit union, our experts offer criti-
cal issues and questions you should consider as you
reshape strategies. For example:
n Legislative relief packages and increasing
compliance responsibilities. Congress delivered
economic packages with stimulus payments for
members and programs to support employees and
businesses. More proposals might be in the works.
These new regulations produced an onslaught
of new compliance duties to the tune of 24 NCUA
letters or risks alerts and some 22 interim final rules
by the Small Business Administration.
How will you sharpen your advocacy awareness,
and manage these additional compliance require-
ments?
n Operations and culture. You’ve already trans-
formed numerous processes and employee roles
5 accelerating trendsCOVID-19 has accelerated these technology trends,
shaping the global economy, according to the
Future Today Institute:
1. Biometric data collection
2. Data governance
3. Smart home technology
4. Digital transformation
5. Contactless payments
“How can you use artificial intelligence to strengthen member engagement?
8 CUNA E-SCAN REPORT
as a result of branch closures, safety concerns,
and new regulations.
As branches reopen to members, safety and
soundness remain primary.
How many of these changes will be permanent?
How has your workplace culture evolved? Will con-
sumer behavior influence even more change?
n The gig economy and vulnerable members.
Gig workers make up an estimated 25% to 35% of
the workforce. But COVID-19’s impacts are expos-
ing the vulnerability of this cohort to economic
downturns or recessions.
Many will see their income decline as demand for
their services and products dries up, while their lack
of access to paid sick leave and employer-sponsored
health insurance compounds their vulnerability.
According to the Kaiser Family Foundation, 31%
of Americans say they’ve experienced problems
making rent or mortgage payments, or paying for
food, utilities, credit card bills, or medical costs as a
result of the coronavirus.
That number climbs to 48% among Blacks and
46% among Latinos.
How do your offerings keep these workers and
other vulnerable members financially healthy?
n Digital transformation. From board gover-
nance to virtual teams to contactless payments
and lending, digital services have become must-
have for credit unions of all shapes and sizes since
the pandemic.
Through collaboration and partnerships, many
have advanced their digital road maps without
missing a beat. And those who haven’t must con-
sider the impact of not doing so.
How do you maintain these efficiencies and con-
tinue to build members’ trust and loyalty through
digital services?
n AI capabilities. You will need deep business
insights as you chart a course through an uncer-
tain future and build a culture of service.
The pandemic requires businesses to lean on
artificial intelligence (AI) capabilities to provide safe
work environments via contact tracing or increased
screening, to quickly respond to economic factors,
and to understand members’ financial situations.
How can you use AI to strengthen member
engagement?
LOOK FOR OUR FALL UPDATE
One truth is certain: The pandemic doesn’t care
about your asset size, loan portfolio, or margins.
But in these extraordinary times, we’re creating
more ways for you to hear from experts who can
deliver insights to aid your strategic planning.
We’ll prepare an E-Scan update as your
business environment continues to adapt to the
“next normal.”
Look for it in October, where we’ll share perspec-
tives on the economy, remote workers, regulatory
issues, and business continuity.
ANN HAYES PETERSON is vice
president of publishing and editor-
in-chief at Credit Union National
Association. Contact her at 608-
231-4211 or [email protected].
THE BIG QUESTIONS
ß How will you address additional compliance
requirements?
ß What consumer behavioral changes do you
expect to become permanent?
ß How can you leverage technological efficiencies
like contactless payments while building mem-
bers’ trust?
ß How will you change products and services to
meet the needs of a financially fragile population?
ß What is the most innovative action you took
during COVID-19?
TREND 01 COVID-19 9
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Automate taskswith workflows that eliminate repetitive manual processes and minimize the burden of compliance management.
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Improve accountabilitywith built-in reporting tools to demonstrate proof of compliance.
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CUCMS20_CMS1Side_FL.indd 1CUCMS20_CMS1Side_FL.indd 1 4/6/2020 11:42:44 AM4/6/2020 11:42:44 AM
TREND
02ADVOCACY
RYAN DONOVAN
AT A GLANCE
Source: CUNA
$55,000average size of a credit union Paycheck Protection Program loan vs. $305,000 for banks.
22interim final rules the Small Business Administration issued since April 2, 2020.
24Letters to Credit Unions and Risk Alerts that NCUA has issued since the start of the pandemic.
11
ONE LESSON from the 2008-2009 financial cri-
sis was the importance of quickly implementing
targeted and temporary measures to address the
needs of stakeholders. From the outset of the
coronavirus (COVID-19) pandemic in the U.S., fed-
eral, state, and local governments moved quickly
to mitigate the adverse impact of the public
health crisis and avert an economic crisis.
With almost unprecedented speed, Congress
enacted three breathtakingly large stimulus and
recovery bills before the economy essentially shut
down and most Americans were advised to shel-
ter in place until further notice. These bills were
designed to ensure government agencies had
the funding they needed to address public health
issues, gave regulators authority to push aside cer-
tain regulatory burdens temporarily, and establish
efforts like the Paycheck Protection Program (PPP)
and economic impact payments to soften the eco-
nomic blow.
Regulators used emergency authority to reduce
person-to-person contact with their regulated
entities, implement temporary changes to regula-
tions that assumed person-to-person contact, and
encouraged credit unions and other lenders to pro-
vide loan accommodations to borrowers affected
financially by the virus.
Now, months into the crisis, three overarching
questions face policymakers in the coming months:
1. Did the government do enough to address the
public health crisis and avert an economic and finan-
cial crisis? If not, what more needs to be done?
2. Was it done well enough? If not, what needs
to be improved?
3. Will the temporary measures be in place long
enough to sustain a recovery? If not, how much
longer should they remain in place?
At the macro level, policymakers and stakehold-
ers will grapple with these questions throughout
the crisis and recovery.
WAS IT ENOUGH?
As of this publication, Congress has appropriated
trillions of dollars and enacted dozens of new pro-
grams to address the COVID-19 crisis, a response
that has been bigger and faster than anything
the government has ever attempted. Still, almost
everyone agrees it is not enough.
There will be another round of recovery legislation
over which the debate centers on three major policy
priorities: additional funding for state and local gov-
ernments to manage and recover from the public
health crisis, liability protection for businesses that
are reopening, and a payroll tax cut to encourage
economic stimulus.
Credit unions, whose capital standards are hard-
wired into federal law, need temporary relief from
prompt corrective action requirements as lending
slows, delayed payments rise, and deposits increase.
Central compliance managementWith the rapid pace of regulatory change, credit
unions spend a disproportionate amount of resources
on excessive compliance requirements, leaving less
time to serve members. Increasingly, keeping up with
compliance challenges requires an assist from technol-
ogy. Two available resources include the Credit Union
Compliance Management System (CU CMS), a benefit
of CUNA or league membership, and CU CMS+.
CU CMS+ provides the same workflows, regulation
updates, and libraries as the member benefit, but
with additional functionality, including policy and
document management, advanced risk assessments,
expected vs. actual cost analysis, and training man-
agement. The solution, with technology by Quanti-
vate, is customizable, allowing credit unions to create
a complete governance, risk, and compliance suite.
Learn more at cuna.org/cucms.
12 CUNA E-SCAN REPORT
Members would benefit from Congress tempo-
rarily eliminating credit unions’ business lending
cap, thereby making all available small business
credit deployable in recovery. And communities
would benefit from Congress appropriating $1 bil-
lion for Community Development Financial Institu-
tions to help get communities back on their feet.
Credit unions have an interest in other policy
proposals, including legislation to permit remote
notary, enhance access to liquidity from the Fed-
eral Home Loan Bank system, and provide housing
affordability assistance. But they also face risks as
Congress contemplates more recovery legislation.
First, well-intentioned changes could have
unintended consequences for financial services
providers. In the second stimulus bill, for instance,
Congress provided tax credits to businesses that
provided extended paid family leave, but the legis-
lation unintentionally excluded federal credit unions
because they are federal instrumentalities. This
error is likely to be addressed in the next round of
legislation.
Second, movement of large legislation opens the
possibility that lawmakers will seek to advance polit-
ical priorities. In May, the House of Representatives
passed a bill designed to lay down a marker in the
debate. This legislation included several provisions
that would make it more difficult for credit unions
to assist in recovery, including provisions that would
impose a moratorium on debt collection activity
during the crisis.
Credit unions need to be prepared to make the
best case to prevent bad laws from being enacted.
The government has more to do, and the trick for
policymakers is to do as much as possible without
causing unnecessary and long-term harm to the
economy, businesses, and consumers.
WAS IT DONE WELL ENOUGH?
Here, the example of PPP is instructive. Credit
unions have been active authorized lenders in this
program, which was designed to keep employees
connected to employers through forgivable loans
to cover payroll while businesses were shuttered.
It’s no surprise that PPP implementation was
nearly an unmitigated disaster. After all, the pro-
gram was enacted into law days before it was
implemented; funds appropriated for PPP loans
quickly grew to 20 times the annual loan volume
guaranteed by the Small Business Administration
(SBA); and its success depended in large part on
participating lenders with no experience navigating
the agency’s guaranteed lending programs.
As of June 29, the SBA issued 22 interim final rules
making changes to the program and updated its
online frequently asked questions document almost
daily. Plus, Congress doubled the program’s fund-
ing, extended the period businesses had to use the
funds, and relaxed some of the requirements on how
businesses could use the funds.
While the PPP implementation violates many of
the historic norms related to government programs,
it provides an example of the approach regulators
have taken during this crisis: Act fast, correct mis-
takes, move forward. The challenge is that speedy
work often is sloppy work, and in the rulemaking
environment, sloppy work leads to inaccuracies and
ambiguities that present risks to regulated entities
like credit unions.
CUNA has worked to identify these errors and
uncertainties as rules have been issued, and we have
worked with policymakers to correct them. But we
anticipate more litigation risk associated with crisis-
era rulemaking in the months and years to come.
WILL MEASURES BE IN PLACE
LONG ENOUGH?
One unprecedented feature of this crisis is its
uncertainty. When a storm or earthquake hits,
the immediate danger recedes and recovery can
TREND 02 ADVOCACY 13
begin quickly. But this is a public health crisis that
has spawned economic and financial uncertainty. No
one knows when the public health component will
end because that depends on the development and
widespread deployment of a vaccine or therapeutic
remedy. What is certain is that the economic and
financial consequences will have a long tail.
The problem for credit unions and other financial
services providers is that economic and regulatory
accommodations that have been implemented have
been pegged to the termination of the presidential
emergency declaration related to the public health
crisis. Most of the provisions significant to credit
unions terminate between 60 and 120 days after the
end of the emergency declaration. Some stop at
the end of 2020 and others, like the PPP program,
were designed to last just a couple of months.
If the president terminates the emergency dec-
laration prior to a vaccine having been developed
and deployed, it would start the clock on the wind-
down of troubled debt restructuring accommoda-
tions, transaction account guarantee authority, and
other provisions.
It could also send a signal to regulators that the
measures and steps they have taken to abate the
crisis should wind down as well. If the crisis extends
past the end of the year, it would expose credit
unions to disruption related to the expanded Cen-
tral Liquidity Facility authorities.
As Congress prepares the next round of recovery
legislation, policymakers need to carefully consider
how long some of these measures need to contin-
ue. In most cases, the enacting legislation did not
provide enough time.
Policymakers have begun to consider mea-
sures unrelated to the pandemic, and their list of
unfinished business is long. Among other issues,
Congress will need to fund the government past
the end of the fiscal year on Sept. 30 and address
infrastructure and water bills that have bipartisan
interest, intelligence reform, and the annual consid-
eration of the National Defense Authorization Act.
That’s a long list under the best of circumstances.
But in the middle of a global pandemic, a full-blown
economic crisis, widespread civil unrest, and an
upcoming presidential election, the challenges poli-
cymakers face are extraordinary.
With so many changes enacted and imple-
mented quickly and often on a temporary basis,
it is critical for credit unions to remain on top of
compliance responsibilities. And, with so much
more on tap between now and the November elec-
tions, it will be just as important for credit unions to
remain engaged with CUNA, leagues, regulators,
and elected officials. We need to know the pressure
points credit unions are facing so we can address
them with policymakers.
RYAN DONOVAN is chief advocacy
officer for Credit Union National
Association. Contact him at
202-508-6750 or at
THE BIG QUESTIONS
ß What pressure points is your credit union
facing in the wake of pandemic?
ß How much more could you lend to small
businesses if Congress temporarily eliminat-
ed credit unions’ business lending cap?
ß Did the government do enough to address the
pandemic, was it done well enough, and will
measures be in place long enough to work?
ß How are you addressing increased cyberse-
curity risks due to the pandemic?
ß How will your credit union stay on top of its
compliance responsibilities with the implemen-
tation of so many COVID-19 relief measures?
14 CUNA E-SCAN REPORT
A ‘RAPID RESPONSE’ COMPLIANCE ENVIRONMENT
From a compliance perspective, 2020 started as any other
year: waiting for NCUA’s annual Letter to Credit Unions
detailing the agency’s supervisory priorities for the upcom-
ing year. Traditionally, this chapter focuses on that letter
to guide credit unions through their strategic planning
initiatives.
No one realized the coronavirus (COVID-19) pandemic
would soon turn compliance officers, credit unions, our
country, and the world upside down.
As a reformed certified public accountant (CPA)
turned attorney, I’m fascinated by numbers. Since
COVID-19, we’ve experienced:
n 24 issuances by way of NCUA Letters to Credit
Unions or Risk Alerts.
n 6 final and/or interim NCUA final rules.
n 22 interim final rules by the Small Business Adminis-
tration (SBA) related to the Payroll Protection Program
(all since April 2, 2020).
n 5 federal laws enacted by Congress related to the
pandemic—with No. 6, totaling more than 1,800
pages, under Senate consideration, at the time of this
writing.
n A myriad executive orders from state governors,
plus laws and regulations enacted and promulgated,
respectively, by states and local municipalities. These
measures concern lending issues related to matters
such as foreclosure moratoriums, deferral and forbear-
ance requirements for consumer and real property
loans, collection and repossession limitations, and
moratoriums.
n Dozens of guidance documents, instructions, and
policy statements from multiple federal and state agen-
cies, government sponsored enterprises, etc.
And the second half of 2020 has just started.
Where do credit unions and boards focus? How do
you stay in compliance in this quickly evolving environ-
ment with so many regulatory changes?
First, evaluate the topics we outline regarding lending
issues as a result of Coronavirus Aid, Relief, and Eco-
nomic Security (CARES) Act provisions and other opera-
tions and governance matters.
Second, embrace a new mindset of governance, risk,
and compliance (GRC). Part of an overall GRC program
entails the adoption of a comprehensive compliance
management system.
In a normal regulatory environment, without a pan-
demic in the picture, identifying regulatory changes is
relatively predictable. Agencies propose rules, provide
comment periods, and finalize rules.
But amid a national crisis such as COVID-19, credit
unions must react quickly to changes as banking reg-
ulators hand them down, often without much advance
notice or time to prepare.
Having a robust compliance management system in
place allows you to manage the regulatory change man-
agement process much more efficiently and thoroughly
than navigating detailed spreadsheets.
Certainly, we’ve seen meaningful COVID-19 relief for
credit unions, along with temporary assistance and guid-
ance documents by both state and federal authorities for
the benefit of consumers and businesses. Expect these
issuances to continue for some time.
Also, expect to remain in “rapid response” mode as
these regulatory changes occur to ensure your core
products and operations remain in compliance.
And finally, bolster your regulatory change manage-
ment processes and procedures to prepare for what may
be our “new normal.”
Paycheck Protection Program
The Paycheck Protection Program (PPP), a provision of
the CARES Act, offers potentially forgivable, low-interest
loans to eligible small business borrowers impacted by
the COVID-19 to retain and pay employees, pay mortgage
interest, and pay rent and utilities. For many borrowers,
the most attractive aspect of the PPP is the possibility of
up to 100% loan forgiveness if businesses use the funds
for their intended purpose.
The two interim final rules the SBA issued May 22, 2020,
TREND 02 ADVOCACY 15
provide guidance to help PPP borrowers and their lenders
prepare, submit, and review loan forgiveness applications.
However, despite the instructions and worksheet designed
to assist in the calculation, borrowers should anticipate
a review of their calculations by a CPA to confirm they’re
achieving the highest possible forgiveness amount for
which they’re eligible.
Lenders should run the numbers several ways to result
in the highest amount. For example, borrowers must
determine whether to use the traditional covered period
or the alternative covered period. Payroll expenses can
include many other costs beyond salary, including pay-
ment for vacation, family leave, health care coverage,
insurance premiums, and retirement contributions.
In addition, borrowers can count toward the forgive-
ness amount certain retirement money benefits contrib-
uted during the eight weeks, so they must determine if
it’s worth contributing the maximum amount. Then the
borrower must calculate any reductions in the forgive-
ness amount due to reductions in head count or salary,
as well as for failure to meet the 75% requirement for
payroll costs.
These calculations are a serious undertaking for any
borrower to calculate correctly, and members will rely
on their credit unions to confirm they have calculated
correctly. The time credit unions will have to commit to
reviewing the application and supporting documenta-
tion to make the final forgiveness decision is substantial.
Loan forbearance
When the CARES Act suddenly required lenders to for-
give federally backed mortgages for up to 180 days (and
borrowers can request an additional 180 days at the end
of the first 180-day term), credit unions were left scram-
bling to implement these new mandates.
How to structure forbearance requests, the benefits
of loan modification vs. refinancing, escrow payments,
and force-placed insurance are just some of the issues
credit unions have had to address in the absence of
regulatory guidance.
Luckily, the agencies emphasized their flexibility
during this time, and credit unions’ best resource often is
each other through resources such as the CUNA Compli-
ance Community.
UDAAP and Fair Lending
Fair Lending Act and Unfair, Deceptive, or Abusive Acts
or Practices (UDAAP) issues can arise due to changes
in the current marketplace. With interest rates at all-
time lows and many members experiencing the need
to access cash due to financial hardship, refinances are
reaching record highs again.
As a result, many lenders face resource constraints
and may have to limit refinancings, picking and choos-
ing which members to serve. This situation is ripe for Fair
Lending issues if lenders have to serve some members
over others. Approach these decisions in a fair and equi-
table manner to avoid Fair Lending issues when select-
ing who to serve across the membership.
FCRA temporary amendments
The CARES Act amended the federal Fair Credit
Reporting Act to impose temporary COVID-19 reporting
requirements on furnishers of information to consumer
reporting agencies. The provision applies to “accommo-
dations” made from Jan. 31, 2020, until the later of 120
days after March 27, 2020 (the date of enactment) or 120
days after the date the national emergency is terminated.
Credit unions that make an “accommodation” (e.g.,
payment deferral, forbearance, loan modification, or
other relief) on a credit obligation or consumer account
should continue to report the account as “current” if the
member fulfills the terms of the accommodation.
The reporting requirement doesn’t apply to accounts
that were delinquent before the accommodation was
made. Accounts that are brought current, however,
must be reported as current. Obligations that have been
charged-off will continue to be reported as charge-offs.
Garnishments of stimulus payments
The CARES Act also included stimulus payments to
provide emergency assistance for individuals, families,
16 CUNA E-SCAN REPORT
and businesses affected by COVID-19. The funds could
be used for food, medicine, living expenses, and other
necessities.
The rule prohibits certain set-offs from stimulus check
payments to collect debts owed to federal and state
governments. However, stimulus funds can be set off
through the Treasury Offset Program to collect delin-
quent child support obligations that have been referred
by the state.
The CARES Act included no language to protect stim-
ulus checks from garnishment under state law or set-off
against delinquent consumer loans, or from being used
to offset negative balances in share accounts.
CUNA believes the funds from the checks should
be protected from garnishment or set-off, and credit
unions that garnish or set-off against funds from stimulus
checks, even in a negative balance share account, may
face severe reputational risk.
But the lack of protection from garnishment or set-off
of stimulus funds is a serious problem: 25 state attor-
neys general drafted a letter to U.S. Treasury Secretary
Steven Mnuchin calling to protect checks from private
debt collection.
And 17 states currently have issued either executive
orders, attorney general guidance, or court orders pro-
tecting stimulus funds.
Garnishment of stimulus funds will be an ongoing
issue so long as funds continue to be disbursed. But if
Congress enacts subsequent relief measures for indi-
viduals, families, or businesses, credit unions should
expect a similar concern.
Operations and governance
As states reopen, the long-term effects of the pandemic
on your members, employees, and institutions may not
surface for a while.
In the event of liquidity shortfalls, NCUA is encourag-
ing credit unions to join the Central Liquidity Facility if
they’re not already a member or if they don’t have mem-
bership through an agent.
For credit unions that took advantage of any tempo-
rary relief provisions under NCUA’s loan participations
rule, its rule on eligible obligations, or the suspended
countdown provision to waive or dispose of acquired
and abandoned premises, the relief under these rules
expires Dec. 31, 2020.
In addition, as COVID-19 will likely be a threat for
some time, consider implementing a plan (and if nec-
essary, amend bylaws) to address delaying or providing
virtual options for annual meetings.
Cybersecurity threats and remote workers
Throughout the pandemic, cybercriminals have lever-
aged COVID-19 themes as lures, often targeting individu-
als and companies that seek healthcare information and
products, or those who are contributing to relief efforts.
Common cybersecurity risks for remote workers
include malware, email phishing schemes using “corona-
virus” or “COVID-19-related” in the subject line or attach-
ment, and advance persistent threat attacks (see CISA
Alert (AA20-099A): COVID-19 Exploited by Malicious
Cyber Actors at us-cert.gov/ncas/alerts/aa20-099a).
Credit unions have had to fine-tune their cybersecurity
policies, procedures, and practices to address remote work
arrangements.
These efforts include preparing employees to prevent
security incidents (e.g., keeping devices physically secure,
updating software regularly) and responding to incidents
that occur (e.g., reporting incidents, changing passwords,
preserving forensic evidence).
NCUA urges credit union leaders to communicate pro-
actively with employees to verify they conduct remote
work securely and to provide guidance and assistance as
needed (see NCUA Risk Alert 20-Risk-01 at ncua.gov).
JARED IHRIG is chief compliance offi-
cer for Credit Union National Associa-
tion. Contact him at 202-508-6732 or
TREND 02 ADVOCACY 17
© Credit Union National Association 2020
STRATEGIC PLANNING TOOLS FOR YOU
One of the largest contributions to long-term success at a credit union is dedication to building a dynamic strategic plan. CUNA provides resources to help guide your strategic planning process:
CUNA Courses Immerse yourself in educational opportunities designed to help you through your strategic planning process. Course topics include: How to Think About Strategic Planning and Credit Union Growth Strategies.
CUNA Environmental Scan Companion Resources Preparing your credit union for the future takes accurate research and diligent decision making. With the CUNA Environmental Scan (E-Scan) companion resources, you can confidently guide your team forward.
CUNA Strategic Planning RoundtableExplore industry trends, how to best integrate insights from CUNA’s E-Scan into planning and how to optimize the process at this in-person training.
cuna.org
SPR20_AD.indd 1SPR20_AD.indd 1 5/1/20 10:08 AM5/1/20 10:08 AM
TREND
03WORKPLACE CULTURE
JEFF RENDEL
AT A GLANCE
1 in 10 possess high talent to be a manager.
37% 51% believe it is easier to find a new job in a different organization than with their current organization.
say on-time pay is more attractive than additional paid time off.
Sources: Gallup, Deloitte, Kronos
19
COUNTLESS STRATEGIC discussions
and credit union initiatives focus on creating
and delivering outstanding experiences—digi-
tal, member, and user—by reimagining business
models through members’ eyes.
Exceptional member experiences lead to
impressive business results, including higher
retention, increased revenue, and lower operat-
ing costs. Clearly, investing in excellent member
experiences is a wise use of capital.
But what about a credit union’s human capital?
Could the emphasis on experience include estab-
lishing first-rate employee experiences? Could a
credit union fashion its internal culture through the
lens of its internal “member”—the employee?
Could a superior employee experience lead to
tangible business results, such as higher staff reten-
tion/lower turnover, increased engagement and
contribution to profit, and a deeper pool of talent
for succession planning?
The answers are “yes” if a credit union commits
to fostering an internal culture around two promi-
nent standards: expected results from the CEO and
complementary execution from human resources
(HR) to create a working environment conducive to
producing top results.
What CEOs need most from HR and the work-
force falls into six themes:
1. Support the credit union’s vision by under-
standing and acting on applicable strategies.
2. Build and retain a workforce dedicated to pro-
fessional growth and constant learning.
3. Discover and develop the next generation of
leaders.
4. Listen, learn, and act on employee feedback.
5. Build a “love to come to work” culture.
6. Live the credit union’s brand in and out of the
office.
With clear expectations from the CEOs, HR lead-
ers will know how to build employee experiences
that deliver substantial results in the near term
while expanding strategic talent advantages in the
long term.
SUPPORT THE VISION
The capacity to produce daily results leading to
strategic success is of primary interest for all cred-
it unions. For strategies designed at the executive
and board levels, credit union-wide execution is
essential.
As leaders form business plans from strategic
objectives, they must delineate every strategic tac-
High-value, high-touch trainingLeadership training appeals to more Gen Xers and millennials than baby boomers, who prefer profes-sional certifications. Financial services employees (33%) also value professional certifications.
Source: PayScale
Diversity/inclusion
Communications/public speaking
Employer-subsidized degree
Teamwork/interpersonal skills
Technical skills
Professional certification
Management/leadership
30%
8%
7%
4% 2%
32%
17%
20 CUNA E-SCAN REPORT
tic to the closest operational level. Employees will
embrace the vision when they understand how their
daily activities support it.
Obtaining buy-in for the credit union’s vision and
strategy requires CEOs to discuss these elements
with employees and listen to how staff support
them. Hold town hall meetings to appreciate the
daily execution of strategy
and to offer support and
encouragement on the jour-
ney to strategic success.
Giving employees the
opportunity to interact with the CEO increases their
dedication to the vision. In multibranch and multi-
state credit unions, CEOs should make it a priority
to visit every branch or office each year.
PROFESSIONAL GROWTH
Don’t earmark learning solely for new-hire orien-
tations or the annual all-staff day. Make learning
continual, delivered formally (classroom-style),
on-demand (short videos and webinars), collab-
orative (opportunity groups), and self-directed
(time to focus on growth within one’s job).
A key element of retention is the regular oppor-
tunity to improve performance. As staff become
more knowledgeable, their satisfaction and desire
to grow increase.
Learning also involves designing employees’
career paths through job sharing, job shadowing,
advanced education, and participation in industry
events. Employees understand success on the job
is primary, but success in a career is not limited or
predefined.
Learning isn’t reserved solely to job-related
knowledge. It covers successes in life, too, such as
mindset, health, fitness, financial savvy, family, and
community. Focusing on peoples’ “whole person
health” is a mutually beneficial goal for staff and
the credit union.
TOMORROW’S LEADERS
Discovering the next generation of promising
leaders is essential. While some credit unions trust
data and testing to pinpoint these individuals,
most rely on the tried-and-true method of seeking
those who demonstrate initiative, pursue chal-
lenges, and deliver results.
Credit unions can foster
employees’ growth with lead-
ership programs, mentoring,
exclusive responsibilities,
and other opportunities. As
tomorrow’s leaders better understand the credit
union’s priorities and focus, it’s imperative to
seek out their ideas.
Being more “intrapreneurial” in one’s job show-
cases a commitment to growth.
Task new leaders with bringing bold and enter-
prising ideas to the strategic discussion. They are
experts in their roles, and you should expect them
to offer new and better ways to grow the business.
Leaders must realize a job is not what you do, but
a goal you pursue.
Cultivating culture change
Communicate engagement initiatives and priorities.
Be consistent and routine in sharing the rationale for and benefits of an engage-ment-focused culture.
Encourage employees to discover and share best practices to create a vivid picture of what highly engaged teams look like and how they perform.
Designate a network of engagement champions that collects best practices to share with other managers, answers ques-tions, and supports manager development.
Embed specific engagement elements into ongoing conversations, connecting engage-ment to business needs and challenges.
Source: Gallup
TREND 03 WORKPLACE CULTURE 21
Leaders must realize a job is not what you do, but a goal you pursue.
“
These attributes and practices allow credit unions
to discover individuals focused on growth for the
credit union and their careers.
LEAD THROUGH FEEDBACK
Listening to employees allows your credit union to
understand what the workforce hears and thinks.
Much like listening to members for insights, creat-
ing the right employee experience requires listen-
ing to employees.
It’s not enough to simply conduct an annual
survey. Engage employees by encouraging and lis-
New competencies, context for evolving leadershipLeadership requires a blend of traditional and next-gen-
eration skills, according to the 2019 Deloitte Human
Capital Trends survey.
While organizations need leaders with traditional
skills, such as managing operations, supervising teams,
making decisions, and managing the bottom line, they
also need people who can meet the demands of a rap-
idly evolving, technology-driven environment.
This new environment necessitates leading through
ambiguity, managing increasing complexity, being
tech savvy, managing changing customer and talent
demographics, and handling national and cultural
differences.
Eighty percent of respondents in Deloitte’s survey
believe 21st-century leadership has “unique and new
requirements” that are important to an organization’s
success. This includes inclusion, fairness, social
responsibility, understanding the role of automation,
and leading a network.
Currently, only 25% of organizations say they are
building effective digital leaders, and just 30% say they
are effectively developing leaders to meet evolving
challenges, according to Deloitte.
“We’ve spent the last few years focused on leadership
development,” says Jan Johnson, executive vice pres-
ident, organizational agility, at $2.7 billion asset Royal
Credit Union in Eau Claire, Wis., and a member of the
CUNA HR & Organizational Development Council
Executive Committee. “We need strong leadership
skills to have effective career development.”
“The greater need may lie in the combination of
developing new competencies and putting them in a
new context,” the Gallup study states. “That new con-
text is the changing set of social and organizational
expectations for how leaders should act and what out-
comes they should aim for.”
Organizations must have the right culture, structure,
and management processes in place to cultivate these
new leaders. The Deloitte survey identifies three areas
where significant gaps exist:
1Transparency. This earns an organization trust
and respect. Only 18% of respondents believe they
have a transparent and open model in the workplace.
Thirty-seven percent worry about their ability to create
trust, 60% have concerns about employees’ perception
of transparency, and 27% believe a lack of transparen-
cy is creating a competitive disadvantage.
2 Internal collaboration. Organizations will
benefit from working collaboratively across the
organization because roles and work have become
more complex and integrated. However, 83% say
C-suite executives rarely collaborate or only do so on
an ad-hoc basis.
3Performance management. The top three
criteria organizations use to measure leadership
success are driving strategy (63%), delivering financial
results (58%), and managing operations (44%). But
putting different performance measures in place will
give leaders the ability to manage uncertainty and lead
through change.
22 CUNA E-SCAN REPORT
tening to their ideas and gathering and using staff’s
recommendations.
Doing so generates dedication among employees.
Feedback is not a process for grievances, but
a conduit for solutions. Staff should be confident
in coming forward, and realize you want to help
them do their jobs, whether it’s ordering supplies,
visiting branches, or responding to member-gen-
erated issues.
Show how their jobs connect to business out-
comes. The more you discuss business reasons for
taking or not taking an action, the more comfort-
able staff will be in sharing their feedback.
POSITIVE CULTURE
Having a positive employee experience involves
creating a culture where a day at the office does
not feel like “work.” Learning and feedback con-
tribute greatly to this, but the physical workplace
matters, too.
An office layout that provides space to concen-
trate (offices and cubicles), collaborate (open work-
spaces and meeting rooms), and connect (coffee
stations and courtyards) serve the different ways
professionals work each day. It can also foster work-
place diversity, mainly through opportunities to
share ideas, perspectives, and experience levels.
Compensation is the main reason people parti-
cipate in the workforce. While competitive pay is a
given foundation, changes in benefits provide the
customization and flexibility employees value.
Consider augmenting traditional benefits with
new offerings, such as paid parental leave, or cre-
ative lifestyle benefits such as fitness memberships,
laundry service, and in-home housekeeping to
improve work-life balance.
Remote working opportunities also help attract
and keep talent.
Some credit unions have introduced profit shar-
ing programs as a way to establish economic par-
ticipation in the credit union’s success.
LIVE THE BRAND
Credit unions define their brands in multiple ways.
But while we promise one message to members,
do we deliver the same to staff?
For digital brands, do you offer employee tech-
nology such as tablets, video collaboration, and
on-demand learning?
If the brand is personal, do you create opportu-
nities for networking, community service, and fun?
Determine how to improve employees’ ability to
serve members, make decisions, and engage with
management.
The greatest benefit of living the brand is the
The leadership gapNearly a third of employees believe their man-agers, even those rated “good” or “world class,” lack team-building skills.
Other
Communication
Delegation
Time management
Providing feedback 17
Team building
17%
8%
7%
20%28%
17%
Source: Predictive Index
Click here for more
TREND 03 WORKPLACE CULTURE 23
demand it creates for future members and employ-
ees. Employees are an extension of the credit
union. Many measure Net Promoter Score to gauge
members’ loyalty and advocacy.
Others survey members by asking, “Would you
hire the employee who served you?” This both
gauges members’ experience and allows employ-
ees to live the brand.
Seeking employment referrals from employees
provides the ultimate validation for living the brand.
Referrals from inside agents indicate trust in the
credit union as a great place to work.
The employee experience is equally as important
as the digital, member, and user experiences. As
you advance your credit union’s human capital, con-
sider the financial results that stem from an excel-
lent employee experience: leaders committed to
growth for the credit union, its members, and their
careers.
JEFF RENDEL is president of Rising
Above Enterprises. Contact him at
THE BIG QUESTIONS
ß How does your organization identify the next
generation of leaders?
ß What’s your plan for staff professional devel-
opment and career growth?
ß What role do employees play in their profes-
sional development plans?
ß What type of culture exists at your credit
union?
ß What skills do future leaders need to handle
change and uncertainty, and do the leaders
at your credit union possess those skills?
Reinventing the workplace post COVID-19It’s unknown whether workplaces will return to
pre-coronavirus (COVID-19) levels, but it’s also still
unclear as to what the “new normal” will look like.
There are several lessons credit unions learned
during the COVID-19 pandemic that will find a way
into the future workplace, including:
n Increased remote work. A focus on mobile
engagement with members quickly expanded to
staff working anytime, anywhere, and with any
device. Credit unions found that many staff could
work from home. Remote work will be a legitimate
option as they consider flexible schedules, stag-
gered in-branch employees, and the best use of
office space and design.
n Enhanced focus on employee well-being.
During the pandemic, overseeing the kids’ educa-
tion, being together all the time, caring for parents,
and working an honest day introduced chaos many
days. We learned life is challenging to manage,
even in normal times. An increased emphasis on
work-life balance will allow credit unions to build
an engaged workforce that values an organization
that invests in and supports self-care for all.
n Faster, nimbler teams. Credit unions shifted
their service and staffing models overnight. Com-
munication, production, and decisions occurred
with imperfect information, but it was enough to
move a step forward. As a result, credit unions
learned the value of innovation, fast project teams,
communication through collaborative technology,
and the nature of agile teamwork.
The long-term benefits of comprehensive digital
transformation, holistic talent development and
support, and outcome-based teamwork will position
credit unions for the next stage of growth, service,
and value.
24 CUNA E-SCAN REPORT
TREND
04GIG ECONOMY
SAMIRA SALEM
AT A GLANCE
27% A $400 emergency expense would be difficult for
42% of gig workers to handle.
of workers combine gig work with traditional part- or full-time work.
$455.2 billion gross volume of the gig economy by 2023.
Sources: Freelancers Union, Federal Reserve, Statista
25
ALTERNATIVES TO traditional work have
always existed, including self-employment, inde-
pendent contractors, and freelancers. But the way
we live, work, and spend money today is changing
at an extraordinary pace.
In fact, most of the new jobs created since the
Great Recession are “alternative work” or gig jobs,
according to Marketplace.
Because of the nature of the work, gig workers’
financial needs differ from those of traditional work-
ers. This has important implications for the finan-
cial services industry, which designed the bulk of
consumer products and services in response to the
needs of the 9-to-5 payroll workforce.
DEFINING ‘GIG ECONOMY’
The “gig economy” includes those who are paid
by the task, or gig, for short-term or temporary
assignments. Gig economy work is characterized
by a high degree of flexibility and autonomy with
workload, working hours, and work portfolio.
Nearly half of gig workers (46%) do gig work
full-time, making it their primary source of income,
while the remainder use it as a “side hustle” to sup-
plement traditional wage income, according to the
McKinsey Global Institute.
Another element of the gig economy are con-
sumers who use the labor, products, and services
gig workers offer (e.g., buying a product from a
vendor on Etsy or contracting an independent
lawyer for legal advice). Intermediaries that con-
nect gig workers to consumers and facilitate pay-
ment for some gig workers, such as Uber, Lyft, and
Airbnb, also form part of the gig economy.
Serving the ‘independent worker’
More people are now classified as “independent work-
ers,” or those who forgo traditional jobs and work in
either a contractor, freelancer, or gig capacity.
While these roles may be attractive, they also involve
risks. This presents a new opportunity for credit unions,
according to the Filene Research Institute.
“The independent workforce represents a growing
working class with distinct motivations, experiences,
vulnerabilities, and opportunities,” according to “Meet-
ing the Needs of Independent Workers at VanCity Credit
Union,” a report from Filene. “By meeting the needs of
independent workers in a holistic way, credit unions can
jump-start long-lasting relationships with members.”
Serving independent workers requires credit unions to:
n Know your members. Your credit union likely
serves independent workers already. But not every
independent worker is the same.
Some work independently by choice, some are highly
skilled, and some barely make ends meet. Some do this
full time while others take on freelance or gig roles as
side jobs.
n Recognize member needs are shifting, which
requires credit union products and services to change
as well. Consider serving independent workers from
the business side rather than the consumer side.
n Be holistic. Shift your mindset from delivering a sin-
gle product or service to “developing and delivering
a suite of services to meet the needs of a new market
segment,” the report states.
Develop relationship-based services that allow staff to
investigate each member’s circumstances and needs so
it can provide a tailored portfolio of solutions.
n Start small. Come up with solutions, test them, and
deliver them to market. Continue to gather feedback
to provide solutions that are sustainable and meet
members’ needs.
26 CUNA E-SCAN REPORT
AN EXPANDING WORKFORCE
Estimates of the size of the gig workforce vary
based on how it is defined, but they generally
fall between 25% to 35% of the U.S. labor force.
Projections show that more than half of the
labor force will be gig workers by 2027, accord-
ing to the Filene Research Institute.
The Freelancers Union and Upwork estimate
the number of gig workers
increased from 53 million to 57
million workers between 2014
and 2019, a 7% increase.
This could grow even more in the coming years.
A McKinsey Global Institute survey found that “if
everyone had the opportunity to pursue their pre-
ferred working style, roughly 40% to 50% of the
working age population in the U.S. and Europe
would be independent.”
While “gig worker” has nearly become synony-
mous with workers who use digital “on demand”
and sharing economy platforms like Uber and
TaskRabbit, only an estimated 15% of gig workers
use these platforms to earn income, according to
McKinsey.
DIVERSE, SKILLED, AND FINANCIALLY
VULNERABLE
Most gig workers (72%) choose to do gig work
while 28% are reluctant gig workers that do it out
of necessity, according to the McKinsey study.
The share of gig workers who freelance full-time
increased from 17% in 2014 to 28% in 2019, sug-
gesting that workplace norms are changing as
gig work becomes more
of a long-term career
choice even in the face of
a strong labor market with
payroll jobs.
Overall, gig workers are demographically diverse,
spanning all income levels (21% of gig workers
are low-income), gender (51% of gig workers are
women), and age (23% of gig workers are under
age 25 and 8% of gig workers are 65 and over),
McKinsey reports.
When it comes to skill level, the largest group
of gig workers (45%) are skilled workers who pro-
vide services such as computer programming,
marketing, information technology, and business
consulting.
“Gig workers tend to be more financially fragile.
The side hustleRoughly half of millennials think gig workers can earn as much as those in full-time jobs. Half also believe there is a better work-life balance for gig workers.
Would consider joining the gig economy
84% 81% Millennials Generation Z
What attracts and discourages millennials and Generation Z about the gig economy?
Positives Negatives
Millennials Gen Z Millennials Gen Z
Earn more or increase income 58% 53% Unreliable income 39% 36%
Set own hours 41 45 Irregular hours 30 29
Better work-life balance 37% 32% Difficult to make plans 27% 28%
Source: Deloitte
Click here for more
TREND 04 GIG ECONOMY 27
In 2019, gig workers generated an estimated $1
trillion in income, or approximately 5% of U.S. gross
domestic product, according to the Upwork and
Freelancers Union. Some estimates suggest gig
workers who provide skilled services have a median
hourly rate of $28 while the median hourly rate of
gig workers overall is $20. The median hourly wage
for the U.S. overall rate is $18.80.
While gig work allows people to supplement
their income, the Federal Reserve’s 2018 Report on
the Economic Well-Being of U.S. Households finds
that overall, gig workers tend to be more financially
fragile than traditional wage earners.
Specifically, 42% of gig workers would have
difficulty handling a $400 emergency expense
compared to 38% of those not doing gig work,
the Fed reports. Gig workers also tend to use
alternative financial services, like payday lenders
or title loan companies, at a higher rate (24%)
than traditional workers (16%).
CHALLENGES FACED BY GIG WORKERS
Gig workers benefit from flexible, independent
work, but they face challenges including:
n Income volatility that comes from not having a
steady paycheck from an employer.
n No employer-provided benefits, such as
employer-sponsored health insurance or 401(k)
plan. Gig workers must pay out of pocket for
health insurance and cover the cost of their retire-
ment plans.
n No income security insurance and other worker
protections, such as disability insurance, unem-
ployment insurance, workers’ compensation, and
minimum wage protections.
The lack of these protections increases financial
risks for gig workers. Plus, gig workers take on an
added cost as they are responsible for both the
employer and employee portion of the cost of
Social Security.
COVID-19 exposes vulnerability of gig workersThe coronavirus (COVID-19) pandemic, which
has put the brakes on economic activity, has
exposed the vulnerability of gig workers to eco-
nomic downturns or recessions.
In particular, blue collar workers are some of the
hardest hit by COVID-19.
Not only are many gig workers likely to see their
income decline as demand for their services and
products dries up, but their lack of access to paid
sick leave and employer-sponsored health insur-
ance compounds their vulnerability.
The $2 trillion Coronavirus Aid, Relief, and Eco-
nomic Security (CARES) Act is unprecedented
because it directly addressed many of these vul-
nerabilities by providing a temporary social safety
net for gig workers affected by the pandemic.
The CARES Act extends unemployment benefits
to gig workers. Loans are also available through
the Paycheck Protection Program.
Unfortunately, gig workers haven’t had an easy
time getting those benefits. Only half of gig work-
ers that applied for them actually received unem-
ployment benefits.
Gig workers who are members of credit
unions can benefit from the efforts credit unions
are taking to help their members stay financially
healthy during the COVID-19 crisis.
Some of these efforts include new loan prod-
ucts (e.g., emergency personal short-term loans
at reduced interest with deferred payments for
up to three months), loan modifications which
offer relief in case they face financial struggles
due to COVID-19, fee waivers and reductions
(e.g., waiving overdraft fees, waiving late credit
card payment fees), and financial counseling
and debt consolidation.
28 CUNA E-SCAN REPORT
These challenges also translate into banking and
payment barriers for gig workers that the financial
services industry must consider.
Gig workers may face barriers to accessing credit
not faced by traditional workers. They lack a regular
paycheck through an employer and don’t have the
requisite W-2s and paystubs for loan applications.
As a result, they don’t easily fit traditional under-
writing standards and related risk assessment
systems. This means gig workers will likely have to
jump through additional hoops when applying for a
mortgage, car loan, and other types of credit.
Income variability in the face of regular bills is
another significant challenge. Income variability can
be due to factors beyond gig workers’ control such
as late or nonpayment, illness, or injury.
This means gig workers face a greater risk of
being unable to pay their bills on time. This makes
it more difficult to maintain good credit scores, fur-
ther exacerbating the lack of access to affordable
credit.
During economic downturns or recessions some
gig workers are hit hard by losing work and being
left without a safety net like unemployment insur-
ance. Other gig workers may benefit from econom-
ic downturns as employers look to shed employees
and hire temporary contract labor.
POSITIONED TO MEET THE CHALLENGES
Credit unions are positioned to meet the bank-
ing and payments challenges gig workers face.
Credit unions prioritize relationships with their
members and, therefore, can provide personalized
service that responds to their needs.
That relationship is part of what allows credit
unions to offer more flexible yet responsible loan
underwriting that provides access to affordable
credit for gig workers.
Credit unions also offer credit-builder loans that
allow members to improve their credit, as well as
short-term, small-dollar loans that can help gig
workers with income smoothing.
Other solutions credit unions offer include
mobile deposits, money management tools,
automated savings, and reminders for gig work-
ers to save when they can to smooth income
during lean times and to pay their bills on time.
We need additional financial innovations to fill in
remaining financial gaps for gig workers, and ulti-
mately allow credit unions to remain relevant in this
dynamic market. While gig workers face challenges,
they’re increasingly mobile-enabled.
Credit unions can build on their suite of prod-
ucts and services, partnerships with fintechs and
other providers, and relationships with members to
ensure they remain relevant and the gig workers’
best financial partner.
SAMIRA SALEM is senior policy
analyst for Credit Union National
Association. Contact her at 608-
231-4398 or [email protected].
THE BIG QUESTIONS
ß How many gig workers does your credit
union serve? What is their financial profile?
ß How does your credit union handle mem-
bers who apply for loans but do not have a
traditional 9-to-5 job and W-2?
ß What challenges do members who work in
the gig economy face?
ß How has your credit union responded to gig
workers’ challenges?
ß What is your credit union’s plan for respond-
ing to an increase in gig workers in the
future?
TREND 04 GIG ECONOMY 29
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TREND
05INCLUSION
KEVIN J. MARTIN
AT A GLANCE
80%of financial services companies cite diversity and inclusion as a stated value or priority.
Companies with above- average diversity scores saw a
45% increase in innovation revenue.
Nearly
two-thirds of employees experienced bias in their workplaces during the past year.
Sources: PWC, Boston Consulting Group, Deloitte
31
WHEN ASKED ABOUT the importance of
building an inclusive culture and how to go about
it, I sometimes struggle with how to begin.
I can easily articulate the importance of inclu-
sion to the future of the credit union movement
considering our nation’s changing demographics
or analyzing the need to attract talent in a world
of constant change. But building an inclusive
culture differs for every credit union based on
several factors:
n Who do you serve?
n Where are you located?
n How are your membership demographics (cur-
rent and future) changing?
n What is your credit union’s story and strategy?
n How comfortable is your leadership with diver-
sity, equity, and inclusion?
Each of these questions could lead to a different
approach. Rather than cite definitions or statistics
that may or may not apply to your membership, I’ll
focus on one credit union’s journey to better serve
its members. I hope it provides some insight as you
start, or continue, your journey.
SchoolsFirst Federal Credit Union in Santa Ana,
Calif., serves school employees and their families
throughout California—the most diverse state
in the country. We are accustomed to serving a
diverse membership in terms of gender, ethnicity,
nationality, religion, language, political view, socio-
economic position, and more.
For years, our team—as diverse as our member-
ship—has leveraged its skills and talents to serve
members. But we’ve primarily managed it locally.
If a branch served a community where a large
percentage of members spoke Vietnamese, for
example, it would recruit for that skill set, just as
with local hiring decisions for other skills.
However, we did not use terms like “diversity”
or “inclusion.” Our focus was, and is, service. If our
members need it, we do our best to provide it.
A BALANCED TEAM
The first time I remember the concepts of diversity
and inclusion entering our lexicon was during a senior
executive team discussion about NCUA’s Annual Vol-
untary Credit Union Diversity Self-Assessment.
The discussion felt awkward, not only because we
wondered why the NCUA requested this data and
how it would be used, but also because we didn’t
have experience discussing diversity. The topic is
typically framed as a problem to be solved.
Our senior executive team is diverse, balanced
across genders, places of birth, religious beliefs,
personality types, ethnicities, generations, and
sexual orientations. But I still remember sitting qui-
etly, concerned about being “the Black guy talking
about race.” I’m sure many of my peers had similar
struggles.
Before the discussion ended, I mustered the
courage to say, “I will do whatever I can to help us
have this conversation.” I realized then that a key
ingredient to participating in this type of dialogue
was vulnerability and courage.
A few weeks later, our president called on me
Putting strategy into actionAccording to a survey by PWC, financial services organizations struggle with translating diversity and inclusion strategy into action.
Diversity is a barrier to employee progression at my organization.
Source: PWC
NoYes
61% 39%
32 CUNA E-SCAN REPORT
to help guide the journey. I felt excited and proud
to help the organization that changed my life with
such an important topic.
At the same time, I started to panic: What had I
signed up for? What did I know about diversity and
inclusion? The one thing I knew for sure was that I
had support from the top. That support was criti-
cally important because the road ahead would be
bumpy.
I spent the next year meeting with diversity
officers from various industries and participating
in training sessions and Certified Diversity Profes-
sional programs. Through this education, I became
increasingly comfortable discussing diversity and
inclusion—which takes practice.
I also gained insight into the experiences of peo-
ple from different backgrounds and perspectives.
I struggled, however, to transfer that knowledge
and insight to our organization. Our progress
floundered because we hadn’t answered a key
question: How does diversity and inclusion sup-
port our mission?
INTERNAL INCLUSION CHAMPIONS
By this time, our team of internal inclusion cham-
pions had grown. The team raised challenging
questions related to specific roles within the
credit union: Are we prepared to serve members
and team members going through gender con-
firmation? How do we ensure our dress code is
inclusive?
I remember being pleasantly surprised that oth-
ers had a passion for diversity and inclusion. It felt
like we had all been waiting for an opportunity to
engage and share—we just needed a safe environ-
ment to do so.
A few of us attended a session at the African-
American Credit Union Coalition Conference that
had insights from integrating diversity into consum-
er analyses. This led to further conversations about
the importance of diversity and inclusion.
The session explained how leveraging inclusion
could drive employee engagement and develop-
ment and improve business decisions and financial
performance. It reinforced a strongly held notion at
Adding the board focus
While much has been made about the importance of inclu-
sion in the workplace, an equal emphasis should be placed
on the board room.
According to the Deloitte Center for Board Effectiveness,
focusing on diversity without a companion focus on inclu-
sion isn’t a winning strategy.
The main difference between the two is that diversity is a
state of being, while inclusion is a set of behaviors that can
be governed.
Boards that are diverse and inclusive have more credibili-
ty with management, customers, and employees.
Boards of directors have responsibilities for influencing
inclusion in five key areas.
1Strategy. Boards can expedite an inclusive culture
by helping management define a common vision for
what inclusion means and embed that vision into business
strategy.
2Governance. Take the first step in accountability by
establishing a committee—temporary or permanent—
focused specifically on inclusion. This committee would
elevate inclusion’s visibility in the boardroom.
3Talent. Boards set the tone by embodying inclusive
leadership traits within their own membership but also
by holding the organization’s management accountable.
4Integrity. When boards set the tone for inclusion
externally and internally, they have an opportunity to
be accountable to maintaining the vision of inclusion and
to improve the public’s perception of the organization.
5Performance. It’s the board’s role to monitor diversity
and inclusion metrics, drawing insights from the data
collected and analyzed by the organization’s management.
Click here for more
TREND 05 INCLUSION 33
SchoolsFirst: To provide world-class service, an
exceptional quality and engaged team is vital.
We came to understand the importance of creat-
ing an environment where employees feel comfort-
able sharing different perspectives, with the under-
standing that employees may have different needs
to reach that level of comfort.
At the African-American Credit Union Coali-
tion Conference, we learned that CUNA Mutual
Group leveraged inclusion to improve the pay-
ment options they provide their customers. Their
leadership was puzzled by the high marketing
response rate of a particular ethnic group, but this
same group had a lower likelihood to make a first
payment. They engaged their employee resource
group, who identified with this ethnic group, for
advice and learned their payment options were not
robust enough.
This insight led to a change that directly
improved the customers’ experience, not just of
this ethnic group but of all customers.
This forced us to ask the question, what insights
are we missing out on? What services and options
do our members need that we are not providing?
A positive effect on the bottom line
Organizations with inclusive environments realize business benefits such as higher revenue and greater innovation.
2x as likely to meet or
exceed financial targets
3xas likely to be
high performing
6x more likely to be
innovative and agile
8xmore likely to achieve
better business outcomes
Starting a diversity committee
Some companies are starting employee-led committees
on diversity, equity, and inclusion. Here’s how to build an
effective group, according to the career website Idealist:
n Make the committee diverse. It’s hard to start a
meaningful conversation about diversity without a com-
mittee that is itself inclusive. An effective committee will
include employees of different backgrounds, identities,
position levels, and departments.
Make employees who work in less visible roles, such as
security or facilities, feel welcome to join.
n Don’t tackle everything at once. Your committee
will feel overwhelmed there isn’t a specific focus.
n Ask employees what issues are important to
them. Use those responses as a starting point to select
one issue the group can influence the most.
Consider specific expertise of committee members that
could guide these efforts.
n Define where committee work begins and ends.
Some organizations rely too much on voluntary commit-
tees instead of taking committee work as a starting point
for creating greater change. Make a formal charter or
mission statement that sets goals and boundaries.
n Find a sponsor in a leadership role. It helps to
have an ally in a leadership role who can advocate for
the committee and bring decision-making power to the
table when the committee makes recommendations.
n Document employee experiences. Capturing these
activities related to diversity will guide future efforts.
Source: Deloitte
34 CUNA E-SCAN REPORT
And how is this impacting their engagement and
the cooperative’s financial performance?
EMPLOYEE ENGAGEMENT
We have a saying at SchoolsFirst: “If we take care
of the team, the team will take care of the member,
and the numbers will take care of themselves.”
Because the path to member engagement is
through team member engagement, we invest con-
siderable time and energy into understanding what
Using DEI to shape our pandemic response
The coronavirus (COVID-19) crisis is threatening the finan-
cial health of households of color and low-income house-
holds, rendering both particularly vulnerable.
Here are six ways to use a DEI lens in crafting responses
to COVID-19 to help our most vulnerable members and staff:
1Know the pain points for vulnerable populations.
Credit unions across the nation quickly responded
to the COVID-19 crisis with a robust suite of products that
align with the financial needs expressed by consumers.
Take stock of challenges vulnerable populations face to
ensure that you’re responsive to their needs.
Credit unions can support vulnerable populations during
these difficult financial times by continuing to provide
financial counseling and debt consolidation assistance.
2Ask the right questions. When making changes to
your organization, products, and services, ask who
benefits. How are you supporting the most vulnerable?
Who might be harmed? What unintentional consequences
should you consider?
Consider insights your frontline staff may have regarding
member needs. They will have a finger on the pulse of a
dynamic environment.
3Use an equity lens in your communications. If
you have members who are non-English speakers,
translate your COVID-19 communications into the relevant
language and make it accessible via multiple channels.
Coopera, for example, has developed useful COVID-19-
related Spanish-language resources for credit unions.
Also, consider staffing your branches and phone lines
with bilingual staff so non-English-speaking members can
receive equitable service.
4Consider unequal access to technology. Some
members may not have smartphones, tablets, or com-
puters. This can pose a barrier to online banking and infor-
mation about their credit union’s COVID-19 response.
Drive-thru windows, ATMs, phone service, and informa-
tional flyers posted on credit union branch doors/windows
are a few ways to address this challenge.
Staff members who are asked to work remotely may
similarly not have access to technology or internet service,
making loaner laptops and assistance with access to inter-
net service important.
5Practice inclusive leadership. Create a virtual com-
munity through regular virtual updates and check-
ins where you listen to staff about how they’re feeling,
acknowledge their critical role on the front lines, reaffirm
your commitment to keeping employees safe, and ask
what the credit union can do to make sure they have what
they need to continue to serve members.
6Practice humility, virtual community, and self-
care. Connecting with others who face similar chal-
lenges may ease our burden.
Check in with peers at other credit unions through virtu-
al check-ins, emails, or phone calls. Or credit union lead-
ership and staff could share how they’re juggling working
from home on their own or with kids.
Recognize that uncertainty and moments of crisis are
incredibly stressful. Make time to tend to your own phys-
ical and emotional needs. Doing so allows all of us to
refuel and bring our best and most authentic self to work.
—Samira Salem is senior policy analyst for Credit Union
National Association.
TREND 05 INCLUSION 35
drives employee engagement.
We’ve learned it’s important for employees to
feel like someone at work cares about them and to
know their opinions count. By building an inclusive
environment, we create opportunities for team
members to feel like they belong and can contrib-
ute to our service culture.
When employees feel their opinions matter, they
are more likely to share their opinions and perspec-
tives. This is particularly important when a perspec-
tive is the minority opinion in the room.
We’ve also learned how diversity and inclusion
allow us to identify blind spots and consider differ-
ent perspectives. This leads to more robust prod-
ucts, services, and experiences for our members.
As we continue to listen and learn, I expect that
integrating diversity and inclusion into our every-
day behaviors will challenge potential biases in our
decision-making and processes.
Imagine your team is trying to solve a complex
problem. If everyone on the team has similar expe-
riences and perspectives, the team struggles to
identify a variety of solutions.
If people on the team have different experienc-
es and perspectives, the list of potential solutions
grows if everyone feels comfortable sharing their
perspectives. This is how we realize the value of
diversity, equity, and inclusion.
According to Gallup, only 34% of U.S. employees
are actively engaged. As leaders of service organi-
zations, it’s our responsibility to create an environ-
ment where everyone feels welcome to contribute.
If your team reflects your membership, employ-
ee perspectives are critical to informing deci-
sions about products, services, and experiences.
SchoolsFirst has decided that to provide world-
class service to our increasingly diverse member-
ship, we need and want to hear those perspectives.
We know it will lead to better decisions and better
service experiences for every member.
We have just started our journey. I’m excited
about our early progress, and I look forward to
learning more. I hope you will join us.
KEVIN J. MARTIN is senior vice
president of organizational perfor-
mance and strategic planning at
SchoolsFirst Federal Credit Union,
Santa Ana, Calif. Contact him at
NCUA offers new assessment tool
NCUA offers the Annual Voluntary Credit Union Diversity
Self-Assessment, which is designed to help credit unions
assess existing diversity and inclusion policies and practices
and identify opportunities to implement best practices.
The Office of Minority and Women Inclusion aggregates
the data and shares the results anonymously, primarily in
the NCUA’s annual OMWI Congressional Report and in a
separate annual report.
NCUA describes the assessment as:
n A tool for building diversity and inclusion.
n Voluntary.
n Simple and brief.
n Plays no effect on CAMEL ratings.
n Available year-round.
THE BIG QUESTIONS
ß How should diversity and inclusion inform
your crisis response?
ß What are vulnerable populations facing?
ß How can you practice inclusive leadership in
a virtual setting?
ß Does your team reflect your membership?
ß How might inclusion efforts affect employee
engagement?
36 CUNA E-SCAN REPORT
TREND
06CYBERSECURITY
IDREES RAFIQ
AT A GLANCE
39% of financial institutions are focusing on digital investment in cybersecurity.
94% of malware is delivered via email.
It takes
245 days for U.S. organizations to identify and contain a breach.
Sources: The Economist Intelligence Unit, Verizon, IBM/Ponemon Institute
37
THE CORONAVIRUS (COVID-19) pandemic
has disrupted operations and will have prolonged
impacts on business continuity, modes of work-
ing, and growth patterns. Information security
teams need to respond with short- and long-term
actions to increase resilience against future dis-
ruptions and prepare for rebound and growth.
One chief information officer suggests, “If we can
take the experience gained from this unique chal-
lenge, we can evolve our practices and continue to
invest in digital transformation. This will better allow
us to design the asynchronous tools that benefit
individuals inside and outside our organizations.”
This challenge is best solved with a community
approach. By engaging in a collective network to
share threat information, we can build a commu-
nity that is beneficial to credit unions of all sizes
throughout our system.
A good starting point is creating the operation-
al backbone needed for the future. This is the
foundation for digitization and for expanding and
accelerating innovation. Addressing drastic mar-
ket demand changes in the short term will require
migrating offline processes to digital channels. This
includes having members schedule branch visits
through websites or apps, minimizing the amount
of time they wait at the branch.
Members can open accounts using digital chan-
nels, and credit unions can verify their identity with
biometrics such as facial recognition. Adapting
products to changing demand also can curtail loss-
es or capture markets with soaring demand.
One long-term solution is building digital busi-
ness while keeping traditional products and chan-
nels. Credit unions must find an optimal balance
between traditional and digital assets, giving orga-
nizations the flexibility to switch among them.
This involves examining the expansion of chan-
nels and touchpoints, and exploring new business
models.
During this period of uncertainty, organizations
can also test how well-prepared their data and ana-
lytics capabilities are to support business decisions.
They can achieve this by automating information
technology (IT) infrastructure to drive provisioning
speed, optimize operational costs, and increase
visibility and control of on-premises or multicloud
infrastructure.
They can also create unified, pattern-based
orchestrations to leverage multiple automated
tasks to execute a larger workflow or process.
Additionally, artificial intelligence combined with
machine learning and big data can improve situa-
tional awareness and response, discover patterns,
and provide insight into applications and business
relationships. Transitioning operations requires a
How financial institutions are targetedFinancial institutions face cyberthreats from four attack tactics, according to ZeroFOX.
Brand abuse and manipulation
Financial fraud and scams
System and information exploitation
Account takeover
20%
19%
4%
57%
38 CUNA E-SCAN REPORT
Source: ZeroFox
transformed cyberfunction, taking into consid-
eration the need to update cybersecurity and
roadmaps; the realignment of security governance,
management, and operational structure; revisions
to risk assessment methodologies; and new key
performance indicators and key risk indicators.
FINANCIAL IMPLICATIONS
The average cost of a cybersecurity attack on
a financial institution is $1.8 million—and that
accounts only for the upfront financial loss,
according to “Impact of Cybersecurity Incidents
on Financial Institutions,” a report from the Iden-
5 emerging security trends
Increased online activity makes consumers and busi-
nesses more vulnerable to cyberattacks.
Advances in technology will continue to shape the
cybersecurity landscape in 2020 as hackers develop
new attack strategies and security experts respond
with improved defenses in the never-ending game of
cat-and-mouse. Five emerging trends:
1Mobile increases vulnerability. As financial
institutions become increasingly invested in
mobile and web-based services, these applications
will create new vulnerabilities. Web applications
were the No. 1 threat pattern in financial services
data breaches in 2018, Verizon reports.
Another study from Accenture reports 30 tested
financial services apps identified at least one secu-
rity risk, including insecure data storage, insecure
authentication and code tampering.
2Bigger role for artificial intelligence (AI).
Entities of all sizes are leveraging AI, which
dramatically accelerates the identification of new
threats and responses to them, helping to block
attacks before they can spread widely. However,
cybercriminals are taking advantage of the same
techniques to help them probe networks, find vul-
nerabilities, and develop more evasive malware,
according to Analytics Insight.
3Cloud security becomes a higher priority.
As more businesses move to the cloud so will
the focus of cybercriminals. New tactics are so effec-
tive they can almost bypass two-factor authentica-
tion, making service accounts and shared mailboxes
vulnerable.
Organizations will need to go beyond focusing
on cloud security configuration and controls and
protect data with a shared responsibility model. As
more data is transferred to and stored in the cloud,
the more important cloud security practices will
become, according to TechnologyAdvice.
4Insecure application user interfaces (API).
This is also related to cloud security. If you
have a cloud service provider, you will not be using
the interface alone. The security of the particular
interface lies primarily in the hands of your service
providers.
Breaches through APIs are caused by lack of tight
security starting from the authentication to encryp-
tion. This process must be stringent.
5The internet of things (IoT) will usher in
new threats. The IoT market will reach $1.1
trillion by 2026, according to Fortune Business.
These devices will increase the attack surface with
risks and vulnerabilities that come with any new
technology in its early stages.
Security experts don’t have time to develop new
strategies to keep up with all the new devices. Every-
thing from blenders to washing machines will be
connected to apps. They’ll collect your data and will
be vulnerable to cybersecurity threats.
Click here for more
TREND 06 CYBERSECURITY 39
tity Theft Resource Center. Falling victim to a
cyberattack can be a nightmare, and with data
breaches increasing in size and frequency, financial
institutions are more likely to fall victim now than
ever before.
Many organizations are reluctant to exchange
and share intelligence. To face rising cyberthreats,
credit unions must focus on a collaborative
approach to cybersecurity.
By engaging in a collective network to share
threat information, we can build a community that
benefits all credit unions. Using shared resources,
credit unions can leverage the knowledge, experi-
ence, and capabilities of their partners.
Some benefits of this approach:
n Shared intelligence. The
simple act of sharing intel-
ligence, whether it’s about
ransomware, malware, or
phishing threats, allows
security experts to respond
faster and prevent cyber-
attacks.
By exchanging cyber-
threat information within a sharing community,
credit unions can leverage the collective knowl-
edge, experience, and capabilities to gain a more
complete understanding of threats. Credit unions
can make informed decisions about defensive
capabilities, threat detection techniques, and miti-
gation strategies.
By correlating and analyzing cyberthreat infor-
mation from multiple sources, an organization can
also enrich existing information and make it more
actionable.
We may achieve this by independently confirm-
ing the observations of other community members.
Additionally, sharing cyberthreat information allows
organizations to better detect campaigns that tar-
get the credit union industry.
We define “cyberthreat information” as any
information that can help an organization identify,
assess, monitor, and respond to cyberthreats. This
includes indicators of compromise; tactics, tech-
niques, and procedures threat actors use; suggest-
ed actions to detect, contain, or prevent attacks;
and findings from the analyses of incidents.
Networking and intelligence-sharing (for exam-
ple, malware samples or potential attack scenarios)
among other members of the cybersecurity com-
munity enables organizations to learn from their
peers about how to avoid breaches.
n Idea sharing. In problem-solving situations,
people often think more creatively and feel more
inspired in groups. In cybersecurity, participating
in formal or unstructured
discussions and intelli-
gence enables organiza-
tions to learn from their
peers.
Detecting increasingly
sophisticated cybersecurity
schemes requires a collec-
tive, communication-based
approach that most organizations cannot develop
or maintain alone.
n Shared resources. Participating in a trusted
community group also allows organizations to
share resources such as scripts, workflows, and
playbooks. Members can ask and answer technical
questions about specific concerns or threats.
Sharing threat intelligence and guidelines among
industry partners about how to reduce the risk of
known threats makes it possible to stop cyber-
attacks before they become rampant. Trading
resources also raises the industry as a whole, result-
ing in stronger defenses than any one organization
could present.
n Shared intelligence models. Two prominent
bodies for exchanging security intelligence are
“Detecting increasingly sophisticated cybersecurity schemes requires a collective, communication-based approach that most organizations cannot develop or maintain alone.
40 CUNA E-SCAN REPORT
Digital identities improve service, security
One of the biggest security threats facing credit unions
is a lack of consistency in the member authentication
or verification process across channels, according to
two executives at CULedger, a CUNA associate business
member at the premier level and credit union service
organization that provides a peer-to-peer services net-
work of verifiable exchange for financial cooperatives.
“When you look at all of the channels a credit union
has, whether it’s a branch or call center or online bank-
ing, there appears to be separate authentication pro-
cesses for each,” says Julie Esser, CULedger’s senior vice
president of marketing/communications. “And that’s for
current members. How do credit unions identify and
authenticate new members?”
The coronavirus (COVID-19) crisis brought this issue
to the forefront, she says, as members use more delivery
channels when credit unions close branches in the
interests of member and staff safety.
“Credit unions have basically become digital financial
institutions overnight because of this,” she says. “The
bad actors are taking advantage of these new ways of
doing business and escalated volumes in these chan-
nels.”
Authenticating staff also is a growing concern, says Dar-
rell O’Donnell, CULedger’s chief technology officer. “It’s
fine when people need access to secure IT systems from
time to time, but when they need it every day, it becomes
cost-prohibitive. And now you have employees with
access to the inside of this network and it becomes an
attack vector. The fraudsters are trying different channels.”
Too often, financial institutions’ authentication pro-
cess is clumsy and time-consuming, he adds, which is
especially troublesome during times of high volume,
which COVID-19 has exacerbated.
“When members contact the call center they ask,
‘What’s your mother’s maiden name? What was the
name of your favorite pet?’ We treat our members like
criminals to stop the criminals,” O’Donnell says. “This
has a cascade effect on wait times and service.”
The consequence of slow response times is losing
members to other, faster providers, Esser says. The solu-
tion lies in establishing “digital trust” with members.
“Digital trust is the confidence members have in our
ability to create a secure digital world,” she says. “This
trend certainly will accelerate. Members have always
had a high level of trust in their credit unions, but
they’re getting frustrated with the service experience.”
Establishing a secure, encrypted connection between
the credit union and member—a digital identity—pro-
vides a secure way for members to safeguard their
information, heightening both security and the member
experience, Esser says. “Privacy is key,” she says. “We
want to put ownership and control back with members.”
O’Donnell says many of today’s systems were “bolted
together like Frankenstein,” creating authentication chal-
lenges. The pandemic has accelerated the industry’s
consideration of digital identities.
“Identity is king,” he says. “Whoever owns it gains
control over the member relationship. It’s as important
an asset as cash.
“Establishing digital identities not only allow credit
unions to streamline their operations and give members
a better experience, it reduces fraud. It’s a win-win for
everyone.”
the National Credit Union Information Sharing &
Analysis Organization (NCU-ISAO) and the Finan-
cial Services Information Sharing and Analysis
Center (FS-ISAC).
To advance credit union resilience to cyber-
threats, a strategic collaborative partnership
established the NCU-ISAO. The purpose of this
organization is to provide credit unions with a
TREND 06 CYBERSECURITY 41
No signs of slowing downThe total number of data breaches rose 17% in 2019 compared with 2018. A newer cybersecurity threat is data exposure from unsecured databases. Another tactic gaining steam is “credential stuffing,” where cyber- thieves use seemingly innocuous personal information like email addresses and logins to try to access various accounts.
2019 2018
Industry# of breaches
Sensitive records exposed
Nonsensi-tive records exposed
# of breaches
Sensitive records exposed
Nonsensitive records exposed
Business 644 18,824,975 705,106,352 575 438,952,056 1,570,602,391
Medical/healthcare 525 39,378,157 1,852 369 10,632,600 2,800
Education 113 2,252,439 23,103 78 1,414,624 39,690
Financial services 108 100,621,770 20,000 135 1,778,658 Unknown
Government/military 83 3,606,114 22,747 100 18,447,920 69,085,000
1,473 164,683,455 705,174,054 1,257 471,225,858 1,639,729,881
Source: Identity Theft Resource Center
trusted, secure, and sustainable infrastructure to
enable cyber-resilience and maintain public trust.
The FS-ISAC is a nonprofit, information-sharing
forum established by financial services industry
participants to facilitate the public and private sec-
tors’ sharing of physical and cybersecurity threat
and vulnerability information.
Sharing attack data through such organizations
offers the potential to benefit the entire industry by
enabling other institutions to assess and respond
to current attacks. Leaders should consider wheth-
er to include such information-sharing as a part of
their strategy to protect the institution.
POTENTIAL ROADBLOCKS
While sharing threat information can be beneficial,
barriers also exist. Some common roadblocks are:
n Constitutional/legal. Many credit unions are reluc-
tant to share cyberthreat information due to concerns
about the risk of disclosure of trade secrets, potential
legal liabilities, and actions taken following the dis-
closure of cyberthreats or attack details, as well as
reputational damage that may occur following these
disclosures.
n Collaborative. These barriers include establishing
trust between a credit union and the sharing organi-
zation, the complexity of sharing information, and the
risk of sharing with rivals/competitors.
Obtaining buy-in from C-suite executives may
pose additional challenges, including miscom-
munication between forward-thinking technology
experts who support threat information-sharing
and old-school leaders who believe sharing infor-
mation puts the credit union at risk.
n Managerial. These challenges include risk aver-
sion and mistrust among managers, who may view
this effort as exposing the credit union to uncon-
trolled risks. This can impede the sharing of infor-
mation and may lead to a status quo bias.
n Organizational. Barriers include a credit union’s
inability to consume data due to limited resources
and an absence of mechanisms to govern and
control the use of sensitive information.
Despite these obstacles, the benefits far out-
weigh the challenges. By putting rules, policies,
and procedures in place, credit unions can
42 CUNA E-SCAN REPORT
avoid putting themselves at risk.
IMPROVE INFORMATION-SHARING
These recommendations can help individual credit
unions improve their information-sharing capabilities:
n Establish goals and objectives. These can help
credit unions advance their cybersecurity strategy
and manage cyberrisks. Credit unions can use the
combined knowledge and experience to share
threat information while operating according to
security, privacy, regulatory, and legal compliance
requirements.
n Specify the scope. The breadth of a credit
union’s information-sharing activities should align
with its resources, abilities, and objectives, and
focus on activities that provide the greatest value.
The scope should identify types of information the
credit union’s board authorizes for sharing, the cir-
cumstances under which sharing of this information
is permitted, and those with whom the information
can be shared.
n Establish rules. Implementing sharing rules
helps control the distribution of threat information
and prevent the dissemination of information that,
if improperly disclosed, could have adverse con-
sequences. Information-sharing rules should take
into consideration the trustworthiness of the recip-
ient, the sensitivity of the shared information, and
the potential impact of sharing (or not sharing)
certain types of information. Consider establishing
predetermined platforms or modifying existing
platforms to comply with Bank Secrecy Act and
personally identifiable information requirements, as
well as defining what you can legally share.
n Participate. Identify activities that complement
your existing threat information capabilities. Your
credit union may need to participate in multiple
information-sharing forums to identify its needs.
n Be proactive. Have sharing agreements in place
before cybersecurity incidents occur. Participating
organizations can establish trusted relationships
and understand their roles, responsibilities, and
information-handling requirements.
n Ensure information security and privacy. You
may encounter sensitive information when han-
dling cyberthreat information. Improper disclosure
could cause financial loss, law and regulation vio-
lation, legal action, or reputation damage.
Implement security and privacy controls and
handling procedures to protect this information
from unauthorized disclosure. Consult legal coun-
sel for guidance.
With a collaborative approach, credit unions
can collectively improve the industry’s cybersecu-
rity readiness. Create an infrastructure that aligns
legal and procedural tactics with the strategy this
approach requires.
IDREES RAFIQ is vice president of
IT consulting for Credit Union
Resources Inc. and a member of
the CUNA Technology Council
Executive Committee. Contact him
THE BIG QUESTIONS
ß What legal hurdles may occur if your credit
union shares cybersecurity information?
ß What are your information-sharing goals and
objectives?
ß Where do potential barriers to trust or clear
communication on cybersecurity exist within
your credit union?
ß Who in your organization is best suited to
take ownership of cybersecurity
information-sharing efforts?
ß How do your policies and procedures reflect
your cybersecurity strategy?
TREND 06 CYBERSECURITY 43
© Credit Union National Association 2020
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CUNANews20_AD-ESCAN.indd 1CUNANews20_AD-ESCAN.indd 1 6/24/20 2:16 PM6/24/20 2:16 PM
TREND
07FINTECH
MARK SIEVEWRIGHT
AT A GLANCE
14% 49% 85%increase in information technology budgets.
of members place the highest value on loyalty innovation.
of consumers use connected devices to save money.
Sources: Business Insider, PYMTS.com/PSCU, PYMTS.com/Visa
45
IN THE PAST DECADE, the pace of change
within the financial services industry has largely
been driven by financial technology (fintech). This
intersection of finance and technology is reshap-
ing the industry’s status quo.
With more than 50% of the global adult popula-
tion using the internet to transfer money, pay bills,
or shop online, fintech is no longer an emerging
market—it is an established industry with even
greater potential. New fintech entrants see the
opportunity to disaggregate the components of
traditional financial services and offer targeted
solutions with better service to consumers and
businesses.
No longer just disrupters, fintech challengers
have grown into sophisticated competitors and, in
response, many financial industry incumbents have
formed fintech partnerships and now offer fintech
solutions of their own.
Many fintechs have
moved beyond the startup
phase. They are mature,
financially strong compa-
nies that operate at scale.
FINTECHS FOR EVERYONE
At the heart of this “fintech revolution” is the
ability of fintech firms to substantially improve
and, in many cases, redefine consumer and busi-
ness service expectations and experiences. The
relentless pressure on financial services firms to
deliver seamless, convenient, and easy experienc-
es to consumers has required them to think and
act differently, including in their pursuit of fintech
partnerships.
Fintechs have built themselves using a conve-
nience-led, design-first approach supported by
agile business processes.
Unlike traditional financial services firms, fintechs
have no legacy environments. They design prod-
ucts and services from the vantage point of a clean
sheet of paper while keeping a technology-first
mindset. At launch, these products and services are
at once personalized, accessible, transparent, fric-
tionless, and cost-effective.
Financial services providers must place an
unprecedented focus on their ability to differentiate
themselves in retaining and attracting new custom-
ers/members, whether by brand, price, delivery
channels, or execution.
Looking forward to the next decade, the average
financial services consumer profile will change dra-
matically as the baby boomer generation ages and
Generations X and Y assume more significant roles
in the global economy. The latter demographic
group, also known as millennials, is bringing radical
shifts to consumer behaviors and expectations.
This segment’s preference for a state-of-the-art
service experience, speed, and convenience will
further accelerate the adoption of fintech solutions.
Millennials seem to
be bringing a higher
degree of “centricity”
to the entire financial
system, and it’s safe
to say the most important impact fintech will have
on this segment is an increased focus on meeting
the needs of the consumer.
DATA AS THE DRIVING FORCE
For all their focus and related investment in the
financial services industry, fintechs generally don’t
have a strong desire to become financial services
firms. They don’t want the balance-sheet risk, but
they are interested in data.
Fintech giants such as Apple, Google, and PayPal
have unparalleled data analytics capabilities, which
most traditional financial firms don’t have.
Equipped with the right data, these fintechs can
offer more sophisticated, highly personalized finan-
cial products and services than most traditional
players can.
“Unlike traditional financial services firms, fintechs have no legacy environments.
46 CUNA E-SCAN REPORT
Google recently announced it is launching
“smart checking accounts” with its financial insti-
tution partners, which include Stanford Federal
Credit Union in Palo Alto, Calif. “Project Cache”
is an extension of Google Pay that will provide a
consumer-friendly interface serving as a conduit
to deposit accounts housed by individual credit
unions and banks carrying their brands.
Interestingly, Google Pay is not winning the digi-
tal wallet race. In the past year, eMarketer has Goo-
gle Pay mobile wallet adoption at roughly 50% of
Apple Pay users. With the recent launch and appar-
ent initial success of the Apple Card, which is tight-
ly integrated into the iPhone experience, Google
might have felt compelled to announce something
that would bolster the prospects of driving Google
Pay volume.
Notwithstanding its somewhat blurry motives,
Google’s stated smart checking goal is to help con-
sumers “benefit from useful insights and budgeting
tools,” with a focus on mobile-first users.
Also, the financial institutions’ brands (Citigroup
is the other partner named so far) will be front and
center on the accounts. Google will leave back-of-
fice operations and compliance to its financial part-
ners.
INVESTMENT AND MEGA-DEALS
Cumulative global investment in fintech compa-
nies in the first three quarters of 2019—combin-
ing venture capital, private equity, and mergers
and acquisitions—exceeded $75 billion. In 2018,
investments of $112 billion in the fintech sector
set a record with a sharp increase over the $51 bil-
lion invested in fintech in 2017.
From a financial services perspective, payments
and lending continued to attract the most signifi-
cant investment globally.
At the same time, investment in regulatory tech-
nology increased to more than $4.5 billion in 2018
from $1.2 billion in 2017.
6 emerging fintech trends
1Big banks will innovate. Big banks are establishing
agile teams and labs to develop new ideas. JPMorgan
employs 50,000 technologists. Bank of America is the world’s
largest blockchain patent holder. According to Forbes, this
push for innovation hasn’t yet produced major changes in the
way big banks do business, but it’s something to watch.
2Big tech will increase its market share. Companies
such as Google and Apple want to expand into finan-
cial services. They already offer payment options, and their
menus will grow as they capture more consumer activity. G2
Research Hub says big tech’s customer base and ability to
scale make it a huge threat to traditional providers.
3Voice is the consumer’s choice. The number of
voice-controlled devices is increasing. According to Com-
score, half of all online searches will be voice-based by 2020.
This transformation has created new requirements for retail
service providers: adjust products and services to voice-en-
abled devices.
45G wireless will connect everything. The prolifer-
ation of connected devices has increased demand for
high-quality internet connections, and 5G is the answer to
market requirements. Financial services should be ready to
provide a stable internet connection wherever and whenever.
5Millennials will drive the market. They are the largest
generation in the workforce, and they were raised on
technology. Startups are built around serving their needs. This
generation has much different needs than older generations
because millennials face more financial challenges.
6The rise of artificial intelligence (AI). This is a hot
topic in every industry, with applications for everything
from self-driving cars to voice technology. In the financial
services world, AI offers new solutions in data analytics, fraud
detection, and consumer engagement.
“AI and data analytics are making big data more digestible for
executive teams,” says Idrees Rafiq, vice president, IT consulting,
for Credit Union Resources and a member of the CUNA Tech-
nology Council Executive Committee. “We’re able to look at
information in a different way. It paints us a better picture.”
Click here for more
TREND 07 FINTECH 47
In 2019, three large fintech deals were
announced:
n FIS’ $43 billion acquisition of Worldpay
(Vantiv). This deal—the largest ever in the fin-
tech space—combines one of the largest issuer
processors, FIS, with one of the largest merchant
processors, Worldpay. Thus, the new company will
have data from both sides of the transaction.
n Fiserv’s $22 billion acquisition of First Data.
Leadership of the combined Fiserv organization
believes that, after realizing significant revenue
and cost synergies, the company will generate $4
billion in free cash flow by 2022.
n Global Payments’ $22 billion acquisition of
Total System Services (TSYS). Global Payments
is a payment technology and software provider,
while TSYS provides payment processing, mer-
chant services, and issuing to financial and non-
financial institutions.
These impressive transactions are in addition
to the dozens of smaller deals being made by the
industry’s larger players, such as PayPal and
MasterCard.
While not all these mergers and acquisitions can
be painted with broad strokes, it does appear many
are defensive moves, specifically taken as a reac-
tion to the disruption technology is bringing to the
financial services industry.
FROM DISRUPTION TO COLLABORATION
The dynamic between fintechs and traditional
financial institutions—credit unions included—is
shifting from disruptive competition to innovative
collaboration. The rapid evolution of fintech pres-
ents credit unions with challenges and opportuni-
ties across several domains.
To remain competitive and relevant in today’s
marketplace, credit unions must consider whether
to invest in new technologies, partner with fintech
companies, or focus on existing services to achieve
member satisfaction and growth.
01
03
02
04
Accelerated digital transformation and demand for digital trust
Economic collapse with more loan delinquencies and charge-offs
Expansion of electronic and contactless payments
Decline in branch visits and ATM transactions
48 CUNA E-SCAN REPORT
Pandemic brings new realitiesCertainly, the fintech sector is feeling the impact of the
coronavirus (COVID-19) pandemic. We have seen a slow-
down in funding, a decrease in the number of startup
fintech firms, and lower revenues for many.
Industry data show that fintech financing activity in the
first quarter of 2020 was far below historical averages, and
it is expected to resemble the lows recorded in 2017.
However, while many fintechs feel the negative impacts
of the COVID-19 crisis, many are better positioned than
traditional financial institutions for the acceleration we are
seeing in digital transformation. Therefore, the product cat-
egory or business segment they’re in will drive the outlook
for many fintechs. This is especially true in the near term,
when the impact of the pandemic on consumer behavior is
expected to be the greatest.
The pandemic will likely create a permanent shift in the
financial behaviors of many consumers and small busi-
nesses. This will be especially apparent in these groups’
increased use of digital banking solutions and the rapid
rollout of touchless payments capabilities such as contact-
less cards and mobile payments. The use of contactless
and mobile payments is surging as virus considerations
become normal.
Fintechs focused on digital banking or electronic pay-
ments will likely fare better than those focused on unse-
cured and secured consumer lending, small business lend-
ing, or international payments.
COVID-19 drives underlying fintech trends
We are seeing pockets of fintech collaboration
within the credit union movement, for example:
n CMFG Ventures, the venture capital arm of
CUNA Mutual Group, committed substantial
resources to help bridge the gap between credit
unions and fintechs companies. This year, CMFG
Ventures announced a partnership with the Filene
Research Institute to launch a new fintech catalyst
incubator.
n PSCU, a credit union service organization and
CUNA associate business member at the premier
level, expanded its fintech collaborative efforts
through its partnership with Jacada to optimize
the call center experience. The desktop automa-
tion system, an attended bot, logs agents into the
credit union’s digital banking platforms, eliminating
multiple manual steps for agents and significant-
ly decreasing member hold times. It is now used
across all PSCU contact centers.
n The DCU FinTech Innovation Center, founded
by DCU in Marlborough, Mass., supports seed-
stage fintech startups. Member companies are
generally in the product/market fit stage of devel-
opment and benefit by the assistance, partner-
ships, and fintech ecosystem the center offers.
n West Community Credit Union in O’Fallon,
Mo., works with St. Louis-based SixThirty, a fintech
accelerator focused on late-seed stage startups
that have a product, market traction, and a prov-
en track record. Through another partnership,
West Community recently launched another fin-
tech solution called Plinqit, a brandable savings
app and the only savings tool that pays users for
engaging with content.
The level of credit union-fintech collaboration
needs to increase exponentially in the early years of
this new decade. Credit unions are well-positioned
to negotiate a constantly evolving technological
landscape as long as they focus on their core mis-
sion of member service.
While some disruption is inevitable, credit unions
should be concerned about fintechs that can emu-
late the same trust-based relationships common
among community financial institutions, but on a
national scale, whether through mobile apps or
other innovative forms of technology.
The fintech space is moving to a new phase of
collaboration, and credit unions need to respond.
MARK SIEVEWRIGHT is founder/
CEO of Sievewright &
Associates. Contact him at
An appetite for collaborationIn 2020, fintech partnerships, collaboration, or investment will be very or somewhat important to just over three-quarters of credit unions. The number of credit unions reporting that fintech partnerships are “very important” rose to 30% in 2020—a 10% gain from 2019. 2019 2020
Very important 20% 30%
Somewhat important 40 46
Not very important 31 19
Not at all important 10% 6%Source: Cornerstone Advisors
THE BIG QUESTIONS
ß How has fintech shaped your credit
union’s retail delivery strategy?
ß How does your staffing reflect the in-
creased emphasis on new technologies?
ß Who at your credit union is best suited to
lead your organization in pursuing fintech
partnerships?
ß How does the post-COVID-19 fintech
marketplace shape your retail delivery
strategy in the “new normal?”
ß What collaboration opportunities exist for
your credit union in the fintech space?
TREND 07 FINTECH 49
© Credit Union National Association 2020
PROPEL YOUR TEAM FORWARD
With constant changes in compliance, technology and member needs, it can be difficult to hone your vision for your credit union, build momentum within your team and create lasting change for members simultaneously. Credit Union National Association is dedicated to providing credit union leaders with the tools they need to coach their staff.
Take advantage of our wide variety of leadership resources:
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Tactical tools for credit union
Board and committee members are an integral part of governing and growing your credit union. Broaden your industry knowledge and gain a foothold in credit union advocacy with CUNA resources designed with directors in mind.
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& Committees Workshop// CUNA Roundtable for Board Leadership// CUNA Strategic Planning Roundtable// CUNA Supervisory Committee & Internal Audit Conference
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© Credit Union National Association 2020
Board_AD.indd 1Board_AD.indd 1 4/6/20 10:59 AM4/6/20 10:59 AM
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TREND
08COMMUNITY CONNECTORS
JASON LINDSTROM
AT A GLANCE
69.5%of members have been with their credit union for more than 5 years.
Promoters spend
25%Nearly
50%more on average on their credit cards than detractors.
of members would like their credit union to focus on loyalty innovation.
53
Sources: PYMTS.com, Bain & Co., PYMTS.com
ALL CREDIT UNIONS have a duty to reach out
to the communities we serve.
But when the coronavirus (COVID-19) crisis
occurred, a challenge presented itself: how to virtu-
ally connect with communities during a pandemic.
For Evergreen Credit Union, the answer came
from listening to urgent community needs.
In Maine, food security and hunger are issues
exacerbated by the pandemic. To provide relief
for those who are struggling, we teamed up with
our minor league hockey, baseball, and basketball
teams to create a virtual food drive. With the minor
league teams and the credit union advertising the
drive, we mobilized community members to donate
any amount they could. We’ve raised money for
8,000 meals at the time of this writing.
The current crisis has made community connec-
tions more important than ever. At Evergreen, we
were able to respond quickly to the crisis because
we had already built strong partnerships with local
organizations. Evergreen had been forging com-
munity connections long before the pandemic, and
in addition to providing vital community aid, these
partnerships can deliver rewards both in terms of
increased awareness and membership.
To become a community connector, study your
market to learn what moves people. In the commu-
nity Evergreen serves, we found that the outdoors,
sports, pets, and dining out are the backbones of
life in Portland, Maine.
So, we looked to partner with organizations that
embody the spirit of the community. We found a
Give consumers what they want
Brand authenticity matters now more than ever: In its
2017 Consumer Content Report, content platform Stackla
found that 86% of people consider authenticity import-
ant when deciding what brands they like and support.
The sentiment is strongest for millennials, with 90%
prizing brand authenticity. This generation is also the
least engaged with brands, indicating consumers will
only become more skilled at distinguishing between
genuine and packaged content.
To create authentic content, brands must tailor their
approach by:
n Leveraging content from real people. Consum-
ers have become accustomed to the communication
styles they see every day on social media: organical-
ly generated and personal.
Consumers view brands that have user-generated
content more favorably, and 60% say this type of con-
tent is the most authentic.
n Prioritize personal recommendations. Sixty per-
cent of consumers say social content from friends and
family affect their purchasing decisions. Only 23% felt
this way about “celebrity” or “influencer” content.
Brands should elevate content that truly speaks to
consumers in their communities.
n Create positive experiences. When consumers
have a great experience with a brand, they want to
share it. For example, 48% of people post about plac-
es they’ve had a positive experience visiting.
Delivering consumers the types of rewarding experi-
ences they’re looking for can lead to constructive buzz
for brands.
The takeaway from Stackla’s research: Consumers
don’t want perfection in the brands they interact with.
They value communication that feels natural and
unrehearsed.
For brands, this means listening closely to what
consumers want and responding with authentic
messaging.
54 CUNA E-SCAN REPORT
spectacular animal shelter that facilitates more than
4,000 pet adoptions every year.
We also discovered an organization that main-
tains local hiking and biking trails. We talked to the
leaders of each of these organizations about how
the credit union could help them.
We could connect the organizations in a unique
way using our marketing savvy, membership base,
and longevity in the community.
The animal shelter had always wanted to connect
to the trail system for dog walking. We approached
the trails group about providing funds to connect
the trail system to the animal shelter.
The trails organization needed someone to help
facilitate. That’s where Evergreen stepped in.
Through planning sessions with the two organiza-
tions and a small donation, we completed the trail
connection.
We now have two grateful partners, and the trail
displays our logo where hundreds of people can
now take adoptable pets for walks.
We’ve also worked to support these partners
during the coronavirus outbreak. We use social
media to encourage social distancing on the trail.
And with the animal shelter closed to the public,
we help to publicize their
private adoptions and
matching gift program.
BE A PARTNER
Being a connector benefits the community and
positions the credit union as a partner to be
counted on. It shows current and prospective
members your values, and you become an organi-
zation people want to be associated with.
Evergreen has also become a community con-
nector through our Instagram “Date Night” promo-
tion. In Portland, a popular website that tracks local
restaurants has become a directory of food culture.
Because we already partnered with a local art
museum and the minor league hockey team, we
worked with the food website to offer free admis-
sion to the museum or a game as a benefit to the
community.
We successfully pitched a “Date Night” contest
to the food website, museum, and hockey team.
The food website selects a restaurant to feature
on its Instagram
page to promote
the contest.
The credit union
provides the prizes: A
$100 gift card to the restaurant and two tickets to
the museum or the hockey game.
Contestants must follow the food website, like
the Instagram post, and tag a friend for the date.
Evergreen manages the contest, and the food
website picks the winner each month. Winners visit
the credit union to claim their prizes.
The contest has run for a year, and the food web-
site has grown its Instagram audience from 20,000
followers to more than 40,000. Evergreen has seen
Crafting authentic messagesNine of 10 millennials say authenticity is important to them when choosing a brand to like and support.
“Every organization we’ve approached has been receptive to partnering with us.
Click here for more
Baby boomers
Gen XMillennials
79 54 31
90% 85% 80%
71 51134 135
58
TREND 08 COMMUNITY CONNECTORS 55
Source: Social Media Today
Marketing, business development complement each other
You might think of your credit union’s marketing
and business development departments as sepa-
rate teams with unique missions:
n Your business development department
creates strategic partnerships with other busi-
nesses, organizations, and individuals in the
community.
n Your marketing department researches, cre-
ates, and executes strategic messaging and com-
munication campaigns to reach the community
you serve.
They may be distinct
teams, but their missions
overlap. If you don’t take
advantage of what they
can do together, you’ll miss crucial opportunities
for these groups to work together to create commu-
nity connections.
The best way to get marketing and business
development working together is to remove them
from their comfort zones.
Branding and marketing agency Hinge suggests
several projects to align these two teams:
n Strategy development. Marketing and busi-
ness development both have a stake in the credit
union’s brand voice and how it’s communicated.
Marketers might be more concerned with mes-
saging to current and potential members, while
business development specialists might spend time
thinking about how that messaging resonates with
community partners.
But the messaging should be consistent, which
means both teams should discuss brand voice and
how to use it strategically.
n Content development. Business develop-
ment specialists have firsthand experience in
communities. This positions them perfectly to
take what they’ve learned from interacting with
the community and help the marketing team
apply these insights to marketing campaigns.
It’s an effective way to ensure marketing pieces
truly speak to the intended audience.
n Campaign development. Marketing is respon-
sible for planning and executing campaigns, but
this team doesn’t always get firsthand feedback
on specific initiatives.
The business development team can check in
with target markets in the
community to learn about
reactions to campaigns,
what worked and
didn’t work, and how
to improve marketing efforts.
n Speaking engagements. The marketing
team is perfectly positioned to pitch your credit
union’s leadership (or other internal subject
matter experts) as speakers for community
events.
Business development specialists can be on
hand at events to network and gain contacts for
future shared plans.
Business development specialists are also in
a position to identify community needs or gaps
through their conversations with businesses, orga-
nizations, and people. Through these interactions,
business development teams can identify areas
where the credit union can help—such as oppor-
tunities to partner on community projects or spon-
sor an event or cause.
Marketing can then use the business develop-
ment team’s findings to promote the credit union
through email or social media campaigns.
Marketing and business development is a vital
partnership when you know how to leverage it.
Both teams should discuss brand voice and how to use it strategically.
“
56 CUNA E-SCAN REPORT
a bump in Instagram followers, too.
It takes work to coordinate these partnerships,
but the results make it worthwhile. Every organiza-
tion we’ve approached has been receptive to part-
nering with us.
We present these opportunities as ways to serve
the community, and we never ask partners to bring
us members or loans.
EMBRACE RESEARCH
Successful connections are all about research.
Explore organizations you want to work with.
Learn how the community views them and exam-
ine their business from a partnership perspec-
tive—not in terms of what’s in it for you.
Plan to show organizations what you’d like to do
and how they could benefit. Be flexible and listen
to feedback. Be ready to pivot if new ideas fit.
You can’t attach return on investment to being a
community connector. Make it your goal to serve
the community and make life more meaningful.
Over time, we expect more people will be aware
of Evergreen, and we’ll see membership growth as
a result of our partnerships.
JASON LINDSTROM, CUDE, is
president/CEO of Evergreen Credit
Union, Portland, Maine, and chair
of the CUNA Marketing & Business
Development Committee. Contact
him at [email protected].
Credit unionsBanks
Puts my financial wellbeing ahead of the interests of the institution
Offers solutions to meet my financial needs
Has my best interests at heart
Makes it easy for me to manage my finances
14.2
8.6% 18.4%
17.2 29.7
31.3
27.1
45.7
The place where people feel cared aboutCredit unions have built strong member relationships by using a personal approach, thoughtful products, and member-centric service models to help members manage their finances. According to a recent Gallup study, there are meaningful differences between how customers and members regard the financial well-being support offered by their financial institutions.
THE BIG QUESTIONS
ß How can you listen more attentively to your
community?
ß What relationships could you turn into
partnerships?
ß How might you find partners to work with?
ß What resources can you contribute to meet a
community need?
ß Where can you add value to your community?
TREND 08 COMMUNITY CONNECTORS 57
Source: Gallup
© Credit Union National Association 2020
CUNACREDIT UNION DIRECTORS NEWSLETTER
As a visionary leader for your credit union, you need a trustworthy and knowledgeable resource that keeps you informed. Credit Union Directors Newsletter provides credit union leaders with indispensable, need-to-know information on current industry trends in a summarized, on-the-go format.
You’ll have access to expert guidance and insights on topics like:
// Managing new regulations and compliance standards
// Relevant industry research
// Tips to grow your leadership skills
// Strategic insights and takeaways to grow your credit union
Learn more at cuna.org/directors
Actionable insights for your board
“As a director, Credit Union Directors Newsletter provides you with enough information to keep you informed on trends and developments in the credit union world. If the topic is of value to your credit union, use the newsletter as a benchmark to conduct additional research to broaden your knowledge.”
- Benita Neely, Director Bridge CU
DNL19_FL.indd 1DNL19_FL.indd 1 6/18/20 10:27 AM6/18/20 10:27 AM
TREND
09ARTIFICIAL INTELLIGENCE
JOHN BEST
AT A GLANCE
44%of consumers are uncertain about the security of personal financial information and AI.
By 2024
69% of managers’ workload will be automated by AI.
Financial services providers will realize
in cost savings from AI by 2023.
$447 billion
Sources: The Economist Intelligence Unit, Business Insider Intelligence, Gartner
59
ARTIFICIAL INTELLIGENCE (AI) is transforming
the financial services industry. While the techno-
logical understanding to enable AI has existed for
decades, only in recent years have we had access to
the computing power to realize how it can provide
solutions in the real world.
Now that we’ve begun to tap into AI’s potential,
we must harness its incredible power to reimagine
not only member service, but how it can transform
operations and processes within today’s digital
financial services model.
AI CATEGORIES
Computer scientists gen-
erally break AI into two
categories: narrow and general AI.
Narrow AI is a program that’s designed for a spe-
cific field or task. For instance, consider “Flippy,” a
robotic arm integrated with AI.
Flippy focuses on specific kitchen duties using its
AI to recognize when a hamburger is ready to be
flipped and served. Narrow AI is not equipped to
balance the restaurant’s books or manage employ-
ee schedules. It can only do the specific duties it
was designed for.
General AI is a program that can understand or
learn any intellectual task a human can. Many may
remember the plot of the movie “2001: A Space
Odyssey,” which included an AI entity called HAL
9000, or Hal. Hal could control the ship, talk about
the weather, and even understand real-world exam-
ples and context.
In the movie, Hal becomes self-aware and must
be reset. Hal is a great example of general AI.
Another important aspect of AI: Let’s say you
asked me to write a program that would be able
to identify a cat within a picture. As a programmer,
I might start by creating a map of the picture. I
would then create an array of elements I believe
visually would define a cat: pointed ears, long tail,
and whiskers. Then I would direct the program to
look for these characteristics.
This might work, but you can imagine the flaws.
For example, the program could easily mistake a
fox for a cat. So, how do I determine the difference?
Over time, more of these issues arise. In the end, I
can’t program the number of types of animals that
are cats and are not cats as interpreted by my code.
However, using AI, I can approach this challenge
in a different way. Instead of trying to determine
the characteristics of cats
myself, I would download
millions of pictures of cats
from the internet. Then I
would feed them to the
AI program and let it determine the best way to
identify a cat based on all the characteristics both
visible to humans and not visible to humans.
In AI, this is a process known as “training.” During
training, when the program mistakenly identifies a
fox as a cat, I would simply feed it another million
fox photos and let the program determine the best
way to identify the differences.
The AI will make connections in the data that
we as humans could never hope to see, even with
infinite amounts of time.
The learning concept is the most important
aspect of AI in understanding why data is so
important to its success or failure. Your AI will only
be as smart as your data.
FLIPPING BURGERS
Because narrow AI is the most likely use case the
credit union industry will encounter, let’s discuss
this type of AI. First, consider the data needs of
the Flippy robot, whose specific purpose is to
monitor meat on a grill and flip it when it’s ready
to cook on the other side. What data does Flippy
need to do the job?
A large list of variables could impact the outcome
AI will make connections in the data that we as humans could never hope to see.
“
60 CUNA E-SCAN REPORT
3 insights for AI in a post-pandemic world
Most experts estimate it will take 12 to 18 months to
develop a vaccine for the coronavirus (COVID-19),
based on the past development of vaccines for epi-
demics and pandemics.
If there is a breakthrough and scientists can devel-
op a vaccine more quickly than this, you can be sure
a big part of the solution will have involved some sort
of artificial intelligence (AI).
AI also is being used to forecast possible hot spots
for the virus and to develop strategies for determin-
ing whether communities should reopen and adapt
to a new normal.
These models use state-of-the-art neural network-
ing, delivering impressive results that continuously
improve as more data becomes available.
How does AI help the credit union industry in the
“new normal” created by COVID-19? Here are three
ways credit unions can employ AI to provide insights
in our new environment:
1Reduce the risk of members and staff
contracting the virus. Hundreds of compa-
nies are racing to develop technology that will help
identify people with COVID-19 symptoms. Whether
it’s contact tracing, infrared camera technology, or
increased screening, data will drive any new solu-
tions. Just as with the race to find a vaccine and
provide safety during the pandemic, AI will drive the
development, implementation, and processing of
information collected by these solutions.
2Anticipate the economic impact of
COVID-19. As the virus continues to change
members’ behaviors, it will be critical to anticipate
new circumstances and deliver products and ser-
vices that meet those needs.
Credit unions have the data necessary to collabo-
rate and create models that could help every mem-
ber weather this crisis. Will members buy as many
cars in the future? What will happen to the real estate
market as a result of the pandemic?
We can answer these questions by using the data
credit unions already have, combining it with the
modeling data from the virus mapping groups, and
applying machine learning algorithms (a form of AI)
to provide the most likely economic outcomes, and
how to improve those outcomes.
3Provide member insights. Facing unprec-
edented unemployment and an uncertain
economic environment, members will turn to credit
unions for financial advice.
Insight on members’ financial situations is more
important than ever before.
The engagement opportunities AI provides can’t
be overlooked in a competitive landscape where
digital banking is the preferred method of access
for most consumers.
The personalization AI offers can help credit
unions build on their position of trust with members
and offer gentle guidance in difficult times.
when cooking the burger, including the type of
meat, grill temperature, and the ambient tempera-
ture of the restaurant among other factors. These
are all factors a human chef could consider effort-
lessly, but the machine will need to learn over time.
How will AI learn? We will continually feed it data.
We feed it data in the form of pictures of meat that
is perfectly grilled, as well as pictures of what an
imperfect burger would look like.
To succeed in its job, Flippy needs data, data,
and more data.
A CREDIT UNION EXAMPLE
Now let’s consider a credit union application of
TREND 09 ARTIFICIAL INTELLIGENCE 61
AI. Think about a narrow AI solution whose pur-
pose is to make auto loans. Let’s call it “Loaney.”
Loaney’s job is to evaluate the creditworthiness
of a member who wants to buy a car. Its second
purpose is to guide an applicant through the pro-
cess in the most efficient and expeditious way
possible. So, what kind of data will Loaney need to
perform at an optimum level?
Loaney needs data about good loans and bad
loans, big loans and small loans. Loaney needs
credit report data, demographic data, historical
data, and, most importantly, outside data.
In the modern world, many algorithms could
easily be considered “AI like,” but these algorithms
fall more in line with a practice known as expert
systems.
Expert systems in the lending space are usually a
series of gates that use data to determine an appli-
cant’s creditworthiness, typically organized into
a series of risk levels. The more risk an applicant
represents, the higher the reward the financial insti-
tution will require in return to offset this risk—often
in the form of higher interest rates.
The system is dependent on recorded behavior
reported by other lending institutions and com-
piled by a credit bureau into a credit report. The
credit report is then summarized into a credit score.
Another transition is now underway. Credit
reports and credit scores worked for a long time
because there was a level playing field, and lend-
ing decisions were based on the data available to
everyone.
If someone was late making a loan payment,
it was easy to determine it was likely their fault
because their economic environment was based on
the facts, not a borrower’s character. This changed
during the financial crisis.
During the crisis, many lost their jobs, their retire-
ment, their cars, and their homes. They fell into
debt because they didn’t have the ability to pay
and, as a result, their credit scores suffered.
This global crisis created a new challenge. Some
members had excellent credit before the crisis, with
FICO scores of 800, and then found themselves
with 640 credit scores after the crisis. Should we
treat them the same as someone who scored a
640 pre-crisis? Do you use the same parameters to
determine credit worthiness for each person?
This is where expert systems and their gating or
“if then else” processes began to show their flaws.
The artificial intelligence portfolioA number of technologies underpin artificial intelligence and its use in the financial services sector.
Deep learningComputer visionNatural languageprocessing
Machine learning
70%60 58 52%
Source: Deloitte Center for Financial Services
62 CUNA E-SCAN REPORT
The evolution of intelligent banking by 2025Within five years, financial services leaders believe artificial intelligence (AI) will benefit consumers.
Agree Disagree No opinion
AI will create better value for consumers 62% 19% 19%
Consumers will be willing to forgo human contact if services are cheap or free 54 32 14
The traditional transaction/branch-based model will be dead 44% 42% 14%
Credit unions discovered it would take something
more to determine credit worthiness in a post-crisis
world.
Now it’s time to apply what we’ve learned from
our cat example to a lending scenario. Looking at
history, we can feed our fake AI loan application,
Loaney, all the loans that meet a certain criterion
and let it determine the best way to decide credit-
worthiness.
Remember, just like our program with the cat
pictures, Loaney will have the ability to make data
connections in the lending data that we as humans
cannot find. There is still a chance that Loaney will
mistake one kind of 640 for another 640, as in our
financial crisis example.
This is similar to the cat and fox issue we dis-
cussed earlier. When this happens, we can simply
feed Loaney more data about the loans we want
to disambiguate and let it do the rest. We can also
add more data for it to look at, such as external
data.
THE CHALLENGE OF SCALE
The next challenge comes with scale. Referring to
our cat picture example, what if I only fed my cat
AI program pictures of grey cats? Would it rec-
ognize a white cat? Would it recognize an orange
tabby?
It may be able to recognize them based on other
attributes it learned, like their whiskers or their
pointed ears, but the recognition score would be
significantly lower than if it had learned during its
initial training that cats come in multiple colors.
The same is true of the Loaney application. If
you only feed it loans from your credit union and
exclude data from other lenders, it will not be as
smart as if it had more data available.
KEY TAKEAWAYS
Four takeaways to consider as you examine AI:
1. Stop deleting data now. Archive your data.
You never know what data will be valuable, so
keep all of it. Hard drives are cheap.
2. Make some friends. Your data alone is not
likely to be enough to fuel the sort of AI models
you’ll need to be competitive in new AI markets
with large players who already possess scale.
I believe credit union service organizations
(CUSOs) will be renewed by this concept in the
coming years. In 2020 and beyond, we will see the
appearance of data consolidation CUSOs that allow
credit unions to collaborate using data, but not
expose any personal information.
3. Find some talent. You need a data scientist to
properly structure and protect the stored data.
You can buy them or rent them, share them, or
hire them. However you go about it, your access
to data expertise will be a key determining factor
Source: The Economist Intelligence Unit
TREND 09 ARTIFICIAL INTELLIGENCE 63
Using consumer data to feed artificial intelligence applicationsThe payments sector is the heaviest user of externally generated customer data with 50% reporting high or very high usage of the data. Deposits and lending fell in the lower tier with only 18% using consumer data at a high or very high level.
Don’t use this sourceVery lowLowModerateHighVery high
Deposits and lending
Market infrastructure and professional services
Investment management
Payments 21% 29% 14% 29% 7%
20 15 35 20 5 5
13 21 29 17 4 16
8% 10% 25% 28% 15% 14%
of your future success.
4. Consider putting AI under its own umbrella.
AI will eventually have its own department. Start
planning what that might look like now, not later.
Think about how other departments within the
credit union evolved over the years. Review new
areas of responsibility or high growth areas, such as
ATMs or payments, and try to learn from the pat-
terns of evolution what has worked and not worked
in your organization.
Data analytics and AI should have a seat at your
organization’s executive table. The member insight
provided by data and AI will impact how the credit
union moves forward strategically.
One other important point: No matter how trans-
formational AI is, it is a long way from replacing the
human touch when it comes to communication,
empathy, social, and emotional tasks. Don’t let AI
take the personal touch out of the process. Use the
advancements AI brings to allow you to improve
the personal touch by enhancing employee perfor-
mance instead of replacing it.
With that said, the power of AI can improve your
ability to serve members and work more efficient-
ly—if you are prepared to take the right steps as
this powerful technology emerges within the finan-
cial services industry.
JOHN BEST is CEO of Best
Innovation Group. Contact him
Source: Cambridge Centre for Alternative Finance, EY
THE BIG QUESTIONS
ß How can AI improve your member
engagement in a post-COVID-19 world?
ß Is your existing data architecture
suitable for AI?
ß Can AI be applied to workflow processes
disrupted by COVID-19 restrictions?
ß How will AI affect workers in your
organization?
ß Do post-COVID-19 work environment changes
present opportunities to employ AI?
64 CUNA E-SCAN REPORT
TREND
10CONSUMER MINDSET
MIKE SCHENK
AT A GLANCE
$14 billion 14%increase in nonstore retail sales during the first four months of 2020.
Annual direct financial benefit credit unions provide members.
40 million consumers have no retirement savings.
Sources: CUNA, Census Bureau, EY
65
BIG, DISRUPTIVE EVENTS magnify and
accelerate change. The coronavirus (COVID-19)
pandemic and related economic crisis have under-
scored that point in many obvious ways.
For one, consumer behaviors have changed
quickly and significantly. Credit union operations
and interactions with members look a lot different
today. In some cases, long-standing processes
have completely transformed. Many credit union
employees have had to fundamentally adjust how
they work, and many have been thrust into com-
pletely new and different roles.
What changes are likely to be temporary? Which
will be permanent? While the epidemic may soon
be a historical event, your credit union will need to
continue to adapt to significant and longer-term
changes in the months ahead.
For clues on the critical transformations, one
useful place to look might be the consumer pack-
aged-goods (CPG) industry. A recent report by the
consultancy McKinsey & Co. is instructive.
As in the financial services sector, the CPG indus-
try produces essential items average Americans
depend on to navigate daily life. Consumers need
many of these products to protect and improve
their health and well-being. Sound familiar?
Importantly, packaged goods manufacturers
have access to the richest, most comprehensive
databases of individual purchasing behaviors on
the planet. They use real-time interactions to meti-
culously study reams of data on billions of bar-
coded and plastic card transactions.
A variety of massive frequent-shopper datasets
power their affinity analyses. Data for traditional
retail and online activity is plentiful. This informa-
tion is combined with continuous and rigorous
testing, consumer surveys, and focus group data to
drive critical decisions on product line, packaging,
placement, promotion, and pricing. Margins are
razor-thin. One false move and a beloved, trusted
brand can quickly cease to exist.
McKinsey uncovers five key trends in this sector,
each with interesting implications for credit unions.
1. ELECTRONIC EVERYTHING AND
CHANNEL SHIFTING
Changes in retail salesFour months ending April 2020 vs. four months ending April 2019
Total retail & food services -4.3%
-34.5%
Nonstore retailers
Food and beverage stores
13.8
12.7
Building material & garden eq. & supplies dealers 4.4
General merchandise stores 0.2
Health & personal care stores
Motor vehicle & parts dealers
Gasoline stations
Sporting goods, hobby, musical instrument, & book stores
Food services & drinking places
Electronic & appliance stores
Furniture & home furn. stores
0.1
-11.6
-13.3
-15.5
-16.6
-17.4
-18.5
Clothing & clothing accessory stores
Source: Census Bureau
66 CUNA E-SCAN REPORT
Concern over COVID-19 transmission and the
need for social distancing has resulted in a seis-
mic shift toward online shopping. McKinsey
reports that in the month leading up to March
14—before governments issued shelter-in-place
guidance—Amazon U.S. saw year-on-year growth
of 41% in household goods, 25% in health prod-
ucts, and 23% in groceries.
More generally, Census Bureau data shows that
U.S. nonstore sales increased nearly 14% in the first
Health disparities hit vulnerable populations
We may be tempted to put our diversity, equity, and
inclusion (DEI) work aside until the coronavirus
(COVID-19) crisis subsides, but our work to advance
DEI is needed now more than ever to help vulnerable
members and staff weather the COVID-19 crisis.
When there’s a crisis, society’s most vulnerable
tend to be hit the hardest. Black, Brown, Indigenous,
and low-income people are among the most vulnera-
ble to the COVID-19 crisis.
Due to a history of segregation, redlining, implicit
bias, and structural racism, people of color in all
socioeconomic levels “tend to benefit least from a
strong U.S. economy, and suffer the most when the
economy falls into recession,” according to a CUNA
white paper. This time around is no different.
Black, Brown, and Indigenous people already face
significant health disparities, making them more
vulnerable to the novel coronavirus. Structural and
environmental racism have resulted in significant
disparities in chronic health conditions, including a
higher incidence of diabetes, asthma, heart disease,
and maternal mortality among Black, Brown, and
Indigenous people. In general, they experience worse
health outcomes, including premature death, com-
pared to Whites, according to the National Center for
Health Statistics.
Compounding this are health care disparities this
group faces, including a higher risk of being unin-
sured—Hispanic/Latinx are two and a half times
more likely to be uninsured than Whites (19.0% vs.
4.3%)—less access to care, language barriers, and
discrimination embedded in health care systems,
according to the Commonwealth Fund. In addition,
it is well-documented that low-income rural popula-
tions also face significant health disparities often due
to lack of health insurance and access to care.
These health disparities make Black, Brown, and
Indigenous people more vulnerable to the virus,
according to the U.S. Department of Health and
Human Services and a report from “PBS News Hour.”
In fact, according to an analysis by the American
Public Media Research Lab of data from the 39 states
and the District of Columbia that are reporting the
race and ethnicity of residents who have died from
COVID-19, Blacks are dying at a disproportionately
high rate compared to other groups and higher than
their proportion of the population.
While Blacks make up 13% of the population in
these places, they represent 27% of the COVID-19
deaths for which race is known. Hispanics or Latinx
represent 18% of the population in these areas and
around 16% of the deaths, and Whites comprise 62%
of the population and 49% of the deaths. Finally,
Asian Americans make up 5% of the population and
5% of the deaths.
Further, a history of housing discrimination and
segregation has led to Black and Brown people living
in densely populated urban areas where the coro-
navirus is more widespread and research finds that
it is harder to social distance, according to the Pew
Research Center. —Samira Salem is senior policy ana-
lyst for Credit Union National Association.
TREND 10 CONSUMER MINDSET 67
Household net worth falls in recessions Wealth as a percent of disposable personal income
four months of 2020 compared to the same four-
month period in 2019 (Changes in retail sales, p. 66).
That’s the strongest increase in any of the 12
major retail sales categories tracked against a
backdrop of double-digit declines in seven major
categories.
This shift to online buying is accelerating and is
broadly representative of trends reflecting greater
acceptance of technology. That’s especially true
among those who are less technically proficient,
historical skeptics, the security-concerned, or those
simply held back by inertia.
Credit unions have transformed their lending pro-
cesses. In addition to big increases in online trans-
action activity, credit unions have routinely reported
a doubling of email volume, with similar increases in
call center volume and online membership applica-
tions compared to prepandemic activity.
E-commerce and electronic volumes may not stay
at their current lofty levels, but the higher plateau
may be a springboard from which to grow. Credit
unions both large and small have demonstrated
their ability to operate without in-branch interac-
tions. But for many, the crisis has exposed weak-
nesses or gaps in electronic offerings—and the
need to address those has become more pressing.
While generally well-positioned to take advan-
tage of member’s greater appetite for mobile and
electronic interactions, credit unions are consid-
ered to be lagging banks on the technology front,
according to CUNA awareness research.
That means communication will be key to success.
More regular, consistent, and clear messaging around
mobile, touchless, and technology offerings, as well
as nudges and reminders, will be crucial. Improved
member education is fundamental to success.
Branches are not dead. The desire for in-person
business will not disappear and may not decline
appreciably. Looking forward, service delivery and
branching strategies will dominate. Six months
ago, most credit unions seemed firmly focused on
expanding their footprint, adding branches and
acquiring outlets from banks (or acquiring entire
banks in some cases).
But technology and related upgrades are expen-
sive. And discussions around right-sizing branches
and re-evaluating branch footprints have been
much more common in the past few months, with a
bigger focus on evaluating branch profitability.
Care and concern about branch profitability is
critical, but branch users also are an essential con-
sideration. Your most vulnerable members may use
branches that appear to be less profitable. Sacrific-
ing those locations to pay for technology may mean
Sources: Federal Reserve, Census Bureau
‘19‘18‘17‘16‘15‘14‘13‘12‘11‘10‘09‘08‘07‘06‘05‘04‘03‘02‘01‘00‘99‘98‘97‘96‘95‘94‘93‘92‘91‘90‘89‘88‘87‘86‘85‘84‘83‘82‘81‘80‘79
712
670701
676
658
656
652
574
570
583
571
566
663
678
670
637
569
566
594
590
613
587
562
539
533
512
524
515
525
516
530
517
513
511
487
469
474
483
481
48753
0
Recession
68 CUNA E-SCAN REPORT
sacrificing those relationships altogether. That could
have big, broad implications for community health.
2. HEALTH AND HYGIENE
McKinsey research shows the “wellness trend has
endured—and even gained strength”—during the
pandemic.
In the CPG industry, McKinsey reports, “Healthy
eating has remained the highest priority of food
shoppers across Europe: net sentiment [positive
responses less negative] was 55%, rising to 82% in
Italy. Consumers are also investing in at-home exer-
cise. In Germany and the United Kingdom, Ama-
zon’s fitness equipment sales spiked by approxi-
mately 60% each week in March.”
The consultancy expects that upward trajectory
to continue into the “next normal.” Hygiene will
become a core element of wellness.
This presents a powerful opportunity.
If history is a good guide, consumers will take big
hits to income and may suffer enormous declines in
wealth during the COVID-19 crisis. During the Great
Recession, median household income fell 8% and
took seven years to recover to prerecession levels.
Also, household net worth as a percent of dispos-
able income fell 17% and took 10 years to recover
(Household net worth, p. 68).
Vulnerable populations, including those living in
rural and inner-city areas, as well as communities of
color, suffered in more obvious ways and for longer.
Members will almost certainly have an increased
interest in financial well-being. Credit unions’
thoughtful, consultative approach to member inter-
actions will be more important than ever.
Financial well-being and the link to both physical
and mental health is clearly established. Doing
more to help members focus and improve in this
realm will pay big dividends. This isn’t “a” thing
credit unions do, it’s “the” thing they do.
Late last year, Gallup reported, “Credit unions
appear to be at their best far more often than banks.”
Gallup’s research shows “meaningful differences
between bank customers and credit union mem-
bers regarding perceptions of the financial well-be-
ing support their institutions offer.”
The organization reports 46% of credit union
members strongly agree their credit union does
this while only 31% of bank customers feel similarly.
Gallup concludes, “The feeling credit union mem-
bers enjoy—of being cared for and looked after by
trusted advisers—is real. It’s not marketing.”
In the months and years ahead, consumers will
embrace financial partners that are clearly inter-
ested in helping them take control over their day-
to-day finances, improve their capacity to absorb
financial shocks, obtain the financial freedom to
make choices and enjoy life, and take control of
their financial lives.
3. NESTING AT HOME
“Staying in is the new going out,” according to
McKinsey’s analysis of CPG industry data. Once
pandemic restrictions are fully lifted, the consul-
tants expect consumers to continue spending
more time at home, driven by a desire to save
money, stay safe, and enjoy their newfound plea-
sure in nesting.
Of course, more time at home means continued
freezer stuffing (and more meals at home), more
home repair and remodeling, fewer vacations, and
generally less time in traditional workplace settings.
This suggests the possibility of lower spending
overall, which could have significant implications for
interchange and NSF/courtesy pay income. These
income streams may not bounce back.
At the same time, less air travel, less public trans-
port use, lower demand for rideshare services, and
significant pent-up demand means news of the
death of autos (and auto lending) was clearly pre-
mature. New auto lending, and the membership
TREND 10 CONSUMER MINDSET 69
U.S. vehicle salesMillions of autos and light trucks sold (seasonally adjusted annual rate)
Recession
8
10
12
14
16
18
20
22
Unemployment
'20'18'16'14'12'10'08'06'04'02'00'98'96'94'92'90'88'86'84'82'80
growth that comes with associated increases in
indirect lending, may rev up in the not too distant
future (U.S. vehicle sales).
In a similar vein, if McKinsey’s analysis of the CPG
industry is on target, it seems reasonable to see a
new, higher level of demand for home equity lend-
ing, assuming home prices continue to hold steady.
Handsome rewards await those able to nimbly
pivot back to now-sluggish business lines catering
to “closer-to-home” activities.
4. VALUE AND TRUST
In the wake of the Great Recession, consumers
traded down, clearly focusing on value and price,
the McKinsey CPG analysis notes. Shoppers
became more promotion-conscious.
In one study, researchers noted a 10-percent-
age-point climb (from 26% prerecession to 36%
post-recession) in the mix of products sold on dis-
count. Similar shifts were observed in moves toward
purchases of off-brand and private label products
(away from brand names) and toward shopping at
value retailers and discount stores.
Credit unions can clearly lean in and capitalize on
those potential shifts. The movement’s structural
difference creates unique and powerful operational
incentives that helped credit unions deliver $14 bil-
lion in direct financial benefits to members in 2019
alone. Keeping this front and center and focusing
on the financial benefits your credit union delivers
could be a difference-maker going forward.
Of course, not all credit unions can (or want to)
compete on price. And with market interest rates
lower for longer, net interest margin pressures will
be more obvious and will almost certainly reduce
the ability to maintain big financial benefits. Per-
haps significantly.
In that regard, McKinsey notes that many con-
sumers claimed they couldn’t afford to make “mis-
takes” with less-well-known brands and reflected
a high degree of interest in staying with tried-and-
true, trusted brands.
Source: Bureau of Economic Analysis
70 CUNA E-SCAN REPORT
The good news: The credit union “brand” is
one of the most trusted brands on the planet. For
example, the most recent comparative data in the
Chicago Booth/Kellogg Financial Trust Index shows
credit unions with an index reading of 60 and banks
collectively with a trust index reading of only 40.
Similarly, Consumer Reports noted in 2018,
“Credit unions are among the highest-rated ser-
vices we’ve ever evaluated, with 96% of our mem-
bers highly satisfied.”
Looking forward, a renewed emphasis on value
and trust will be a winning combination.
5. PURPOSE
In the wake of the Great Recession, the Edelman
Trust Barometer found that more than 75% of
consumers agreed “corporations should operate
in a way that aligns with society’s interests even if
that means sacrificing shareholder value.”
No surprise then that McKinsey reports large
CPG companies have prioritized crisis-related com-
munications, such as announcements of new safety
protocols and charitable donations. McKinsey
notes, “Digital-native brands have nimbly connect-
ed with their social-media communities about how
they’re helping people affected by COVID-19.”
The consultancy suggests consumers will expect
companies to continue this heightened emphasis
on social responsibility after the COVID-19 crisis
ends.
This, too, plays into a credit union strong suit.
CUNA underwrote a Morning Consult phone
survey made up of a representative sample of 2,200
U.S. adults in January 2020 wherein we explored
this topic in detail. Consumers were two times more
likely to “agree strongly” that credit unions “act in
consumer’s best interests and are good corporate
citizens” than to answer similarly about banks.
Moreover, they were roughly 55% more likely to
“agree strongly” that credit unions “treat custom-
ers fairly and abide by laws regulations” than to
answer similarly about banks.
That said, brands must strike the right tone.
During the pandemic, 77% of consumers said they
appreciate CPG companies communicating how
their brands can be helpful in daily life, but an
almost equal percentage said brands shouldn’t
“exploit” COVID-19 as a commercial opportunity.
Credit unions have continued to engage with
members in obvious and meaningful ways despite
the significant challenges and unprecedented dis-
locations posed by the COVID-19 crisis. Leaning
in and looking for opportunities to do more and
to more effectively adapt to changes in consumer
behavior will be critically important.
Based on the experiences and expectations
developing in the data-rich consumer-goods arena,
the movement seems well positioned to thrive in
the post-pandemic future.
MIKE SCHENK is chief economist
and deputy chief advocacy officer
for Credit Union National Associa-
tion. Contact him at 608-231-4228
or at [email protected].
THE BIG QUESTIONS
ß What lessons about consumer behavior can
your credit union learn from the consumer
packaged goods industry?
ß How will you address consumers’ greater ap-
petite for mobile and electronic transactions?
ß How will you tap into consumers’ increased
interest in health and hygiene?
ß How will you adjust your branching strategy
as consumers move to other channels?
ß How will address the disparities that vulnera-
ble populations experience?
TREND 10 CONSUMER MINDSET 71
AprMarFebJan
7.9% 8.212.7
33%
AMERICANS STASH CASHThe U.S. personal saving rate hit a record
33% in April as Americans sheltered in place and saw 40 MILLION unemployment claims.
Source: Bureau of Economic Analysis
SIGNIFICANT DIGITAL ENGAGEMENTIn the month leading up to March 14, Amazon U.S. saw
41% year-on-year growth in sales of household goods, 25% in health products, and 23% in groceries.
Source: McKinsey & Co.
PESSIMISM LEADS TO REDUCED SPENDINGTwo-thirds of consumers are pessimistic or unsure about the pandemic’s lasting effects, and
46% of U.S. consumers plan to reduce spending in the coming weeks.
Source: McKinsey & Co.
LIVING HAND TO MOUTHOne-fifth (21%) of workers save none of their annual income and
78% live paycheck to paycheck.
Source: National Credit Union Foundation
'19'09'99'89'79'69
16.7%
22.224.5 25.6 27.0 28.4%
DINNER FOR ONEThe number of households with one person is on the rise.
Source: Census Bureau
AT A GLANCE
72 CUNA E-SCAN REPORT
© Credit Union National Association 2020
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© Credit Union National Association 2020
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Credit unions using CUNA Training Bundle are able to take advantage of:
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CUNA
ENVIRONMENTAL SCAN REPORT// 2020-2021
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© Credit Union National Association #44442M
Find out more at cuna.org/escan
PowerPointFocus your meetings and build understanding with additional insights and guidance from this easy-to-use presentation.
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companion resources can help with your strategic planning needs.
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