cuEngage Live saw 150+ attendees from the Credit Union industry, come together to network, collaborate and unlock the next generation Credit Union.
We were thrilled that Miriam Galvin, Department of Finance, led a fireside chat at recent industry event, cuEngage Live, in June.
This blog aims to deliver the highlights of Miriam’s fireside chat, which include some key takeaways that everyone in the Credit Union sector will find valuable.
The "Corporate" Credit Union
Miriam began the chat explaining the meaning behind the corporate Credit Union. She believes the term “Collaborative Credit Union” is a better description of intention of the Credit Union Amendment Act which was to provide regulatory provisions to enable Credit Unions establish collaborative, centralised services. In essence, the Act was seeking to allow Credit Unions to act as a group (like a CUSO) to start thinking about how they can act as a larger body, especially when it comes to offering services, e.g. investments/insurance.
One recent example is the Mortgage CUSO; it’s an opportunity to do more of this type of thing. A corporate or collaborative Credit Union is about serving a need. Miriam advised not setting up conflicting CUSOs though; Ireland is not a big enough country for that, and it would only cause delays and setbacks.
Miriam said it was crucial that the core purpose of the corporate Credit Union/CUSO was clearly defined from the start.
Referrals
There is a section in the Act that mentions referrals; whereby a Credit Union, if they don’t offer the service in question, can refer a member to another Credit Union that does offer the service. However, it also means a Credit Union can refer a member to another Credit Union, even if both do offer the service.
Ian Glenn, CEO at Wellington IT brought this up and asked Miriam the value-add of referrals in the case whereby the original Credit Union already offers the services in question. Miriam said the aim of this amendment was to get everyone thinking about the greater good of the Credit Union movement as a whole.
During a later session at cuEngage Live, Pat Corcoran from RW Pierce said that “Credit Unions need to stop operating as ‘little islands’ and work together for the benefit of the movement”.
Wouldn’t we all much rather have services remain within the Credit Union sector, rather than go to a competing bank or Fintech? This change would hopefully push Credit Unions to think about their communities rather than competition, and worse still, competing with each other.
Technology needs to be able to facilitate this new initiative as well. We should think about member experience, could a member log into their app and potentially be a member of two Credit Unions; one they’re an original member of, and the other for which they’re only utilising a particular service for a period of time. Could this be a perfect opportunity for a collaborative Credit Union?
Approvals
One of the most transformative parts of the Credit Union Amendment Act is the subtle change to the process of approvals. The loan approval process no longer needs to be approved by a credit officer, but now states…
“a loan approval process which has been approved by the board of directors”
This change means that, as a Credit Union, with approval of your board, you can put new rules and regulations in place when it comes to loan approvals.
Miriam suggested this is the perfect opportunity to leverage technology and automated decisions in your loan approval process.
There are numerous decision engines in the market, which generate recommended decisions on loans, based on a wide range of data, from back office records (Scion), to bank statements and Open Banking connections.
These can facilitate Auto-approval and Auto-payout of loans. When SEPA Instant Payments come into play, this means your members could apply for a loan AND receive their funds in a matter of minutes. A huge transformation for Credit Unions.
Miriam said using technology will generate significant time savings on “yes” decisions and can be programmed to ensure all potential refusals are referred for human review before final sign off. This change in the Act gives Credit Unions scope to make prudent decisions around low-risk loan applications. It also allows Credit Unions to leverage technology to remove the administrative burden and overheads, letting them compete and provide a stellar experience to their members.
Digital Operational Resilience Act (D.O.R.A)
D.O.R.A was a hot topic throughout the day at cuEngage Live and interestingly, 73% of the audience viewed D.O.R.A as a positive framework for Credit Unions (should it come into effect).
Miriam took this opportunity to thank Wellington IT for our input on D.O.R.A. from an ITSP perspective and finds it positive that we are implementing elements of D.O.R.A as part of our overall Operational Resilience framework as best practices dictate.
The focus of this chat was around proportionality; how are these rules applicable to all Credit Unions, especially as some are very large and some are very small. But Miriam turned that on its head and said it’s not about big versus small; it’s about Credit Unions versus other payment providers. There is no doubt a demand to implement more resilient strategies, but given the scale and size of Credit Unions, Miriam suggested that proportionality was critical to ensure that the rules that apply to other institutions may not be directly applicable to Credit Unions. An alternative solution might be separate Central Bank regulations for the Credit union sector.
This was a fantastic healthy debate throughout the audience. The flip side was that a different set of rules for Credit Unions could be worse; at least D.O.R.A is well established and standardised and it would make sense for Credit Unions to follow suit. Also, if Credit Unions want to be seen as viable alternatives to the big banks, then surely they should also adhere to the regulations that surround the financial sector?
Wellington IT's approach to D.O.R.A
At the moment, Credit Unions are exempt from D.O.R.A, and these rules may never apply, but no matter what, more stringent rules around technology are coming down the track.
Credit Unions are advised to look at the underlying principles of D.O.R.A as best practice and to start preparing for it. It’s all about building in continuity for Credit Unions. The Minister of Finance is still deliberating over D.O.R.A and will ultimately decide whether the exemption applies or not.
The good news is, that at Wellington IT, we are already in a strong position with ISO27001 certification and our Operational Resilience Framework, which encompasses elements of D.O.R.A as best practice dictates. It’s essential to recognise its value and to start thinking about potential changes now. While there are mixed views on the feasibility to comply, it often comes down to operational capabilities within Credit Unions.
Thank you Miriam Galvin
We’d like to take this opportunity to thank Miriam Galvin for being a part of cuEngage Live! Feedback from attendees proved that Miriam kindly giving her time to the fireside chat was hugely valuable and the opportunity to ask questions was greatly appreciated.
To learn more about how Wellington IT are approaching D.O.R.A (and SEPA Instant Payments), check out our blog by clicking below.
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