Kaufman & Canoles recently released its predictions for trends and changes in the credit union industry for the upcoming year. Here are three potential hurdles for 2016 that could impact many credit unions:
Class action litigation. Spikes in class-action lawsuits against credit unions and their overdraft programs are predicted to continue. Credit unions will be forced to closely examine, and possibly revise, all overdraft disclosures, account agreements, as well as courtesy pay programs, risk governmental enforcement actions or member lawsuits. It’s predicted that many credit unions will revise or revamp these programs to avoid any issues in the future. Using a core system provider that has built-in support for courtesy pay can help by saving you time and money if you are required to revise or restructure your courtesy pay program.
TRID. The TILA/RESPA Integrated Disclosure rule became effective on Oct. 3, 2015, changing the forms required to close home loans. Congress provided credit unions and other lenders a grace period for compliance with TRID through the Homebuyer's Assistance Act to encourage normal processing times and business operations during the first few months of TRID integration. This grace period expired Feb. 1, 2016. TRID compliance will require comprehensive changes in the way credit unions make home loans. Has your credit union core processor worked with you to ensure that you are compliant with TILA/RESPA or have they dropped mortgage support altogether?
Mergers. The trend for mergers of credit unions is forecasted to continue and perhaps increase throughout 2016. For all credit unions, the regulatory burden is becoming extremely cost prohibitive. Many maintain that the regulatory burden could cost credit unions nationwide billions of dollars. For credit unions that are $100 million or less in assets, this regulatory burden has made such a financial impact that even with a strong financial position, these credit unions, in 2016, may seek merger partners. The difference, however, will be that mergers in 2016 will be by and between strong credit unions with a mutual goal of improving member service and increased opportunities to members. Partnerning with a credit union core processing system that guarantees regulatory compliace will ensure that regulation does not become a burden. Believe me when I say, such a core processor exists.
Some or none of these predictions may impact your credit union, in fact I would bet they don't. I would predict that your credit union is more likely to face immediate issues such as problems with data. Credit union core processing systems are the repository for your member data, and if your core technology does not provide you with access to member information in real-time and offer you the tools to make sense of the data then you may have a real problem, instead of worrying about 'predictions'. Carpe diem!
