How to Navigate Credit Union Regulations with Fintech

November 9, 2023

  As technology continues to revolutionize the financial industry, credit unions are constantly grappling with new sets of credit union regulations. From credit risk reviews to cyber incidents, staying compliant can be a daunting task. But fear not, because financial technology (fintech) companies are here to save the day!  In this article, we will explore why manual processes are a thing of the past, a few recent regulations that credit unions need to navigate, and how fintech solutions can help streamline compliance processes. Get ready to discover how cutting-edge technology can make regulatory headaches a thing of the past!

Constant Changes Call for Automated Processes

The burden of regulatory changes for financial institutions has surged from 10 per day in 2004 to approximately 200 per day in 2023, according to Thomson Reuters. unions that rely on manual processes to understand and implement these modifications find themselves needing help to keep up. So how can your credit union keep up with these constant regulatory changes? By finding the right fintech partner, which will provide cloud-based compliance in real-time. It’s easier than ever before to partner with a fintech company. The NCUA recently passed a new rule that enhances the collaboration between federally insured credit unions (FICUs) and fintech companies. The final rule modifies current regulations pertaining to indirect lending, loan participation, as well as the buying, selling, and pledging of eligible obligations and notes sourced from liquidating credit unions.

Commercial Credit Risk Reviews 

The NCUA has taken significant steps to strengthen its supervision of commercial real estate activities. This includes closely evaluating loan performance, conducting risk assessments and scenario analysis focused on loan exposures, implementing more rigorous review procedures for credit unions with elevated risk profiles, and conducting targeted reviews at credit unions with higher levels of risk. Credit unions can use fintech to automate data collection and analysis, monitor commercial real estate loans in real time, develop risk assessment models, and more. These technologies enable credit unions to effectively manage their loan portfolios and ensure the overall health of their lending activities.

Collecting Small Business Demographic Details

According to Section 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which was issued on March 30, 2023, credit unions need to collect and report on small business lending to the Consumer Financial Protection Bureau.  The primary objective behind gathering and documenting this data is to enhance the implementation of fair lending regulations and empower creditors and communities to effectively cater to the requirements of small businesses, with a specific focus on minority-owned and women-owned businesses. Credit unions can use fintech to automate data collection processes. These innovative solutions empower credit unions to effortlessly gather essential demographic information from their small business members. By integrating these tools into their existing systems, websites, and apps, credit unions can simplify the entire data collection process.

Cyber Incident Reporting

Credit unions now have the obligation to notify the NCUA within 72 hours regarding any reportable cyber incident. Such incidents encompass unauthorized data access, disruptions in crucial member services, and breaches facilitated by third-party service providers.  The NCUA has provided explicit guidelines for reporting procedures to ensure adherence to regulations. When submitting a report, credit unions must furnish vital information including their name, charter number, and a concise summary of the incident. However, it is recommended that specific sensitive data such as indicators of compromise (IoC) and particular vulnerabilities be omitted from the initial communication. Credit unions are recommended to revisit their existing cyber response plans, thoroughly evaluate contracts with third-party service providers, and guarantee that employees possess adequate training to identify and report cyber incidents promptly. Fintech companies like Information Management Solutions help credit unions back up data, identify and mitigate cyber incidents, and restore clean backups. We can also help your credit union maintain compliance

Navigate Changes to Credit Union Regulations with IMS

Using fintech to navigate regulation changes is essential for your credit union’s success. By understanding the regulatory landscape, collaborating with fintech partners, and leveraging technology solutions, credit unions can streamline operations, enhance member experiences, and drive growth.  Are you interested in diving into fintech waters? Learn more about our Compliance services and contact us today to start keeping up with regulatory changes. 

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