A Checklist For Working With The Fed

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CLEVELAND — From tips on getting started with the Federal Reserve Bank on item processing to time-savings steps in the conversion process, three experts provided advice on working with the Fed.

Process & Timeline

The process and timeline for establishing services varies depending upon a credit union's current use of Federal Reserve financial services, and may take just a few days to add to existing services to one to two months to implement a Fed account, an electronic connection, and a suite of payment services, according to Sean Rodriguez, the Federal Reserve Banks' national sales and marketing director.

"Establishing a Federal Reserve Bank account or an electronic connection requires that a financial institution submit a resolution from its board of directors, along with an official list of representatives authorized to conduct business with the Federal Reserve Banks on behalf of the financial institution," explained Rodriguez. "If not already on file with the Federal Reserve Banks, this precursor step may take a financial institution some time depending on their directors' schedules."

Rodriguez said forms to begin the process can be found at http://frbservices.org/forms/account_services.html.

Settin Up Account

"Setting up an account and ordering and installing the equipment required for a FedLine Advantage connection are the other steps in the process that require the most setup time," explained Rodriguez. "If a credit union takes quick action on these processes, it can minimize setup timeline."

Rodriguez pointed out that every credit union has an assigned account executive at the Fed who can assist with identifying the right set of services and guide the customer through the setup process. "Credit unions can get their account executive's contact information by entering their ABA into My FedDirectory on the home page of FRBservices.org."

Andrew Tilbury emphasized the importance of Rodriguez' advice. The director of marketing and communications for the Vista, Calif.-based Bluepoint Solutions stated that he is aware that CUs that don't already have a relationship with he Fed often don't know who to call.

"They sometimes call the wrong person or they contact the wrong region when they first investigate the process of converting over. In those cases we have helped by looking up their routing and transit number and then we put them in touch with their Fed rep."

Testing Period

According to Tilbury, another step that can slow down the credit union from flipping the switch with the Fed is that "There is a testing period that needs to be completed and carefully checked. You want to make sure that the cash letters are being created properly to be certain inclearings are being processed correctly."

Tilbury shared that he has seen issues with CUs converting their check archives over to an in-house archive.

"Traditionally those archives are held and maintained by the corporates," Tilbury told Credit Union Journal. "It varies from corporate to corporate, but if the credit union's corporate keeps the archive on some proprietary system, they can make it very expensive to make these images available to the credit union. What we sometimes see credit unions do is build up their own check archive for three to six months before flipping the switch and presenting their items to the Fed."

Depending on the core system, credit unions could face problems with aligning databases, said Tilbury. "Sometimes you need a conversion tool to make sure all the databases line up and that everything is being read properly."

Check Retrieval Process

According to Paul Maslonka, COO of JSC FCU in Houston, the main concern when moving away from the corporates for item processing is how the new processor will handle retrieving check images.

"Whatever organization the credit unions decides to process with, the CU needs to know how the processor is going to retrieve those check images. The credit union must decide whether it wants to bring that part of the process in house, or whether to pay someone else to do that."

One of the most challenging aspects of the JSC changing over to the Fed was keeping all of the technical terminology straight. Maslonka said vendors, the Fed, and even its own IT staff often use different terms to address the same products and processes.

"Inclearing, Fed Return, Fed Forward . . . the components within item processing often are not referred to the same way when you talk to different organizations. Credit unions, too, have their own jargon. So all of the people involved in the transition have to have a clear understanding of who is saying what. Everyone has to speak the same language."

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