ORLANDO, Fla.-Acknowledging the dominant issue of heading into 2009 is the credit crisis and related credit risk, Harland Financial Solutions said it has identified seven trends that are affecting credit union decision-making.
The company's executives, basing their findings on the relationships the company has in some form with two-out-of-every-three financial institutions in the U.S., shared their findings with Credit Union Journal during its Connections Conference here.
Hre's a look at the trends identified by Harland:
Credit Risk Management. In a soft credit market in which regulators are increasingly vigilant, the trend in risk management is toward greater transparency, said Sam Kilmer, VP-market development. "You must have transparency, and for that you must have automation," said Kilmer.
In this space Harland offers its CreditQuest product, and it is reporting strong interest in the product. "We're seeing the market demand the ability to bring all the risk together," said Kilmer. "There is a lot of anticipation that regulators are going to ask for more and more risk measurement. Regulators are going to want you to 'show your process' on the commercial side, just like on the retail side.
Operational Risk Management. Internal and external fraud, business continuity, "fortress-level security," and related issues all fall under this umbrella. "There is a wide range here from the processes involved in granting credits to security to fraud aspects," said Kilmer.
Green Banking. "Green banking is taking off, if not for the environment, then for efficiencies, if not for the public relations value, then for the tangible results," observed Kilmer. Green banking should mean infrastructure-related cost savings, he said. "We're starting to see some innovative solutions being built out of this, including whole new organizations," said Kilmer, pointing to OneEarth Bank as one such example. In Harland's case, one related outgrowth has been products that eliminate paper, including electronic signature-based loan docs.
Optimizing the Branch. The historic rise in branches and the resulting increase in employees has led to a new emphasis on getting more out of those people - or using fewer people. "From what we can gather this is just an old-fashioned efficiency play," said Kilmer. "We are tailoring processes to the business strategy; we want to bake that into the process." Increasingly, he said, optimizing the branch also means leveraging business intelligence. "Sales come from good service, and good service comes from information," said Kilmer.
Leveraging Business Intelligence. Effectively using business intelligence, said Kilmer, means changing the way a credit union hires and fires employees. "You need to be able to document transactions, with the key being the information (from the member) that is gleaned," he explained. He pointed to Credit Union 1 in Anchorage, Alaska as a leader in the use of BI.
Mobile Banking. In Harland's view, mobile banking "feels like Internet banking rev. 2.0." "There's been a flurry of interest in these solutions," said Kilmer. "There are some very aggressive predictions of adoption. In this rush, the questions become 'How does this fit into our business strategy, and what about our technology strategy?'" The only roadblock: one concern of consumers is that if they lose their cellphone their accounts are vulnerable. Harland offers a browser-based mobile app, with Raj Shivdasani, president of Harland's Enterprise Solutions Group, predicting that that the three mobile apps-browser, SNS and downloadable apps - will eventually be merged into one.
Architecture. While SOA has historically been for "techies," Kilmer said its integration is now a top business challenge. "It's a major, increasing factor with branches and lending," said Kilmer. "It's a growing factor in the backoffice, too, to ensure everything is connected. The other piece that is really interesting is the ability to convert incrementally, and that allows more flexibility and cost savings."
