NEW HAVEN, Conn.-Credit unions need to think strategically, subscribe to scale and automate to have any hope of meeting compliance demands.
That is the message from Andy Greenawalt, founder and CEO of Continuity Control, provider of a regulatory platform for community financial institutions.
"Small credit unions are at a massive, massive disadvantage, so No. 1 they need a way to get scale," he said. "Too many are trying to do it themselves, or borrow from the credit union down the street, but this is not getting it done. NCUA's bar is rising, so getting together with other credit unions to have a shared compliance officer is a good idea. Renting expertise from someone else is a good idea."
Small CUs have not thought strategically about compliance, Greenawalt asserted, meaning they continually are only addressing the "next" issue. He said they need to "zoom out," in the parlance of online maps, and find a way to gain "systematic control."
"Regulatory change is only going to come faster," he said. "Credit unions could get help from their state leagues, it could be us, or it could be any of the companies wrestling with this problem."
If every regulatory change requires human energy, that becomes a problem, Greenawalt continued. He said CUs should not address compliance on a 1:1 ratio. If credit unions use a shared compliance officer from their league, it might change the ratio to 5:1, he explained. If they use technology, that might take it to 20:1.
'Stubbing Toes'
"Credit unions should organize their strategy around NCUA's AIRES (Automated Integrated Regulatory Examination Software) framework," he said. "For a $30 million credit union, the examination questions will only go to a certain depth, but for a $500 million credit union it goes deeper. It is an open-book test."
Continuity Control sees CUs "stubbing their toes" on very basic elements of compliance, such as policy management, Greenawalt lamented. He said this is because of "cobbling things together" from various sources and nothing looks the name.
"Write all the documents the same way," he said. "Small credit unions cannot continue to survive by doing things the same way they always have. Technology is available that will help." -Michael Bartlett
