5 Emerging Risks and How to Mitigate Them

By Joe Luedke, Risk Consultant – Emerging Risks, Risk & Compliance Solutions, CUNA Mutual Group.

With each technological advance emerges new risk. Think about it: Every technology upgrade, new mobile device and new payment method brings exposure that wasn’t identified previously.

The real threat occurs when these risks aren’t anticipated or communicated within your organization.

Here are five emerging risks every credit union should have on their radar right now:

  1. Social media. Employees posting comments on social media that are inaccurate or appear incomplete or disparaging can threaten your organization’s reputation. Be careful when taking disciplinary action, as the National Labor Relations Board can classify social media activity as “protected concerted activity.” Mistakes here can lead to retaliation, wrongful termination claims and expensive litigation.
  2. Internet of Things (IoT) era. The IoT offers new tools and technologies that provide constant connectivity. It also creates new opportunities for data compromises. Workplace devices – like printers, clocks, break room appliances and TV – and employee devices – like watches, Bluetooth headsets and fitness trackers – are all susceptible to hacking, which can lead to unauthorized access to your network.
  3. Bitcoin and blockchain. Members may already use bitcoin and blockchain for fast and unregulated transactions, sometimes associated with nefarious activity. Unfortunately, about a third of bitcoin trading platforms are hacked.
  4. Ransomware. Today’s phishing attacks can restrict access to files and threaten disruption or permanent destruction of sensitive information unless a ransom is paid. Ransoms can range from hundreds to thousands of dollars, and they are typically payable in bitcoin.
  5. SMiSHing and website spoofing. As demand for mobile access grows, members don’t think twice when they receive texts claiming to be from their credit union. These fraudulent texts can infuse malware or redirect members to spoofed websites that allow fraudsters to capture or confirm personal or account information.

Credit unions must be ready to deal with emerging risks like these, while still tending to familiar threats. So, the bottom line is, don’t be complacent. Start implementing basic steps – like the following – today, so you don’t fall victim:

  • Educate staff and members about spam, shams and other scams. Ensure they understand how to identify fraud. Teach them what to click and what not to click and how to use proper technology etiquette to keep themselves – and your credit union – out of harm’s way.
  • Stay in the loop, as executive involvement is critical to success. Remember, when risk management is effective, nothing bad typically happens and the status quo is maintained. But, when you’re blindsided by a problem, poor risk management usually takes the blame.
  • Follow a process that includes risk mapping matrices, risk heat maps and process mapping to help uncover potential risks, quantify their potential impact and keep leadership aware.
  • Implement risk and compliance best practices, including policies and procedures to reduce potential loss. A number of great resources in the credit union marketplace are available to help, including those in CUNA Mutual Group’s Protection Resource Center.

As technology continues to evolve, risks will continue to emerge. So, do your best to visualize, track and communicate risk at your credit union. Once you identify an emerging risk, you can begin taking action to mitigate it.

Learn more about emerging risks by watching our recent webinar “Emerging Risks on the Radar.”

CMG logoCUNA Mutual Group is the NAFCU Services Preferred Partner Mortgage Payment Protection. Learn more about our Preferred Partner at www.nafcu.org/cunamutualgroup.

How to Resonate with Today’s Up-and-Comers

By: Stacy Styles, Vice President and Senior Business Leader at Mastercard.

Marketing to Millennials

The myth of the millennial as the perpetual adolescent has finally been put to rest. Adult millennials, meaning those in the 28 to 37-year-old age bracket, are today’s adults with families, homes, careers, and most importantly to credit unions, money. In fact, older millennials are really the sweet spot for credit unions. They are growing in affluence, accounting for a third of adults earning more than half a million a year and more than 6 million of them earning six figures.

Play to their Passions

In a recent webinar, Key Ingredients—Resonating with Millennials and a Sneak Peek at Centennials, we discussed how to capture millennials’ business. The key is to understand what drives them. This group is making money and they are not afraid to spend it on things they care about such as travel, golf, and cuisine. These three areas differentiate affluent millennials from other generations.

Travel:  Nearly three-quarters value travel for entertainment. More than half have traveled outside the country in the last year which sets them apart from other adults.

Golf: 22 percent played in the last year. That’s more than double the rest of the adult population. Nearly three-quarters are willing to travel just for golf and use it for business.

Cuisine: Millennials are the true foodie generation with two-thirds saying cooking and food are a big part of their identity. They are really ready to put their money where their mouths are. A whopping 87 percent said they would splurge on a nice meal even when money is tight. They are willing to spend $282 per person for an extraordinary culinary experience, compared to the next highest spending group, which came in at $170.

Building the Bridge with Boomers: Community and Future Planning

A question on the minds of many is how to market to millennials while still appealing to the largest current base: the boomer generation. The answer is community.

Getting involved and making a difference locally is very important to millennials. More than three-quarters of millennials say they feel like they should be doing more to help their local communities. The same number report that when a company donates to or does something for their school or community, they try to buy things from that company as often as possible. This is a value shared by the boomer generation. It’s also a great spot for credit unions which are smaller and more personal to the communities they serve.

Both of these groups are also in stages of planning. Boomers are still planning retirement while older millennials are planning for their children’s educations. A good area to focus on that resonates with both generations is providing easy tools to create life plans.

What’s Next? The Centennial Generation

The next generation, we’ll call them centennials, would refer to those currently 19 years old and under. They are expected to be quite different from millennials as they grew up under the recession and are more cautious, are savers not spenders and are very concerned about the future. This generation wants advice and is debt adverse, so offer them educational materials including the benefits associated with accumulating debt so they can get to where they want to be in the future.

One area that bridges these generations is the digital landscape. There is no doubt this is important to millennials: 92 percent say they would make a banking choice based on digital services. Three-quarters of millennials would like to make payments by scanning with their phone, and 60 percent have already done this in a store. Mastercard did a study which indicated the only thing holding this group back from using their cell phones to make payments was availability. Not all places accommodate this, and they are waiting for it to happen.

So while it is obvious credit unions need to be offering the best possible digital services to millennials, this will be a foregone conclusion for centennials. The next generation doesn’t know anything but the digital age and they will expect everything in place, so getting up to speed now will pay off in the future.

Watch the webinar in its entirety here.

Mastercard is the NAFCU Services Preferred Partner for Credit, Debit, and Prepaid Branded Products. More educational resources and contact information are available at www.nafcu.org/Mastercard.

Image 1 Sources: Harris Poll, November 2015; eater.com research, 2015; MasterCard golf segmentation research, 2014; Yankelovich Monitor, 2016
Image 2 Source: Apptentive report “Mobile Banking Apps Not Just For Millennials,” 2015

The Most Popular Posts of 2016

2016 was an eventful year, and the experts have provided educational material you can’t miss. From card fraud to millennials, credit scores to new IRS regulations, we’ve rounded up the top 5 webinars and blogs that cover the most important topics of the year. Keep yourself in-the-know and be prepared for a strong, successful 2017.

Webinars

Card Fraud on the Rise: How Financial Institutions Can Help Prevent It
Ann Davidson, VP of Risk Consulting at Allied Solutions; Tammy Behnke, Program Executive at ProSight Specialty Insurance

Possibly the most relevant concern for financial institutions right now is costly card fraud risks. Learn the fraud prevention best practices that could save your credit union from hundreds of thousands of dollars in payment card losses.

Understanding Credit Scoring and Credit Reports
MaryKay Scully, Director of Customer Education at Genworth Mortgage Insurance

Everything you need to know about credit scoring and reports, inside and out. This webinar covers report preparation, the information contained and where it comes from, what types of reports are available, how to use the codes in each section of the report, how the scoring model works, and more.

NAFCU/BFB Gallagher 2016 Executive Compensation Survey Report
Christine Burns-Fazzi, Co-Founder of BFB Gallagher; Jack E. Clark, PhD, Clark Research Associates

Now in its 10th year, the annual NAFCU/BFB Gallagher Executive Compensation and Benefits Survey is the trusted source for comprehensive data on credit unions of all asset sizes, coast-to-coast. Get data on important topics like total executive compensation by asset size, types of nonqualified plans, demographic profiles, and more.

Top Risk Concerns: A Look Back and a Look Ahead
Ann Davidson, VP of Risk Consulting at Allied Solutions; John Buzzard, Product Manager of Network Products at FIS Global

Don’t wait until disaster strikes. Arm your credit union with the knowledge of the most prevalent risk exposures from years past, and prepare for 2017 with the best methods to mitigate these risks.

Data Breaches Continue to Rise: How Financial Institutions Can Prepare & Respond
Ann Davidson, VP of Risk Consulting at Allied Solutions; Sally King, Managing Partner and Co-Founder of NXG Strategies

Build a proactive data breach response plan that will help reduce the financial and reputational impact of an attack inside your organization or in your community. Get educated on secure policies and third-party programs, effective account holder response plans, methods for offsetting the costs of responding to an attack, and compliance with FTC regulations.

Blogs

Four Emerging Risks Challenging Credit Unions Today
Roger Nettie, Senior Risk Management Consultant at CUNA Mutual Group

Four major emerging risks at-a-glance: wire transfers and ACH, overdraft fees, collection letters, and ATMs and the Americans with Disabilities Act (ADA) compliance.

How to Speak the Millennial Language
Larry Pruss, Senior Vice President of Strategic Resource Management

Making up nearly 25% of the US population, it’s no wonder millennials were one of the hottest topics of discussion in the financial services industry this year. If you know how to connect with them, millennials represent a huge opportunity for your membership, educational content, and sales teams. Read the top five tips on how to leverage a millennial engagement strategy today.

Card Data Breach Loss Prevention Checklist
Ann Davidson, VP of Risk Consulting at Allied Solutions

Eleven key steps to ensure your credit union is doing everything possible to prevent card data breaches. From evaluating the compromised card number and determining the level of risk, to reporting the fraud to the Visa Fraud Reporting System and/or MasterCard’s Safe System (a requirement under card association rules), you can’t afford not to implement these best practices.

The 7 Most Expensive Vendor Management Mistakes
Patrick Goodwin, President of Strategic Resource Management, Inc. (SRM)

Even the wisest professionals at financial institutions overlook savings opportunities when dealing with third-party vendors. From the insidious, to the emotional, to the downright dangerous, here are the most expensive mistakes credit unions make with their vendors—and how to prevent them.

Card Fraud Lessons Exposed
Ann Davidson, VP of Risk Consulting at Allied Solutions

When Allied Solutions presented a webinar on card fraud, they conducted a poll and found that 81% of attendees had personally experienced an uptick in card fraud during the preceding 12 months. Allied reached out to individual financial institutions to perform an assessment of their risk programs and help uncover potential causes of the card fraud they were experiencing. Read on to find out what they found.

 

The Internet of People

By: Bryan Clagett, CMO, Geezeo.

The Internet of Things (IoT) is defined as the proposed development of the Internet in which everyday objects have network connectivity, allowing them to send and receive data.

It’s rapidly evolving and I’m a huge fan of my Wink, Nest, and Honeywell products, which give me control over my lights, security cams and thermostat at my vacation home.

How IoT will impact financial services is yet to be fully understood, but I’m confident great things lay ahead. Connectivity is a wonderful thing.

While we are waiting for IoT to shake out, why not consider an Internet of People (IoP) strategy?

I’m not just talking about a social media or digital strategy, but rather a substantive approach to this simple question; how do we leverage the internet to connect with members and our communities? I know this question is rather broad, but it’s one that I don’t think enough of you ask nor answer.

The concept of IoP started emerging in 2015, as wearables started hitting the market. Ironically, little is written about IoP because it has been a concept driven by the electronics industry as a means to connect people to devices and technology.

The real opportunity of IoP, is its ability to connect people with other people, and of course with brands.

I firmly believe that the heart and soul of the Internet is made of people reaching out to each other, connecting and communicating for a myriad of reasons. Our industry gets so wrapped up in talking about channel convenience and accessibility. We forget that individuals and organizations need to experience the Internet as a two-way communications platform. It cannot just be about product delivery or only serve as a broadcast medium serving up stale, homogenized content.

iopConnectivity to your audience improves transparency and helps you build trust.

Most importantly, it gives you and your brand an opportunity to emerge as a center of influence. If your goal is to be the “financial partner of choice” or “lifetime financial partner” of your members, you better have an approach that leverages an IoP strategy.

Every aspect of the web, particularly as mobile continues to flourish, represents an opportunity for you to connect and connect the dots. Relationship building, community building, and influence building should be competencies of your brand and none can be effective without an IoP strategy.

So many of you tell me your credit union is about “people helping people.” Well, increasingly people are on the web and it has emerged as the channel of choice. So I ask– what’s your IoP strategy?


Geezeo
 is the NAFCU Services Preferred Partner for Personal Financial Management (PFM).

 

Insurance for Mortgages May Confuse Members

By: Ben Weismer, Mortgage Payment Protection Product Manager, CUNA Mutual Group.

If you’ve talked with members who can’t make their mortgage payments because they’re temporarily disabled and can’t work, you may have heard something like, “I thought I had insurance through work for this,” or “I thought PMI covered this.”

It’s heartbreaking. And, it’s predictable. Just look at the products and programs members might think are covering them in case they can’t work due to illness or injury:

  • Private mortgage insurance (PMI)
  • Workers’ compensation insurance
  • Short-term or long-term disability insurance
  • Social Security Disability Insurance
  • Mortgage payment protection

Mortgage transactions are already complex.  Members may struggle to understand the key differences between the items listed above.

However, at some point before closing, it’s a good idea to ask them how they’ll pay their mortgage if their breadwinner loses his or her paycheck. Be ready to clarify key aspects of these products and programs. Here are a few points that can help you clarify the differences:

PMI

PMI protects lenders, not homeowners if you stop making payments on your loan. It will not make your mortgage payments.

Workers’ Compensation

Workers’ comp applies only to work-related illness or injury. This is rarely the cause of long-term disability. In a survey by the Council for Disability Awareness, fewer than 5 percent of the workers who claimed disability benefits from 2009 through 2013 also received workers’ comp benefits.1

A 2015 report 2 by ProPublica and NPR detailed the steady erosion of workers’ comp benefits. According to this analysis, many states have not only shrunk the payments to injured workers; they’ve also cut them off after an arbitrary time limit—even if workers haven’t recovered.

Short- and Long-Term Disability Coverage

It’s important for members to double-check with their employers (unless they’ve purchased private policies) about this type of coverage.

It generally applies to non-work-related disabilities. But, it’s easy to misunderstand how much of a paycheck these coverages actually replace, when they kick in and how long they last.

Members may be surprised to learn the limitations of this coverage—or worse: They may discover they don’t actually have one or both of them.

Social Security Disability Insurance

If you’re permanently disabled, this coverage may be provided as a Social Security benefit. The most recent statistics available regarding Social Security Disability Insurance claims show that the rate of denial has climbed every year for the last six years. And, it topped  70 percent in 2013.3 It’s important to note that these claims typically take a long time to process—long enough for an unpaid mortgage to go into default.

Mortgage Payment Protection

Mortgage payment protection products vary; but, in general, they have some key advantages:

  • Mortgage payment protection benefits aren’t reduced by other benefits, such as workers’ compensation or long- and short-term disability. So, they can supplement these benefits. This can be critical if the other benefits fall short of replacing the member’s full paycheck.
  • These benefits typically kick in after only 30 days of a disability, but other types of benefits may not kick in for several months or longer.

Helping members protect their ability to pay their mortgages supports both members’ and your credit union’s bottom line. Remember, it’s definitely worth having a brief conversation about disability protection before you close a mortgage. That can help you avoid much more difficult conversations later.

Learn more about common misperceptions members could have about insurance for mortgages and how this could lead to falling behind on payments because your members thought they had coverage by listening to our recent podcast Mortgage Insurance Can Make A Member’s Head Spin.

CMG logoCUNA Mutual Group is the NAFCU Services Preferred Partner Mortgage Payment Protection. Learn more about our Preferred Partner at www.nafcu.org/cunamutualgroup.

 

12014 Council for Disability Awareness Long-Term Disability Claims Review
2“The Demolition of Workers’ Comp,” March 4, 2015, ProPublica and NPR
3SSI Annual Statistical Report, 2014