overdraft fees |

Recently, the Credit Union National Association held its annual governmental affairs conference. They covered a wide range of topics from regulatory changes to future initiatives and more. After the conference, American Banker compiled a list of 6 topics from that conference that credit unions are talking about. Those topics include:

War in Ukraine
Economy and fee income
Struggles of starting a new credit union
Inclusion initiatives
LGBTQ+ affiliations and communities
Credit unions buying banks

Let’s discuss some of these trending credit union topics and what they mean for the future of your credit union.

War in Ukraine

Many industries are wondering how far the effects of the war between Ukraine and Russia will spread. We have already seen a hike in gas prices, and the supply shortages caused by the pandemic will also compound any issues furthered by the ongoing conflict.

Many countries are cutting ties with Russia, making it difficult for them to retrieve any assets or benefits of commerce from these areas. And since Russia has already been accused of interfering in American politics, many businesses are concerned that we are about to get hit with an increasing number of cyberattacks originating from the Russians.

As far as credit union-specific dealings, the Ukrainian National Credit Union Association has partnered with its members to help send aid to those affected by the war. According to their website, “the Ukrainian American credit union movement in the United States exceeds 100,000 family memberships…our asset base has surpassed $4 billion.”

Of the trending credit union topics we are talking about in this article, this one is likely the most volatile, as the war could potentially have global repercussions regarding economic stability, and the rise of military involvement from various countries.

A recent article from the Credit Union Times talks about the issues the Ukrainians face as their towns are invaded and destroyed. There is looting and the sparse reports from the region include insights into a near-total collapse of all cashless payment options in the country. Relief efforts in the country are being debated currently to help even the playing field and allow for credit union depositors to be treated the same way bank depositors are treated.

In early March, the World Council of Credit Unions (WOCCU) and the World Foundation for Credit Unions have launched campaigns to aid Ukraine, including the creation of the Ukrainian Credit Union Displacement Fund, and many other credit union organizations have created funds that collect and disburse donations from all over the world to aid in relief efforts.

Credit unions across the world are being encouraged to help by providing monetary donations and using their platforms to help show Americans where and how they can donate through their CU memberships.

Economy, Financial Inclusion, & Fee Income

The economy is another trending credit union topic right now, and that has been the case since the pandemic began. With the huge global events that have taken place in the last few years, it’s hard not to be wary of market shifts and other economic indicators.

Many credit unions have been focused on creating opportunities to aid in the recovery from the pandemic, especially for those who live in underserved areas.

And one tactic that many credit unions have embraced is the reduction or elimination of overdraft and other complicated fee systems. These fees can actually harm credit union efforts geared toward increasing financial inclusion.

We’ve previously shared our insights that explain why the era of overdraft fees is ending. However, the discussions around these topics and the push for more financially inclusive initiatives mean that reducing or eliminating your overdraft fees is the most likely path forward. And that means your credit union will have to analyze their specific branch data to adjust their programs to account for this loss of an income stream.

The Struggles of Opening New Credit Unions

Though there are many difficult things to navigate this year, there are some trending credit union topics that center around how we can make it easier for new credit unions to open their doors.

For example, Village Financial Credit Union is a Black-led credit union that was set to open in 2019, but after several setbacks – including a global pandemic – the leaders of this enterprise are hopeful they will be able to open their doors in North Minneapolis by early 2023.

As we continue to strive for financial inclusion, it will become more important to create and look for opportunities to increase the presence of reputable credit unions in areas that are historically underserved.

Use Optimized Tools to Navigate Trends in the Credit Union Sector

Navigating trending credit union topics have long-lasting implications for your CU. And that’s why you need cutting-edge solutions that have been tailored to credit union needs.

Luckily, IMS Integration can help augment those offerings with elegant, member-facing solutions that include: Make a Statement, Online Courtesy Pay+, Online Self-Service Forms, and Trial Balance+.

Banks and credit unions have been charging overdraft fees for decades. Recently, many financial institutions have scaled back or eradicated the practice entirely. And many more institutions are poised to do the same. Facing harsh criticism from generations of banking members, it seems the era of overdraft fees is ending.

Since these fees often prey on the financially unstable and other demographics near the poverty line, credit unions and banks are removing overdraft fees in order to evoke trust and entice prospective members and clients to bank with them. Here’s what you need to know.

The Overdraft Fee Rules Have Changed

One big change in the overdraft fee argument is the implementation of Regulation E of the Electronic Fund Transfer Act (EFTA).

In 2009, The Federal Reserve Board made an amendment to Regulation E.

The amendment prohibits institutions (financial or otherwise) from charging “overdraft fees for ATM and one-time debit card transactions unless the consumer opts in or affirmatively consents to the institutions’ overdraft services.”

While this helps limit predatory banking practices, many believe there is still more room to be made for transparency in banking fees and charges.

In the last few years, many banks and financial institutions have reduced or removed their overdraft fees and other penalty-based revenue programs.

In an article from the Regulatory Review, and according to the Consumer Financial Protection Bureau (CFPB), 80% of revenue from overdraft fees comes from less than 10% of banking members. That means this small number of members is charged overdraft fees 10 or more times every year.

Thanks to initiatives and awareness being spread around this topic, more and more savvy bank and credit union members are opting to have their financial institution simply decline any charge that puts their accounts in overdraft status.

The Effect of Ousting the Overdraft

In a report about non-interest income, the Filene Research Institute found that revenue created by overdraft programs and overdraft protection services is shrinking. This is due to increasing regulatory pressures and evolving consumer expectations, as well as the financial industry’s struggle to maintain a wholesome reputation in light of these practices.

Predatory banking is turning members and potential members off. Members see them as indicators that a credit union or bank is looking to profit off financially vulnerable individuals in their communities.

Regulation and reputation are powerful tools. They can turn the tide against something that was once considered a staple of the banking business.

But as we’ve seen before, a reputation problem for big banks is often what makes credit unions so powerful today. Smaller institutions, and especially credit unions, have been providing financial literacy resources and education to their members since inception.

Many big banks can direct prospects’ attention away from these topics by flashing shiny new technology. However, there are credit union partners like IMSI looking to support reputable credit unions by providing them with the best in web development, industry expertise, and superior customer service.

Moving Your Credit Union Forward

Historically, overdraft fees incurred from big banks were much higher than credit union fees. But that trend is changing. Now, most overdraft fees – whether from a big bank or a local credit union – are about the same price.

Many financial institutions are creating new, less predatory practices to replace the overdraft system. Many are creating “low balance alerts.” These and other preventative protocols warn credit union members that they are approaching the limit of their account’s funds.

There are also the many products and services credit unions already offer to help those living paycheck to paycheck find ways to improve their financial situation over time.

Community outreach and financial education are great tools that can be more heavily marketed to replace the declining revenue that was collected from overdrawn accounts.

It’s true that everything has its season, and it looks like the season of overdraft fees is ending. Overdraft fees started in the 1990s but look to be on their way out.

Make a Statement at Your CU with IMSI

Make a Statement is not just a catchphrase – it’s a valuable service that IMSI provides to credit unions around the country. Our Make a Statement tool creates portable print and electronic documents delivered electronically and integrated behind Internet banking.

Similarly, Online Courtesy Pay+ is your online solution for electronic enrollment. It is fully integrated with your core systems. Online Courtesy Pay+ handles regulation-required member notifications like opt-ins and other Regulation E-affected processes.

Check out our website for more information, or contact us today if you have questions.