By Randy Karnes, CEO, CU*Answers

…Unless we help them. When asked to think through some ideas and solutions to nudge regulators toward more efficient interactions with credit unions, I sat down and started listing all the reasons that they will never get it right—it was a long list.

Most simply came down to information procurement practices and the centralized thinking cast upon regulators as business people. They see it as needing a grand solution, not a distributed one, therefore requiring a single, standard approach for a whole state or even the entire country authored by one body. The spec development process goes on way too long and the RFP for processors to consider is often entirely outdated before the first contractor can bid it. 

And if they skip the big, front-end work for the specification and go straight to a single contractor’s design, the product is doomed to fail because credit unions are on too many diverse systems and have too many different vendor pricing considerations, plus there is no good way to prioritize the order in which vendors are certified and encouraged to sign up. It dies on the vine, before most regulatory leaders even complete the first elevator speech to start the project. It doesn’t die at the agency, it dies in the field. 

Read other ways technology can make credit unions’ lives easier—on the Underground!

Practical thinkers on both sides dismiss it as a lost cause, or know they can wait it out and expect a very dull, slow to evolve, and long-debated topic. The users will spend more energy bitching than actually using it, and the cycle continues as new regulators and administrations start over with their own generational approach to current technology tool applications. (See: CAMEL, AIRES, CUSO reporting formats, etc.) 

What if in a galaxy far, far away a young soul flipped the script and offered a solution like this:

1. Credit union stakeholders and regulators alike could share a database and web presentation of CREDIT UNION performance data that had a 24-hour feedback loop, data was auto-trended for years with daily data points, and alerts were sent out to get users to look at data when it changed significantly.
2. Credit unions invited regulators (or any valued partner) to see and use the data as credit unions were—trust was extended by Credit unions and rewarded by examiners. Data was at the center of their exchanges, and it could be viewed by any device anywhere.
3. Rather than each credit union having a single, general examiner overwhelmed with once-a-year, all-at-once examination designs, automation could connect arising issues to specialists at the credit union and examiner’s office. The specialists could resolve issues in nearly real-time, rather than letting issues snowball due to wide gaps in reviews.
4. Supporting documents, contracts, and ownership proof could be digitalized and exchanged between Credit unions and regulators in an encrypted transport mode to support the data clues and issue resolution. Smaller examination packages that could be exchanged in the here and now—not through mail or in-person exchanges.
5. The blue prints for these data warehouses and exchanges were shared and available to every credit union vendor to build like designs. What if the model could be replicated by many and evolved via lightly coordinated competition instead of centralized production and mandate?

Certainly, all the technology exists to do this today. Best thing is that regulators could distribute these expectations to credit unions, industry vendors, and new solution providers, and they would be built without any government or agency mandates. A creative, competitive race would develop to build these solutions based on credit unions and regulators sharing a solution for both analysis and for examination. Would it work here?

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CU*Answers is working on all five of these approaches today, and has been for the last two years. While we have more faith in our participating credit unions to change the world than regulators, we still hold out hope for NASCUS and the NCUA. More of the details are leaking out to the credit union marketplace as we bring these initiatives to market. This is not a sales pitch—it’s a rally cry to nudge everyone toward a new solution for regulator interactions.