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Credit unions forge ahead with tech investments as COVID-19 keeps members home

The COVID-19 pandemic has pressed credit unions to double down on efforts to enhance their offerings of electronic services as their customers are forced to stay at home.

In recent years, credit unions were already increasing the number of electronic services they offered. For instance, a total of 65.9% of U.S. credit unions provided mobile banking services in 2020, up from 48.7% in 2014, according to data compiled by S&P Global Market Intelligence.

The fallout from the coronavirus only underscores the need to increase adoption that can help members connect with credit unions without visiting a branch, executives said.

"It's changing the whole mentality of how we do business," said Lynette Smith, president and CEO of Springfield, Va.-based TruEnergy FCU, in an interview. "It's a new financial world, and that's what we're faced with."

Prior to the pandemic, credit unions were focused on making electronic loan originations available and allowing accounts to be opened digitally, according to Brad Smith and Quintin Sykes, technology practice managing directors at Cornerstone Advisors, a financial institution consulting firm.

Now, efforts are being concentrated on assisting members who have been hard hit by the economic downturn caused by COVID-19.

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Christopher Saneda, senior executive vice president and COO at Virginia CU Inc., said his institution is "going forward from a services and member-need perspective."

"There are a lot of members losing jobs," he said, noting that funding from the U.S. Small Business Administration's Paycheck Protection Program, intended to keep people employed during the pandemic, is starting to dry up.

With the murky economic picture, Virginia CU wants to ensure member accounts can be opened, joint accounts are "taken care of" and account types can be changed — all with the press of a button on a smartphone.

"I think people just want to be able to do all of that remotely," Saneda told Market Intelligence.

According to data compiled by Market Intelligence on all operating credit unions as of March 31, the most tech-savvy institutions offered over 20 electronic services each to their members. Tampa, Fla.-based Suncoast CU topped the list at 25 services. Lake Jackson-based Texas Dow Employees CU was second with 24 services offered.

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The next seven institutions, including the largest credit union in the list by total assets at $22.71 billion — Tukwila, Wash.-based Boeing Employees CU provided 23 services each. Atlanta-based Delta Community CU South Bend, Ind.-based Teachers CU, Rockledge-based Community CU of Florida, Houston-based PrimeWay FCU, Klamath Falls, Ore.-based Pacific Crest FCU and Covina, Calif.-based United Catholics FCU rounded out the list.

Mobile-based banking services offered by credit unions have steadily gained ground on internet-based banking services in recent years, according to data compiled by S&P Global Market Intelligence on June 23.

Dan Berger, president and CEO of the National Association of Federally-Insured Credit Unions, said tech investments, like those in mobile- and internet-based banking, have allowed credit unions to keep pace with their banking competitors. "We have pretty robust technology plans," Berger said in an interview. "The pandemic has literally accelerated those plans. That's what we've seen."

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Midsized and large credit unions are offering the most electronic financial services, according to Market Intelligence data of all operating credit unions through March 31.

For institutions with total assets between $100 million and $1 billion and credit unions with assets greater than $1 billion, over 97% offered mobile banking. Meanwhile, just 51.31% of credit unions with assets under $100 million offered such services.

Only 41.61% of the smallest credit unions permitted new loans to be originated electronically, compared to 92.38% of midsized credit unions and 95.76% of the biggest institutions.

The data also showed a significant gap in e-signature authorizations between smaller credit unions, at 19.01%, and midsized and large institutions at 63.41%, and 70.06%, respectively.

Lance Noggle, senior director of advocacy and counsel at the Credit Union National Association, said one area in which e-signatures are still not commonplace is mortgages, due to notary signature laws that are "different for every state."

To allow mortgages to be processed electronically across the U.S., changes in some state laws may be needed, Noggle said.

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