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A CUSO Buys Wescom Central Credit Union’s Office Building

April 15, 2022 –  On February 18, 2022, a CUSO funded by investments from twenty credit unions purchased Wescom Central Credit Union’s office building in Pasadena, California.   The buyer is CUSO Realty Investors One, LLC (“CRIO”), which is a CUSO solely owned by credit union investors.   CU Capital Management, LLC (“CUCM”), which is also a CUSO, managed the fundraising, bidding and purchasing process on behalf of CRIO.  Wescom will lease back the entirety of the building for an initial term of fifteen years with options to renew.  The lease is triple net with Wescom maintaining full operational control and maintenance of the property, and picking up all building related costs, including structural repairs.

The sale was brokered and submitted to a bidding process involving twenty bidders.  CRIO distinguished itself as the only CUSO bidder.  The sales price of $59 million consisted of $29 million in equity from the credit union investors and the balance from a loan.

Wescom, founded in 1934, has assets in excess of $5 billion, and over 200,000 members.  The credit union has owned and operated the property since 1986.  As a result of the transaction, Wescom added approximately $50 million in capital and increased its capital ratio from 7.79% to over 8.5%.  Due to an accounting rule change effective in 2022, Wescom can recognize all the capital gain upon the sale. Wescom now has more capital to fuel its growth objectives.

The projected annual returns to the credit union investors from the Wescom transaction over the next fifteen years are between 5% and 7%, payable quarterly beginning in 2023.  CRIO has received over $109 million in investment commitments from twenty-five credit unions to fund additional credit union sale/leaseback transactions.  CUCM, as Manager of this sale/leaseback CUSO network, is in active negotiations to assist one of the network CUSOs to purchase another large credit union office building.   Other seller prospects are in exploratory discussions. Future purchases will also include lending opportunities for credit unions.  Loans originated by credit unions will be participated out to multiple credit unions.

Maps Credit Union is a co-owner of CUCM.  Maps was the first credit union to use a CUSO as a buyer in a credit union sale/leaseback transaction over ten years ago.  Mark Zook, CEO of Maps Credit Union, is on the Board of CU Capital Management.  Before Guy Messick’s retirement from the law firm Messick Lauer & Smith, Guy worked with Mitchell to design and implement this collaboration with three goals in mind for credit unions: grow capital, obtain superior investment returns, and source solid commercial real estate loans.   Guy is now CEO of NACUSO Business Services, Inc. (“NBS”), a wholly owned subsidiary of NACUSO.  NBS works with CUCM to communicate the opportunities to credit unions.

Guy Messick said, “NACUSO Business Services choose CU Capital Management as its first NBS Promotion Partner because the benefits of this collaboration are so compelling.  The investment and lending opportunities for credit unions are second to none.   As for the selling credit unions, the comfort of a credit union knowing that its long-term landlord is a CUSO controlled by credit union colleagues cannot be underestimated.   The collaboration provides a business model that keeps the benefits and revenue within the credit union industry.”

CU Capital Management, LLC and CUSO Realty Investors One, LLC were represented by Fox Rothschild LLP and Messick Lauer & Smith P.C.

For more information on CUCM and the CUCM CUSO Network you are invited to visit www.cucapitalmanagement.com .  For more information on NACUSO Business Services you are invited to visit www.nacusobiz.com .

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Digital trust and safety on fintech platforms

By Mahipal Nehra

The financial technology or FinTech market is expanding with new, innovative businesses improving banking and financial services like never before. According to the Market Data Forecast, by the year 2026, the FinTech market will reach a market value of $324 billion at a compound annual growth rate of 23.41%.

As the industry continues to grow steadily, the fraudsters are also evolving at the same speed, making it difficult for financial institutions to implement the best tools and protect their company and customers.

Digital trust and safety on FinTech platforms

Due to the financial institutions not implementing tools quickly, customers remain skeptical.

As reported in the BIS survey of May 2021, US households state they trust traditional banking institutions more than FinTech to protect their data. Hence, it becomes essential for the FinTech industry to bridge the trust gap and secure people’s data.

Trust: FinTech’s undeniable asset

Thinking of FinTech, technologies like Big data, digital ID, and open banking are the first things that come to mind. These tools facilitate new opportunities for digital transformation in the financial sector. But getting people to try out the products designed using these innovations in FinTech requires their trust.

Besides, the trust gap can occur at any level in the digital banking ecosystem, i.e., between users and platform, platform and sectors, or sectors and tech providers. However, and as from the stat mentioned above, it is clear that consumers trust traditional banking more than FinTech institutions, making it essential to approach FinTech solutions holistically.

Designing your solution in FinTech

Before designing a solution for your FinTech business, you must understand whether the user experience you are offering resonates with people on a rational and emotional level. If the FinTech product you provide is meaningful, then how you ensure credibility and functionality, added by your technology partner, will signal trust.

To merge trust into FinTech products, each stage of product development, such as user experience, critical feature development, business analysis, etc., should have a trusted foundation.

Risks in FinTech for consumers

There are many dangers for customers in the FinTech industry. These dangers can be broadly be divided into compromised data security, and the use of non-transparent data to both regulators and consumers.

Undeniable is the loss of privacy, rising fraud and scam risks, discriminatory uses of data analytics, and consumer behavior manipulation.

These situations risk entering the financial regulatory space with bare minimum operational knowledge.

One of the significant risks for consumers will be privacy and data security loss

The loss of privacy and data security are intertwined and lead to different concerns based on the data that is being accessed and how sensitive the information is.

Banks are already at the risk of data breaches due to siloed IT systems.

The growth of these activities created the phase of “Crime as a Service” that playoff technology built based on SaaS.

Talking about risks in FinTech, apart from cyber-insecurity, some vulnerable consumers have also encountered fraud and scam risks. And the rate of online scams and fraud is increasing day by day and creating fake identities online—currently, fake I.Ds are much easier to do online than build your own real-life identity.

So what are the ways to gain consumers’ trust while providing safety on FinTech platforms? Let’s find out.

Ways to Achieve Trust and Safety on FinTech Platform 

Despite being the center of cyber criminals’ attention, the FinTech industry has strongly opposed it. With the help of the new tools and technologies, FinTech organizations are working towards creating trustworthy foundations for their customers and indulging safety on the platform.

  •  AI Fraud Detection   

Artificial Intelligence or AI is a broad range branch of information technology that aims to build smart machines to perform tasks that usually require human intelligence.

For example, in the FinTech industry, AI collects data, analyzes information, secures and facilitates transactions.

The comprehensive purpose of uses that AI has includes customer support, credit risk assessment, decision making, and most importantly, fraud detection.

AI and ML systems analyze customer and business data to help the FinTech industry flag vulnerabilities and rank client risks.

As AI can analyze a large volume of transactions, it can be used to reject or flag transactions altogether for further investigation. In addition, an ML model can be used to predict behavior at a granular level across all aspects of a transaction to predict any fraudulent activity.

That’s why FinTech leaders like Visa are advancing towards AI and machine learning strategies to foresee and control financial frauds.

  •  Smarter Cybersecurity   

Failing to prioritize cybersecurity within the FinTech space can create critical risks. To build more robust cybersecurity, FinTech organizations should know their assets and implement a layered security strategy so that if one protocol fails, it doesn’t affect other protocols.

To achieve this, one can leverage cloud solutions, multi-factor authentications, and IAM (Identity and Access Management).

  •  Blockchain   

Blockchain is a digitally decentralized and distributed ledger that exists across a network. It is a series of immutable blocks. Blockchain distributes transactions across different blocks or nodes that cannot be altered.

Any unauthorized access will change the hash links and create a mismatch between the nodes, making the Blockchain highly secured. Blockchain protects the data of a FinTech organization and offers an additional bonus for them.

The decentralized nature of blockchain networks eliminates the costly, unnecessary workflows and processes. Needless to say, Blockchain can restrain data breaches or any other fraudulent activities from reducing fraud and cyber-attacks in FinTech services.

  •  RegTech   

RegTech or Regulatory Technology helps financial institutions to comply with regulatory requirements effectively. It relies on AI and ML to automate routine tasks like fraud and risk management, regulations reframing, real-time reporting, data analytics, and decision making.

This technology aims to ensure that FinTech remains compliant with the regulations. RegTech works by automating regulatory changes, monitoring transactions, generating reports, and sending alerts to the compliance staff about potentially fraudulent transactions.

Some of the critical characteristics of RegTech are speed, agility, integration, and analytics.

  •  SASE   

Secure Access Service Edge (SASE) is a network architecture that converts SD-WAN into cloud service. Put simply, SASE combines the pros of software-defined wide-area networking (SD-WAN) with security to deliver them as a facility.

For FinTech organizations, SASE simplifies authentication, increases scalability, supports zero-trust networking, security convergence, and simplified management.

In short, using SASE in the FinTech industry can increase the security of their cloud-based infrastructure application and prevent unauthorized access or abuse of the customer’s sensitive data.

  •  Testing   

Another important factor while developing FinTech applications is testing throughout the development cycle.

To test the application security, you will need to build a security testing team that can come up with realistic scenarios of data breaches or other scams and improve the application’s security.

The FinTech security testing team will also run penetration tests to detect the potential vulnerabilities and perform a security audit to detect flaws, verify the effectiveness of security measures, and evaluate regulatory compliance.

Final thoughts

FinTech can be made safer by keeping an eye on circumstances driving its adoption, breaking free from outdated security transactions that don’t fit its current direction, and taking a new approach to data security by being transparent.

If we learn suitable lessons, commerce, trust, and the digital economy will be even more resilient and trustworthy.

Analyzing user behavior to defeat fraud for FinTech or similar platforms becomes essential for the service in a crowded market. Therefore, it should be stated as transparently as possible for customers’ awareness and consideration.

The Challenges of a FinTech Industrialist

To overcome the challenges of FinTech industrialists, you can use security trends like Machine Learning and AI for faster fraud detection. In addition, use Blockchain to keep data transparent yet secured.

Don’t forget IoT for smarter cybersecurity to develop safe and reliable FinTech products and solutions.

Only after integrating these technologies for security will the FinTech industry show its true potential across the marketplace and win the trust of its customers.

 

This article was written by Mahipal Nehra from ReadWrite and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.

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How to instill trust in every transaction – and every interaction

By Ajay Bhalla

“We can only make delivery of your next shipment if you pay your outstanding balance of $102.02; please download the attached invoice.”

“The password for your email account has expired. Click here to change your password.”

“You can receive your tax refund faster — all you have to do is share your bank account information.”Seemingly every day, each one of us is barraged with a never-ending stream of urgent requests and so-called “opportunities” across an ever-expanding network of apps, platforms and IoT devices. These examples are only the most obvious threats, ones we can — hopefully — easily identify and defuse. But in our hyperconnected world, we may not always be aware of where we are vulnerable.

The small businesses we support are under increasing threat, with cybercriminals exploiting the rapid transition to e-commerce during the pandemic. So too are local governments — a forthcoming report by RiskRecon, a Mastercard company, reveals that 41% of American cities do not have information security programs strong enough to protect their data assets, making them vulnerable to data breaches and ransomware attacks that could upend essential city services.

Even larger companies with more cybersecurity resources struggle to properly safeguard their businesses when employees work from home over less secure connections, or find themselves at risk from bugs in ubiquitous pieces of software. They also fail to appreciate the risk posed by third-party vendors — or vendors of those vendors, often many steps removed from their core business.

A decade ago, mobile banking and digital payments had just begun to take off, but the connections within the ecosystem were still clearly defined and well protected through industry standards and protocols, limiting the risk of large-scale fraud and cyberattacks. Today, the digital explosion has created exciting opportunities for people and businesses of all sizes — and many more points of vulnerability for all of us.

It’s not enough to protect each transaction. We must work together to protect trust in every interaction, taking what we all have learned in managing individual risk and bringing those best practices — and developing new ones — to the rest of the cyber realm.
“A more proactive, forward-looking attitude toward cybersecurity will support innovation while infusing trust across the digital economy.”

That means continuing to set the digital standards to fortify trust, and collaborating with government agencies and other private-sector companies to quickly identity emerging threats.

It also means evolving our focus on risk, taking an outside-in approach to assessing and guarding against the vulnerabilities of our vendors, suppliers and partners, as we do our own. These “third-party risk” attacks are projected to account for 60% of cybersecurity incidents this year. We are only as strong as our weakest link, but companies large and small may not have a full understanding of who is participating in their ecosystem and being trusted with access to sensitive data and operating functions — or if they do, is that information current? Could it change tomorrow? Would they be ready if it does?

That’s why we launched the Global Cybersecurity Alliance Program earlier this year, which provides user-friendly APIs to extend cyber-risk monitoring and scoring to our partners’ customers — and why we are excited that Interos, an industry leader in systemic risk management, will be joining the alliance.

This holistic view of risk can save time and resources, reduce potential financial losses and give companies and governments the opportunity to focus on what they do best — serving people.

A more proactive, forward-looking attitude toward cybersecurity will support innovation while infusing trust across the digital economy. A systemic approach to risk makes us all stronger.

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Constellation and Bonifii enable simple, secure authentication for credit union members

April 13, 2022 – Constellation Digital Partners announced today that it will launch a new certified service for Meritrust Credit Union that will provide privacy-preserving, verifiable digital identity credentials through its platform. The innovative solution to authenticating membership identity, MemberPass™, is enabled through the strategic partnership with fintech industry veteran Bonifii.

“MemberPass is a breakthrough identity technology that provides credit unions and their members with a myriad of security benefits,” said John Ainsworth, CEO, and President of Bonifii. “It upgrades security authentication protocols and helps credit unions move beyond knowledge-based authentication questions. Instead, a MemberPass digital credential allows Meritrust members to authenticate who they are using new blockchain-based identity technology. This allows them to control their personal information and use it in a safe and private way to access financial services.”

“Meritrust is working to improve members’ financial well-being by staying connected not only through these extraordinary times but beyond,” said Holly Terrill, Director of Member Support Services, at Meritrust Credit Union, “Even before the pandemic created an urgency for digital banking, Meritrust made it a priority to offer a range of services that make it easy to bank on members’ personal time. With the launch of MemberPass, we can now reduce friction while delivering the control and security over personal information that our members need to interact with us when it’s most convenient for them.”

Through Constellation and its roster of other credit unions planning deployment, Bonifii can connect and deliver benefits to more credit union members. With this type of strategic collaboration, Bonifii enables credit unions to drive and improve engagement with their members and provide them the privacy and security they need while using digital banking and financial services.

“The value of Constellation is the cutting-edge safety and industry-leading fintech innovation provided by Bonifii,” said David Lindner, SVP of Sales and Marketing. “Credit unions that deploy on our platform with either full digital banking or even stand-alone services will have the capability to provide MemberPass to members. Our credit union partners can feel confident in the simple integration and superlative data security.”

To learn more about Constellation, visit www.constellation.coop. Connect with Constellation on TwitterInstagram (@ConstellationDP), Facebook and LinkedIn.

About Constellation Digital Partners, LLC

Constellation has created the first open development platform dedicated to credit union and fintech app development. This patented, secure, and flexible cloud-based ecosystem provides credit unions and innovative app developers the ideal platform to deliver safe, reliable, and next-generation digital financial service experiences. Credit unions now have the freedom to compete, innovate, and thrive in the financial services industry. First, by redefining what they offer, and second by delivering digital financial services in a way that places members squarely at the center of their business strategy. Visit www.constellation.coop to learn the latest innovations. Connect with Constellation on TwitterInstagram (@ConstellationDP), Facebook and LinkedIn.

About Bonifii

MemberPass™ is provided by Bonifii®

Denver-based Bonifii is the financial industry’s first verifiable exchange network designed to enable trusted digital transactions using open standards and best-of-breed security technologies. Bonifii empowers credit unions to change the way they interact with their members by enabling a seamless user experience in every financial transaction through a secure, private, trusted, and transparent resolution of the entities’ identity. To learn more about Bonifii, visit www.bonifii.com, email us at sales@memberpass.com, or follow the company on the Bonifii blog, LinkedIn, or Twitter.

 About Meritrust Credit Union

Meritrust Credit Union has been helping its members do more with their money since 1935. The credit union now serves nearly 107,000 members with $1.3 billion in assets. Meritrust is headquartered in Wichita, Kansas, with 16 retail branches providing expert, advisory experiences, complemented by online, mobile and eATM technology allowing members to bank on their time. It’s easy to join Meritrust, and membership is open to most anyone. With a mission of improving the lives of members and the communities it serves, Meritrust offers consumers and businesses the products, services, tools and education they need to achieve their financial goals with confidence. For more information, visit meritrustcu.org. Federally insured by NCUA.

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True North Federal Credit Union partners with PSCU for credit and debit processing support

April 13, 2022 — PSCU, the nation’s premier payments credit union service organization (CUSO), has announced that True North Federal Credit Union (True North) has selected the CUSO for credit and debit processing support and services.

Headquartered in Juneau, Alaska, True North has been serving its members since 1948, guided by its mission to improve the economic well-being of the members, employees and communities it serves through quality financial solutions. Today, True North makes contributions to civic and nonprofit organizations, as well as recreational and charity events that serve local communities across Anchorage, Juneau and other parts of the state.

With more than $205 million in assets, True North was looking for a partner committed to quality and communication. The credit union was also seeking a provider that would uphold the superior level of service its members have come to expect from their credit union.

“Our team has been watching PSCU closely, and we were impressed with everything the CUSO has accomplished over the past several years, as well as how dynamic it has become,” said Lauren MacVay, president and CEO of True North. “We are pleased to partner with an organization that demonstrates such a consistent commitment to credit unions, as we feel confident PSCU is well-positioned to best lead us into the future.”

PSCU will begin providing credit and debit processing services and support to more than 12,600 True North members in October 2022.

“True North’s dedication to the credit union philosophy of ‘people helping people’ is a value shared by PSCU,” said Scott Wagner, EVP, chief revenue officer at PSCU. “We are pleased to welcome True North to the cooperative and look forward to putting our industry-leading solutions to work to deliver an unparalleled experience for their members.”

About PSCU

PSCU, the nation’s premier payments CUSO, supports the success of 1,900 credit unions representing nearly 7 billion transactions annually. Committed to service excellence and focused on innovation, PSCU’s payment processing, risk management, data and analytics, loyalty programs, digital banking, marketing, strategic consulting and mobile platforms help deliver possibilities and seamless member experiences. Comprehensive, 24/7/365 member support is provided by contact centers located throughout the United States. The origin of PSCU’s model is collaboration and scale, and the company has leveraged its influence on behalf of credit unions and their members for more than 40 years. Today, PSCU provides an end-to-end, competitive advantage that enables credit unions to securely grow and meet evolving consumer demands. For more information, visit pscu.com.