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RedZone Protects to Offer Credit Unions a New CUSO Alternative for Compliance and Risk Mitigation

10/21/21 – Annapolis MD, RedZone Compliance Services, a premier provider of regulatory compliance and governance solutions, and Launch Credit Union are pleased to announce the formation of RedZone Protects, LLC, an enterprise risk and compliance focused Credit Union Service Organization (CUSO). The CUSO was formed through a collaboration of inaugural investor Merritt Island, Fla.-based Launch Credit Union ($1B in assets; 73,000 members) and RedZone Compliance Services, LLC of Maryland. The CUSO also acquired the financial service industry business portion of Security Compliance Associates (SCA) of Clearwater, Fla., giving it an existing customer base of 160+ credit unions.

This newly formed RedZone Protects CUSO will provide premier information security services solutions to credit unions across the country though the delivery of professional information security assessments and regulatory compliance advisory services. The new CUSO’s broad  expertise and decades of experience will assist credit unions in securing and defending their membership and organizations against the ever-evolving threat landscape while helping them comply and remain compliant with growing information and cyber security regulations.

“We felt that the creation of RedZone Protects at this time was appropriate and needed in the credit union industry,” said RedZone Protects CEO Bill Murphy. “Our goal is to assemble the best of the best into this CUSO in providing services to credit unions nationally in the area of governance and regulatory compliance. Over the next year, the CUSO will develop as the go-to vendor in meeting your credit union regulatory requirement. We are excited about what the future will bring.”

“The creation of RedZone Protects was a win, win, win scenario. The credit union industry gained a respected partner/CUSO in an ever evolving space,” said Launch Credit Union President and CEO Joe Mirachi. “Launch Credit Union was offered a unique investment opportunity with a chance to shape the CUSO and RedZone Technologies partnered with an existing client to continue their endeavor of securing the lives of millions of consumers. We are eager to partner and collaborate while serving the needs of credit unions and their member owners.”

“RedZone Protects acquired a majority stake in Security Compliance Associates’ (SCA) financial industry business in September of this year, making it the first credit union-focused business to be integrated into the new CUSO,” said Jim Brahm, former CEO of Security Compliance  Associates and now President of RZProtects SCA, LLC. “We are excited about becoming the dominant provider of security compliance services for credit unions. In joining the new CUSO we will continue to bring our long tradition of providing valuable compliance and security services to the Credit Union market as part of the new and enhanced team.”

About RedZone Protects

RedZone Protects focuses on key elements of NCUA and state regulatory-mandated assessments and reviews related to the examinations every institution is required to perform. The CUSO understands and tracks the ever-changing landscape of regulatory compliance, technology, and financial segment trends to position each credit union client in a posture of strength, knowing that they are compliant, secure and PROTECTED. RedZone Protects provides credit unions with regulatory governance and information compliance support. For additional information visit www.redzoneprotects.com.

For specific questions regarding this announcement, please contact Jim Brahm at 727-571-1141 or email Jim at jimbrahm@scasecurity.com.

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PSCU Payments Index – October 2021 Edition

10/21/21 – Today, PSCU – the nation’s premier payments credit union service organization (CUSO) – published the October edition of the PSCU Payments Indexthe goal of which is to provide information and insights to help financial institutions make informed, strategic decisions on the road ahead.

In this month’s iteration, PSCU focuses on the combination of optimism and uncertainty within the U.S. economy – and the related effects within the payments industry. With COVID-19 hospitalizations on the decline and new non-vaccine-based medicines on the horizon, consumer spending remains strong as we enter the holiday shopping season. Yet, there is increased uncertainty as labor and supply chain shortages, as well as surging fuel prices, are projected to impact ongoing economic recovery. Even as consumers appear ready to buy, they are often challenged to buy products, leading some of the biggest U.S. retailers to charter their own cargo ships to speed goods to market. The study looks at the impact of these forces and takes a deep dive into credit card delinquencies, which have declined throughout the pandemic, aided by government stimulus funds.

“Consumer spending remained strong throughout September, once again adapting to the changing environment despite continued declines in consumer confidence,” said Jack Lynch, SVP, Chief Risk Officer and President, CU Recovery. “As we have been reporting on the drop in credit card balances, we now look at credit card delinquencies in this month’s Deep Dive, where notable declines have coincided with government stimulus payments throughout the pandemic. While still currently well below pre-pandemic levels, overall delinquency rates tend to increase historically toward year end. We will continue to closely monitor additional impacts of the sunset of most forbearance accommodations, as well as spending trends as we begin the holiday shopping season.”

A sampling of key takeaways from the September report includes:

  • Consumer spending remained strong for both credit and debit purchases, while concurrent declines were reported in the September Consumer Confidence Index, dropping for the fourth consecutive month.
  • Inflation remains elevated as the CPI-U for September increased slightly to 5.4% year over year, representing an increase from the August result by 0.1%. This is a 13-year high, with notable increases in food, shelter, new car prices and home furnishings.
  • Finding staff remains a top concern. The unemployment rate fell to 4.8% in September, with strong growth in wages as data shows available workers are being paid a premium. The economy grew by 194,000 jobs in September, far less than what was anticipated and fewer than the 366,000 added in August.
  • Credit card delinquencies have declined through the COVID-19 pandemic, influenced by the three stimulus/recovery payments, and are now 61 basis points lower than 2019 pre-pandemic delinquency rates. The September 2021 overall credit card delinquency rate was 1.30% and has been slowly rising since June.
  • Consumer credit scores are on the rise. Aided by lower credit card balances and lower credit card delinquencies, overall FICO credit scores for our fixed population for September 2021 was 737, seven points higher than pre-pandemic September 2019. Younger demographics benefitted most from the improvement, with Younger Millennials (25-32 year-olds) posting a 12-point improvement compared to September 2019 at an average credit score of 705.
  • Amazon has officially started the holiday shopping season with sales beginning on October 4 – even earlier than 2020, when Amazon’s Prime Days sale shifted from the summer to October 13-14. Other retailers are following suit, influenced by continued supply chain shortages for both labor and products, as they hope to boost holiday sales in an economic environment with elevated consumer liquidity.

The full report is available for download here or can be shared as a PDF upon request. Additionally, feel free to subscribe here to receive updates when the PSCU Payments Index is published each month.

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New CU*Answers CEO Geoff Johnson Eager for Opportunity

9/9/21 – Grand Rapids, MI – At its August Board Planning Session, the Board of Directors of cooperative CUSO CU*Answers announced the completion of their succession project and have selected current CU*Answers President/COO Geoff Johnson as its new CEO effective October 1, 2021. Speaking on the matter, Chairman of the Board Scott McFarland said, “Geoff has been an invaluable member of the CU*Answers team for many years, and we are confident that he will be an exceptional leader for our organization.”

Johnson, who has served as COO since 2014, expressed his gratitude to the board and excitement for the opportunity. “In the sixteen years since I joined CU*Answers, I’ve seen our products and services change dramatically. New technology and ideas come in, only to be replaced by the next great thing. One thing that has not  changed is the sense of purpose we all have every day. Of being a cooperative, just like the credit unions that own us, and of giving those credit unions the power to control their own destinies.”

“I have been entrusted with an incredible responsibility by our clients and owners, to lead CU*Answers and the next generation of leaders looking to continue that legacy,” Johnson added. “To work closely with our owners and to build something special together. What we do and make for our clients is important. But why we do it is what makes us who we are. I look forward to inspiring credit unions to join us in that mission.”

Johnson first joined CU*Answers in 2005, coming in with sixteen years in credit union leadership roles primarily overseeing lending. In 2014, he was named COO and further promoted  to President/COO in 2018. During his tenure, Geoff has worked closely in the growth and development of CU*Answers Management Services teams including Earnings Edge, Lender*VP, AuditLink, Web Services, SettleMINT, and Imaging Solutions.

About CU*Answers, Inc. – CU*Answers offers expertise in implementing technical solutions to operational needs, and is a leader in helping credit unions form strategic alliances and partnerships. CU*Answers provides a wide variety of services for credit unions including its flagship  CU*BASE® processing system (online and in-house) and Internet development services featuring It’s Me 247 online and mobile banking. Additional services include web development, network design and security, and image check processing. Founded in 1970, CU*Answers is a 100%  credit union-owned cooperative CUSO providing services to credit unions representing over 2 million members and $21.5 billion in credit union assets. For more information, visit www.cuanswers.com.

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Credit Unions Needing Help Due to Hurricane Ida are Encouraged to Contact CU*SOUTH as a Resource

8/30/21 – Fairhope, Alabama – As a CUSO dedicated to growing credit unions in their communities, CU*SOUTH announces its Hurricane Ida Assistance Program. Any credit union that finds itself without sufficient office space, staffing, power, or IT support, is encouraged to reach out to CU*SOUTH for support.

“In over 38 years on the Gulf Coast, we’ve seen our share of hurricanes; as each one passes through, we learn our lessons and begin to prepare for the next one,” says CEO Leo Vaulin. “Our Event Response Team is activated as soon as there’s a threat of landfall anywhere along the Gulf or East Coast. Smaller credit unions tend to be the most vulnerable; but we’ve seen billion-dollar credit unions impacted as well.”

“Our first priority is to make sure that our core clients are provided for,” says COO Derrick Smith. “Between hurricanes and COVID, we’ve learned to distribute our resources – we have team members from Virginia to Washington ready to offer support. We provide office space, call center support for member service, back office support to make sure that ACH and draft items are posted, and IT support to replace damaged equipment, or re-route communications when primary channels fail.”

“With our core clients taken care of, we reach out to the community,” notes Mr. Vaulin. “We work with leagues and chapters – there’s always credit unions that need a helping hand. After Katrina, we hosted credit unions from along the Gulf Coast that had lost their offices, some for several months. After Hurricane Irma devasted the Virgin Islands in September 2017, CU*SOUTH provided all member services for St. Thomas FCU until power and internet were restored in January 2018. Once the credit union reopened, they became the leading force for economic recovery on the island.”

Any credit union needing a helping hand is welcome to contact CU*SOUTH. The CUSO emphasizes that credit unions don’t need to be current clients of the service provider – the CUSO wants to offer their support to any credit union in need.

Should your credit union need assistance around Hurricane Ida, please contact CU*SOUTH at 800-293-7554 or emailing support@cusouth.com

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Despite Growing Uncertainty, July Payments Trends Show Robust Growth

CO-OP Payments Trends Report (Spending Data from July 1-31)

8/19/21 – RANCHO CUCAMONGA, California – As it has been for much of the past year and a half, the U.S.’s path to economic recovery in the wake of COVID-19 can be described as uncertain and tenuous, at best.

Although CO-OP Financial Services has been tracking several positive spending trends among member credit union portfolios, including an anticipated resurgence of credit spending, big increases in the grocery category and a red-hot back-to-school shopping season, there are reasons to be cautious.

The Delta variant has led a new wave of coronavirus cases worldwide and across the U.S., a worrisome factor that is not fully captured in July’s spending data. As federal, state and local governments consider reestablishing mask mandates and other social distancing measures, it is still to be seen what dampening effect this may have on in-person schooling and work, as well as leisure activities like dining, entertainment and travel this fall.

For now, consumers have extra cash on hand, thanks to a rebounding jobs market and expanded federal child tax credit payments, which began hitting share accounts in July. That has translated to a month-over-month boost in both credit and debit spending in categories like dining and entertainment, education, gas, lodging, medical and travel.

Keeping uncertainty in mind, here are some of the key spending trends CO-OP’s SmartGrowth Consulting Team members are watching closely this month:

#1: Big Jump in Grocery Credit Spend
One of the biggest surprises in July spending was the growth in credit transaction volume within the grocery merchant category, both on a month-over-month and year-over-year basis.

Month-over-month, grocery rose by 61% in transaction count and 54% in transaction amount, resulting in a whopping 133% increase in interchange revenue. Year-over-year, the results were similar, with increases of 54%, 41% and 109%, respectively.

“This has been the big story of the summer so far,” said John Patton, CO-OP Senior Payments Advisor. “As consumers got back to throwing July 4th barbecues and graduation parties with family and friends, it led to bigger grocery shopping bills. We’re looking for this trend to peak in August and September, with Labor Day festivities and football tailgating coming back into favor for now.”

#2: Travel and Lodging Remain Hot
Consumers took to the roads and the skies in July, as they activated long-dormant travel and recreation plans. The travel, lodging, gas and dining/entertainment categories all enjoyed double-digit month-over-month credit spend growth in July, and smaller single-digit increases in debit.

Interestingly, while camping and home improvement credit spend also grew strongly in July, both categories trended down in debit. This may simply reflect a natural pull-back from the unprecedented growth seen in these categories last summer, when coronavirus lockdowns spurred a rise in “staycation” and “nearcation” activities, trends that have decreased as the economy has reopened this year.

#3: Strong Back to School Portends Early Holiday Season
According to Mastercard’s July SpendingPulse report, U.S. retail sales jumped by nearly 11% year-over-year in July, led by department stores with 44.8% growth. The report also showed that in-store purchases excluding auto accounted for more than 4 out of 5 retail sales in July – a 15% increase as compared with July 2020.

Within CO-OP’s portfolio, July debit interchange revenues within the retail merchant category jumped by 16% year-over-year. Meanwhile, credit retail interchange fell year-over-year by -17%, illustrating how credit is still trending behind debit overall, although the gap is starting to narrow.

Retail spend has been helped by the expanded child tax credit along with an early, supercharged back-to-school shopping season. The National Retail Federation predicts consumers will spend a record $37 billion on back-to-school shopping for K-12 students, along with $71 billion for back-to-college, also a record.

“As we move fully into the back-to-school shopping season, and what we anticipate being an early holiday shopping season, we’re looking for a notable strengthening in credit spend over the next several months,” said Patton.

What Credit Unions Should Do Now
According to Beth Phillips, CO-OP Director of Strategic Portfolio Growth, now is the time for credit unions to capitalize on these strong growth trends, while keeping an eye on how members will likely behave come fall.

With credit trending up after being overshadowed by debit over the past year and a half, credit unions have an opportunity to focus on cardholder incentives across various categories, including travel, grocery and retail, in order to get their cards top-of-wallet and capture maximum interchange revenue growth.

“Given supply chain interruptions and shortages across toys and other retail categories brought on by COVID, most experts are predicting an early holiday shopping season this year,” said Phillips. “For credit unions, it’s important to start ramping up their credit incentives early. Get in front of it now – don’t wait until October, as that may be too late.”

With more uncertainty on the horizon, credit unions should also make it easy for members to access their card accounts through their preferred digital wallet apps. CO-OP Digital Card Issuance allows members to access their digital credit and debit credentials instantly, providing a seamless, touchless and secure process through the credit union’s mobile app. And with CO-OP Digital Wallets, credit unions can enable members to use their debit and credit cards with most popular wallet apps, including Google Pay, Apple Pay, Samsung Pay, Fitbit Pay and Garmin Pay.

Month-Over-Month Category-Level pending (Comparing July 2021 to June 2021)

Please note that the category spending below reflects month-over-month comparisons (rather than year-over-year), i.e., compares July 2021 with June 2021, rather than July 2021 and July 2020.

Amazon/Bookstores
Transaction Volume (#):
Credit: Up 11%. Debit: Down 6%.
Transaction Amount ($):
Credit: Up 6%. Debit: Down 12%.
Interchange ($):
Credit: Up 20%. Debit: Down 8%.

Digital Goods
Transaction Volume (#):
Credit: Up 21%. Debit: Up 3%.
Transaction Amount ($):
Credit: Up 21%. Debit: Up 3%.
Interchange ($):
Credit: Up 23%. Debit: Up 3%.

Dining and Entertainment
Transaction Volume (#):
Credit: Up 24%. Debit: Up 5%.
Transaction Amount ($):
Credit: Up 22%. Debit: Up 5%.
Interchange ($):
Credit: Up 24%. Debit: Up 5%.

Education
Transaction Volume (#):
Credit: Up 14%. Debit: Down 2%.
Transaction Amount ($):
Credit: Up 22%. Debit: Up 4%.
Interchange ($):
Credit: Up 22%. Debit: Up 2%.

Gas
Transaction Volume (#):
Credit: Up 65%. Debit: Up 5%.
Transaction Amount ($):
Credit: Up 56%. Debit: Up 8%.
Interchange ($):
Credit: Up 106%. Debit: Up 7%.

Grocery
Transaction Volume (#):
Credit: Up 61%. Debit: Up 4%.
Transaction Amount ($):
Credit: Up 54%. Debit: Up 3%.
Interchange ($):
Credit: Up 133%. Debit: Up 4%.

Lodging
Transaction Volume (#):
Credit: Up 29%. Debit: Up 6%.
Transaction Amount ($):
Credit: Up 31%. Debit: Up 8%.
Interchange ($):
Credit: Up 29%. Debit: Up 7%.

Medical
Transaction Volume (#):
Credit: Up 17%. Debit: Up 4%.
Transaction Amount ($):
Credit: Up 15%. Debit: Up 2%.
Interchange ($):
Credit: Up 16%. Debit: Up 3%.

Retail
Transaction Volume (#):
Credit: Down 24%. Debit: Up 2%.
Transaction Amount ($):
Credit: Down 18%. Debit: Up 1%.
Interchange ($):
Credit: Down 23%. Debit: Up 1%.

Travel
Transaction Volume (#):
Credit: Up 26%. Debit: Up 8%.
Transaction Amount ($):
Credit: Up 16%. Debit: Up 1%.
Interchange ($):
Credit: Up 16%. Debit: Up 1%.

Computers
Transaction Volume (#):
Credit: Up 73%. Debit: Down 6%.
Transaction Amount ($):
Credit: Up 47%. Debit: Down 8%.
Interchange ($):
Credit: Up 77%. Debit: Down 7%.

Office
Transaction Volume (#):
Credit: Up 24%. Debit: Up 7%.
Transaction Amount ($):
Credit: Up 8%. Debit: Down 2%.
Interchange ($):
Credit: Up 8%. Debit: Up 7%.

Campers & Camping
Transaction Volume (#):
Credit: Up 17%. Debit: Down 4%.
Transaction Amount ($):
Credit: Up 7%. Debit: Unchanged 0%.
Interchange ($):
Credit: Up 12%. Debit: Down 1%.

Home Improvement
Transaction Volume (#):
Credit: Up 22%. Debit: Down 5%.
Transaction Amount ($):
Credit: Up 13%. Debit: Down 6%.
Interchange ($):
Credit: Up 21%. Debit: Down 6%.

More information on the CO-OP SmartGrowth Consulting Team can be found here.

About CO-OP Financial Services

CO-OP Financial Services is a payments and financial technology company whose mission is ensuring the success of the credit union movement. CO-OP payments solutions, engagement services and strategic counsel help credit unions optimize member experiences to consistently provide seamless, personalized multi-channel offerings, while delivering secure, sophisticated fraud mitigation service. For more information, visit www.coop.org.