WASHINGTON—Saying NCUA does not want credit unions to “go the way of Blockbuster,” Vice-Chairmen Kyle Hauptman addressed what the agency is thinking when it comes to the future technology needs of credit unions.
Hauptman shared those thoughts and addressed other questions in a Q&A with NAFCU President Dan Berger during the association’s Congressional Caucus.
“The main thing is we don't want credit unions in the long run to go the way of Blockbuster,” said Hauptman in response to Berger’s question rover what NCUA is doing to make certain credit unions are prepared to deal with a new digital world that includes blockchain and bitcoin. “We are credit unions’ regulator and we can’t be slow to give credit unions the clarity they need to compete with fintechs and anything else that comes their way.”
Hauptman said he believes credit unions are currently well-positioned to step into the rapidly changing world of digital transformation.
“I think credit unions are better positioned than most,” he said, pointing to collaboration being an even bigger benefit moving forward. “Credit unions, as you know, work together in a way that other kinds of institutions don't—right? Not how like Morgan Stanley and Goldman Sachs don't work together…”
Compliance Issues
Hauptman said an important step NCUA has to make in helping credit unions compete in an era in which cryptocurrency is gaining strength is to work with compliance officers and clearly outline what are acceptable practices regarding digital banking and digital currencies.
Berger asked Hauptman about credit union’s ability to invest in fintechs through CUSOs, and the limitations that are in place today.
“We don't want to have an Uber versus taxi situation. We don't want you to lose. If that requires us reinvestigating CUSO investments into fintechs…,” Hauptman said.
Small Credit Unions
Turning to the plight of small credit unions, Hauptman addressed inherent difficulties in de novo efforts, saying he is aware the process to launch a new credit union can be difficult and take a long time.
“If you go to our website there's nothing that says ‘How to start a credit union,’” noted Hauptman. “It’s not like Burger King or some other large franchise business that has this information on their sites. Just click here and learn more.”
Hauptman said he hopes NCUA, too, can help more small credit unions survive beyond approving mergers. He believes one way to do so would be to incentivize examiners to help keep a small shop operating.
“When a small credit union faces some difficulties, the easiest thing is to have them merge. Nothing collapses, the Share Insurance Fund doesn't have to write a check. It's not a huge pain for everybody. That’s the easier route,” he said. “We have to incentivize examiners to find ways to keep small credit unions going.”
The NCUA Budget
Before leaving the Caucus stage, Berger asked Hauptman to address NCUA’s budget.
Hauptman pointed out that last year the agency’s budget was reduced.
“But we shouldn't rely on a pandemic to reduce our spending,” said Hauptman, noting one way NCUA is considering cutting spending is to not always replace personnel when an employee leaves.