WASHINGTON–NCUA Board Member Rodney Hood told credit unions here to prepare for a “comprehensive” rule for CUs when it comes to relationships with fintechs, in addition to addressing several other issues.
In remarks to NAFCU’s Congressional Caucus, Hood touched on a number of points, beginning with the economy, suggesting it’s “possible this foreboding situation is transitory, and simply reflects the challenges that accompany a gradual recovery from the almost unprecedented economic shock that we experienced in 2020 when the COVID-19 emergency hit.”
Hood said he is generally optimistic about credit unions, citing the most recent performance numbers and the addition of seven-million new members over the past 30 months.
“Suffice it to say that the performance of the credit union industry in a very challenging environment is a reflection of the industry’s resilience and leadership,” said Hood.
A Point of Caution
Hood cautioned his credit union audience to “be attuned to warning signs for the industry’s future.”
“I’m not generally alarmed when credit unions consolidate or even close, in most cases – those are simply a fact of the financial services ecosystem,” he said. “But I have been concerned, and my fellow board members share this concern, about the slow pace of adding new institutions in recent years. Do we have a reliable pipeline of new credit union charters bringing fresh blood into the system over time? Similarly, are we taking the appropriate steps to protect smaller, more vulnerable credit unions, which play an important role in the financial services ecosystem providing services to under-served communities? And are we doing everything they can to appeal to a rising generation of younger members?”
Other Points
Other Points touched on by Hood included:
New Charters
Hood said new charters “are a priority. We made some progress on this front last year, with four new credit unions established. I certainly hope we can build on that number, but it’s a step in the right direction -- the credit union system would benefit from more start-up energy, so that’s something we’ll continue to encourage.”
CUSOs
Hood pointed to the expanded authorities for CUSOs approved by NCUA, saying, “We want credit unions to be able to take advantage of these tools for collaboration and innovation, which is important for the industry to compete in today’s marketplace.”
Cannabis Banking
Hood again noted he has been advocating for Congress to reform and normalize banking laws for cannabis-related businesses, to allow financial services providers to work with this emerging industry with “greater clarity.”
Fintechs
A point he often raises, Hood said he has been “intensely focused on the rising financial technology industry, with the goal of encouraging constructive partnerships between fintech and credit unions to improve credit union operations and member services.”
He noted NCUA is developing a “comprehensive rule” to better guide credit unions in integrating fintech solutions with their existing service models.
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