The most important position at your credit union

August 3, 2012 at 9:10 am Leave a comment

I had never heard of a brokerage firm called Knight Capital until I read that the company caused its customers $440 million in trading losses.  Company officials blamed software installed earlier this week, which resulted in the firm entering millions of faulty trades in less than an hour.  In addition, as this blog post from the BBC points out, a still unexplained malfunction caused bank depositors to bounce checks after another computer malfunction miscalculated their balances.  These are extreme examples of what is becoming increasingly clear:  the quality of your computer services is becoming the most important aspect of your credit union’s infrastructure.  (Let me stress that this is not coming from some techno geek; in fact, I have a love-hate relationship with technology.  I love it because it allows me to do my job much better than otherwise would be the case, but I hate it because I am about as nimble with it as a cat in marshmallow fluff.)

Do you think this is an exaggeration?  It’s not.  IT is literally the nerve center of your operation and how well it performs will affect everything you want your credit union to do.  You may have the best marketing campaign in the world, but if your website isn’t user-friendly enough you will be missing most of your potential new members under the age of 40.  Have you invested a lot in compliance?  Well this investment is useless if your vendor can’t update software to reflect regulatory changes.  Pride yourself on excellent customer service?  All the friendliness in the world won’t make up for a member frustrated because he can’t access his banking account online.  And when you begrudgingly recognize that a problem is big enough to call in the lawyers, one of the first things they are going to ask you to do is to retrieve all those electronically stored records.

Does this have any practical implications?  You bet.  While it is obvious we need to hire the most competent IT people we can find, we also need to promote executives who understand the technology on which their business is so dependent.  Your management team doesn’t have to include Bill Gates, but it should include someone educated enough to ask the right questions of your vendors and/or IT staff.

Because IT’s impact on your credit union is so pervasive, your IT staff, like your compliance officer, should be involved in decisions before, not after, they are made.  Getting back to that marketing team with the best idea in the world, if it is not technologically feasible, it is not going to be of much use and you just wasted a lot of time and resources. 

Most importantly, your credit union should decide, based on its size, resources and products, what its core technological needs are and which ones can risk being shut down.  As Jason Liu points out, no IT person, no matter how talented, can recognize the consequences of every glitch but all management should understand what core functions need to be protected and take the necessary steps to ensure this.

Jobs Report Released Today

Today ought to provide further clarity as to how the economy is doing.  First, the government will release the jobs report for July.  Early predictions anticipate job increases of no greater than 100,000, meaning that the unemployment rate will remain unchanged.  Plus, the stock market may continue to react to the European Central Bank’s decision not to take any steps to buy the bonds of struggling European nations at this time.  Bottom line:  the economy is stuck in the mud and policy makers are spinning the wheels. 

On that happy note, have a great weekend.

Entry filed under: General. Tags: , , , , .

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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