AFC CHALLENGES
Another way credit unions are adapting to the requests for remote banking is through the development of a fully remote member solutions team . These staff members are able to provide the services that would typically be offered in person in a completely virtual setting . Through the use of video conferencing and cutting-edge identity verification tools , team advisors meet with members when and where it is most convenient for them . This solution has been a great success as the younger generation has come to expect virtual offerings . It is advantageous to both the members and the credit union as it checks the box of an online offering while also adding the human touch element that is important to establishing key relationships and increasing loyalty .
Fraud , technology and the war on gaps
With all the technological innovation credit unions have implemented there also came risks . As digital access to products and services improved , so did the ability of fraud actors to exploit gaps within systems and rules . With this innovation , threat actors adapted and utilized social engineering , personal identity information for sale , deepfakes and other artificial intelligence ( AI ) - enhanced strategies to defeat anti-fraud tools and frameworks . This is not unique to just credit unions ; it also affects banks and other lending entities . When the COVID-19 pandemic hit , many FIs thought they were “ digitally ready ” when in fact they were not . During the pandemic and afterward , most FIs tried to ensure they were truly digitally ready for all segments of their customer base . Some of the steps FIs took included improving digital sales channels , improving efficiencies of customer contact centers and striving for greater agility in resolving fraud reports from customers .
What differentiates most banks from credit unions is the level and sophistication of their cyber defenses , transaction monitoring , AI , robotics and machine learning . In Canada for example , the six largest banks have more advanced and more complex frameworks to deal with potential fraud and money laundering . Multiple layers of digitally enhanced redundancy and well-staffed fraud and anti-money laundering ( AML ) teams ensure banks are meeting the challenges of modernday threat actors .
Although they have also invested in sophisticated technology and case management tools , credit unions simply do not have the resources of larger banks . In some cases , credit unions use the same case management tools for fraud and AML casework as banks , but do not have the resources to fully utilize the tools or staff them to similar levels . In the early 2010s , Scottish police warned credit unions that they were susceptible to organized crime groups because they lacked the resources that banks had . 3 In early 2024 , police in Northern Ireland investigated a local gang enforcer who forced members of a community to pay him through loans from their community credit unions as an overall targeted plot to increase criminal profits . 4
The future and the solutions
Although credit unions ’ unique vulnerabilities still exist , there are comprehensive and durable solutions and strategies being implemented globally . As an example , in Canada , the total number of credit unions has declined over time , but the remaining institutions are growing in size and sophistication . This strategy ensures that they continue to serve their unique customer bases but also secure themselves against threat actors and organized crime groups through investment in technology and teams . As an intended benefit , these reinvigorated institutions pool their resources and technology , primarily through credit union service organizations ( CUSOs .) Through the use of CUSOs , credit unions are able to create new opportunities for improving threat detection capabilities and enhancing the technology they have through their combined size and budget . These opportunities have allowed these critical community institutions to improve
AML and fraud detection performance and even contribute to top-line revenue for members . These achievements have been made by CUSOs investing in AI and machine learning , as well as by leveraging shared security infrastructure . As a result , these collaborative efforts have greatly helped credit unions to reduce costs while also greatly improving operational efficiency .
Finally , it must be stressed that the battle is not won . Credit unions still face significant challenges by virtue of their size and present-day capabilities . More investment is needed in modernizing detection tools , case management and reporting capabilities to keep pace with threat actors . Credit unions must ensure that they continue to upskill their fraud and AML teams to ensure regulatory compliance , to effectively combat financial crime , and equally important , to manage the reputational risk of their institutions .
Kristie Lestition , CAMS , director , antimoney laundering compliance & fraud , First Ontario Credit Union , Burlington , Canada , Kristie . lestition @ firstontario . com
Cameron Field , BA , MSc , CAMS , vice president , The Vidocq Group , Toronto , Canada , cameron . field @ vidocqgroup . com
1
“ Global Credit Union Membership Surpasses 411 Million ,” World Council of Credit Unions , October 16 , 2024 , https :// www . woccu . org / newsroom / releases / Global _ Credit _ Union _ Membership _ Surpasses _ 411 _ Million
2
“ Credit Unions ,” The Canadian Encyclopedia , https :// www . thecanadianencyclopedia . ca / en / article / credit-unions
3
Reevel Alderson , “ Police warn credit unions of organised crime threat ,” BBC , September 14 , 2012 , https :// www . bbc . com / news / uk-scotlandglasgow-west-19602141
4
Connla Young , “ Gangland enforcer Kevin Conway ordered vulnerable people to take out credit union loans to clear drug debts ,” The Irish News , January 11 , 2024 , https :// www . irishnews . com / news / northern-ireland / gangland-enforcerkevin-conway-told-people-take-out-credit- union-loans-to-clear-drug-debts- Q6XT2ME72BAONAE3CL5WKBNPN4 /
22 acamstoday . org