Confronting the Winds of Change

by Rick Metsger, NCUA Board Member

Harry Truman stood defiantly on the front steps of his beloved Spirit Lake Lodge, his eyes fixated on a frothing Mt. St. Helens in the distance. The winds of change were whistling through the forest, the earth grumbling in discontent beneath him, yet Harry remained unimpressed and unconcerned.

He was already a rising celebrity of sorts when my news crew and I caught up with him in the spring of 1980. Harry was old school. He knew what to be concerned about and what not to bother worrying over. His daily routine was comforting to him and planning for the future meant no more than ticking off the chores before him during the day at hand.

It was clear to all who met him that he wasn’t about to change the way he was doing anything. While the rest of the mountain community heeded the dire warning to evacuate, Harry remained resolute. A change of course wasn’t necessary. He wasn’t moving. After all, he reasoned, “This place is heavily timbered, Spirit Lake is between me and the mountain and the mountain is a darn good mile away.” He repeated those assurances to all who came to inquire.

“The mountain ain’t gonna get me,” was his popular refrain.

In retrospect, he was right. The mountain did indeed preserve him—150 feet beneath a layer of volcanic debris. Harry Randall Truman was 83.

Sometimes we can’t see the volcano for the trees. But, the winds of change always whistle a warning. The question is, “Will we be listening?”

The financial marketplace is experiencing a seismic shift with the onset of the digital age. Millennials, the next wave of financial services consumers, are more inclined to interact with their fingers than through their larynx.

Alternative financial providers, often unregulated, challenge the historical norms of lending and borrowing. Not surprisingly, the computer age has evolved into a tug-o-war between convenience and risk as cyber criminals continue to mutate their tools of sabotage and fraud. And brick and mortar has been supplanted by keyboards and three-by-five pocket companions as the preferred means of communication and commerce.

Neither the NCUA nor the credit union community can afford to be Trumanesque about the changes swirling around us. Change is inevitable; unpreparedness is not.

In May of last year, I announced in this newsletter an initiative I called CQI—Continual Quality Improvement—at NCUA. I said the agency would undertake a complete review of our “processes and operations” to better meet the challenges of a fast changing credit union environment. Many of these reviews and restructuring efforts would be multi-year projects. They would require time, resources, focus, and, at times, a little hand holding as well.

The direction of the sand in the hourglass was undeniable and irreversible. Delay was not an option.

Modernizing our electronic platforms, data collection programs, safety and security and user interface had already been identified as priority tasks. We intensified these efforts, providing additional financial and human resources to accelerate the effort.

We also called upon our leadership team to embrace innovation, with an eye on critical review and reconstruction of core operations. The leadership team must do more than just participate—it must initiate and invigorate. Our leaders on the front lines at NCUA have met that clarion call.

Under the leadership of Regional Director Keith Morton, our credit union examination program was disassembled and rebuilt to reflect a strong economic climate and industry consolidation. The resulting exam flexibility protocols eased burdens on well-run credit unions, while still being nimble enough to address sudden changes in the economic climate, or in the condition of individual credit unions.

Consumer Financial Protection and Access Director Gail Laster and Deputy Director Matt Biliouris took a deep dive into our antiquated field-of-membership rules and regulations and emerged with the most comprehensive and creative changes in years to better allow credit unions to serve their members and their communities.

Laster’s team also answered my call last summer to revamp how credit unions and NCUA interact on tracking and completing charter and field-of-membership applications, modifications, and conversions. They have sculpted a dashboard product, to be unveiled this month, that will allow credit unions to check in real time their application progress, outstanding documentation needs, and the responsible NCUA staff ’s contact information to streamline the application process.

The Office of the Inspector General initiated a thorough and critical review of NCUA’s procurement process and procedures and returned with a detailed list of needed reforms that have been embraced by the executive team.

This past fall, Executive Director Mark Treichel took the initiative to analyze our entire central and regional office structure and make recommendations to revamp and realign agency resources to meet the projected changes in the credit union landscape. That analysis has been completed and will result in the largest restructuring of the agency in years, with a 40 percent reduction in the number of regional offices and an 80 percent reduction in leased office space.

Chairman McWatters has initiated a major retooling of our appeals process, led the effort to close the Stabilization Fund ahead of schedule and refund credit unions a significant portion of their prior assessments, and to increase transparency to members during the merger process.

The agency has rededicated itself to constantly evolving to meet the changing winds.

As credit union leaders, are you addressing the changing financial landscape? Is your board of directors welcome to new ideas and energy? Does it actively pursue an evolution in leadership to stay relevant to your members and their financial needs? Do you comprehensively track member engagement with the credit union and its services, spotting trends and evaluating corrective action when necessary?

Credit unions have long been a stalwart in innovation. Shared branching networks and credit union service organizations have been created to help expand member engagement and services. A hallmark of the credit union system has been its cooperative principles, tapping the ideas and experiences of others to bolster and strengthen not only their individual credit union, but also the system as a whole.

Your responsibility, like that of NCUA, is to honor the past by ensuring financial opportunity for generations of Americans in the years ahead.

Change requires not only accepting new realities, but also the courage and vision to address those realities with enthusiasm and decisiveness.

The winds of change are in the air. Don’t let the volcanic eruption of market disruption find you caught in its path.