NCUA Chairman: Credit unions can lead during ‘a time of seismic change’

Hood speaks to AACUC on inclusion, innovation, and modern regulation.

America is going through an unprecedented demographic transition, National Credit Union Administration Board Chairman Rodney E. Hood said last week, and credit unions have a chance to show leadership as the financial industry responds to that transition.

“This is a time of seismic change,” Hood said, “and that dynamic creates both challenges and opportunities. I consider financial inclusion to be the civil rights issue of our time. For too long, too many people have been overlooked or locked out of the financial system. Lack of access holds working families back from climbing the financial ladder.

“I believe credit union are better-positioned than any other player in the financial sector to make a big difference when it comes to diversity and inclusion; because those are a fundamental part of our industry’s history,” he said.

Chairman Hood spoke to the 21st annual conference of the African-American Credit Union Coalition. The speech was the chairman’s first major address since taking office. The full text of Chairman Hood’s remarks is available online.

Chairman Hood described the commitment to service that set the course of his life and career, and he discussed ways the NCUA can both support and protect credit unions and their members.

“When I embarked on my banking career, I always saw our primary mission in simple terms,” Hood said. “It was about people helping people and people serving people.”

Innovation: Changes and opportunities
Rapid changes in information technology create growing concerns about data breaches, but they also provide credit unions with new tools to improve service and expand access to affordable financial products, Hood said.

“Cybersecurity is a significant concern,” Hood said. “Even the largest and strongest financial institutions have points of vulnerability. It will remain a top priority for NCUA during my chairmanship, and I recently appointed a cybersecurity advisor who reports directly to me.

“On the other side of the ledger, financial technology is creating a different kind of challenge, in the form of new ways of doing business and new customer expectations,” he said. “Mobile banking, digital payments, artificial intelligence, data aggregation, or whatever may come next. These trends are going to change the way you engage members, analyze lending risk and market your products and services.”

Regulatory reform: Effective, but not excessive
Chairman Hood made a commitment to regulations “that will encourage innovation, provide flexibility, and fulfill our primary mission of protecting safety and soundness.”

Two examples of this effort, he said, were increasing the threshold for requiring commercial property appraisals from $250,000 to $1 million and a two-year delay in the agency’s risk-based capital rule.

Calling the appraisal rule changes “long overdue,” Hood said they would reduce transaction costs and spur more lending, particularly in hard-press rural areas.

The two-year delay in the risk-based capital rule will ensure it will be properly implemented and will give NCUA an opportunity to take “a holistic approach to the issue of capital in the credit union system,” Hood said.

“The goal is to create a regulatory system that is effective, but not excessive,” Hood said, “so you can go about your vital work of lending and providing your members with the highest level of service and quality, affordable financial products.”

As it moves forward, Hood said, the credit union industry should keep its traditional mission in mind.

“The key to this industry’s future success lies with staying true to the values the credit union system was founded upon,” he said, “the commitment to people helping people by fostering greater financial inclusion, accessibility, and opportunity for all Americans.”

Source: NCUA