Volunteers: The Secret Weapon of the Credit Union Movement.

As part of my CFPB presentation, I talk about how credit unions can better leverage volunteers as a cost cutting tool.  I figured that I could put some more meat on the concept and perhaps get a decent post out of it, so here goes.

At one time in the movement, there were examples among credit unions of volunteers filling every role at the cooperative.  We had volunteer CEOs and member service reps in addition to volunteer directors and committee members.  What has happened to that spirit?  Is it a sign of the times as to how people want to spend their time?  Is it a failure of marketing to people by credit unions to get more people to volunteer?

If Clay Shirkey is at all right, people still have volunteer time available or as he calls it:  “cognitive surplus.”  If that is true, perhaps it is just a matter of wanting more volunteers and then marketing to members to become volunteers.

What can volunteers do?  I propose that volunteers can be rounded up into task force assignments in order to handle various regulatory requirements cheaply rather than by hiring a vendor.  At a baseline, they need to be at least 18 years old, bondable and a member of the credit union.

Three areas I want to focus on include vendor due diligence, risk analysis and compliance testing.  All three of these functions have been required by NCUA and all three are resource intensive.  Here’s how it would work:

Vendor due diligence.  The board chair would appoint a task force of volunteers to pick 3 vendors for the particular service (say core processing) and then review their financial statements, reputation, experience and other attributes required by NCUA.  The task force would then report it’s findings back to the Board of Directors after an appropriate time and make a recommendation (which the board is free to follow or not).  This would take a great deal of pressure off staff and the directors themselves in meeting NCUA due diligence requirements at a cost of zero.

Risk analysis.  Most compliance requirements at the credit union are risk based.  This means that NCUA would prefer that you assigned risk values to every vulnerability and then build your policy around that.  Put another way, you could spend a billion dollars on a BSA policy and it would still not be perfect.  We don’t have billions to spend on policies so it helps to document the risks we have and put what resources we have around them.  Therefore, the task force could meet, take various credit union compliance policies, document the particular risks that the credit union has on  a 1 to 10 scale along with the credit union’s experience with the particular risk and then make a recommendation to the Board and to Management as to any changes that need to be made.  This report could then be placed in the file with the particular policy (BSA, Disaster Recovery, Social Media, etc.) to be shown to the examiner later.

Compliance testing.  Most material credit union policies need to be reviewed and tested annually.  Volunteers can be trained to do ECOA testing (see how members are treated, review past applications and look for discrimanatory effects of policies), Disaster recovery (table-top testing or even creating a mock disaster), BSA (review of cash data versus CTR filings, review of SAR quality, review of OFAC compliance) and a host of other things.  What is either a time consuming task for staff or an expensive task to hire a vendor to complete can be done quite effectively at no cost by volunteers.

The new compliance burden is real.  700 credit unions no longer exist since the passing of the Dodd Frank act.  Volunteers are a credit union’s secret weapon.  It is time for credit unions to reach out to volunteers again to meet these increasing compliance demands.