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Can Compliance Gain Customer Trust In Credit Unions?

Financial crime in cyber space is on the rise. The PwC 2014 “Global Economic Crime Survey –
Financial Services” analysis shows financial and retail services at greatest risk.

Although the financial industry is a top spender for security and compliance, the figures provided
by PwC show that cybercrime accounts for a total of 39% of economic crime.

The 2015 survey announced that the cost of security incidents has jumped 24% with the
number of companies that reported losses in the $10m - $20m range increasing by 141%.

For the credit union industry this trend is more than worrying, as credit unions end up with a
hefty bill in the aftermath of a credit breach. The Target data breach was estimated to have cost
credit unions $5.68 per card affected.

With 40 million card details stolen, the total cost for credit unions came to $227 million. The
reality is that financial cybercrime reverberates throughout the supply chain.

So far credit unions have taken a proactive approach in their response to retail breaches. They
have been quick to understand that the correct approach in light of a breach is to work
alongside the customer and keep them informed of the progress of the fraud.

After the impact of the Target attack, we now see credit unions openly reaching out to their
customers and informing them of breaches, while offering advice and resources to check for any
signs of fraud.

For example, in the Home Depot breach some credit unions have gone as far as to comb
through customer records, looking for any transactions with Home Depot.

However the credit industry is suffering on a different level as well. Specifically, small credit
unions appear to be facing a steady decline.

A comprehensive survey carried by the Financial Brand projected a worrying trend for the Credit
Union industry; as the big are getting bigger, the small are shrinking to the point where by 2032,
one out of every two credit unions will have disappeared.
However, despite the decrease in credit union branch numbers, industry assets are set to go up;
proving the public is still showing faith in credit unions.

In the face of such issues, how can the imminent threat of cyber attacks represent a silver lining
for credit unions?

The reality is that attacks will continue, and NAFCU has identified small credit unions in
particular as vulnerable, as they lack access to extensive IT security budgets and specialist
staff. Many small organisations fear finding themselves crippled by regulatory bodies’ increasing
measures and standards.

15 Cyber Warnings E-Magazine – June 2015 Edition
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