Transparency is Key to Protecting Members’ Assets

by Michael Cochrum

My wife and I are “owned” by two German Shepherd Dogs. These are by far the smartest dogs I have ever been around.  If they had thumbs, they would probably rule the world.  But, even the smartest dogs in the pack can be fooled when they are distracted by something they are passionate about.  In credit union land, we have been fixated on protecting members’ privacy, but there may be an altogether different issue we should concern ourselves with, when it comes to protecting our members’ assets.

Recently, as I sat watching TV, I could see, out of the corner of my eye that Dixie and Bella, the aforementioned GSDs, were up to something. While there is ample cushioned space on the floor for each of them to stretch out, one of the Shepherds is not satisfied with their spot, and would rather occupy the spot where the other is laying.  But, the one trying to concur the space knows that the other is not going to give it up willingly.  The aggressor does not take the direct approach of attempting to physically remove the “targeted victim,” but will attempt to do it on the sly.  By “on the sly,” I mean she will take a bone in her mouth and taunt the other dog with it.  The bone now becomes more important than the resting place and the victim vacates the prime resting spot to chase down the bone.  The aggressor is now free to take it over.  Very cunning, indeed.

The NCUA reported just a couple of weeks ago that the majority of credit union failures over the last year were due to internal fraud. In other words, the very individuals entrusted with the protection of members’ money were the same ones guilty of stealing it, and putting the credit union at risk of failure.  The NCUA recommended that transparency in operations was the remedy to preventing these acts of thievery.  And here is the rub; we have worked so hard to protect privacy and access that it is easy for someone who wants to conduct their acts of deceit under cover.  Like the cunning dog, those who want to deceive us will use that which we are passionate about as a tool of deception.

You may have heard the phrase, “single source of the truth,” when it comes to data management. A properly designed data warehouse will provide all leaders in the organization access to the same information at any time.  This level of transparency prevents those who would otherwise attempt to deceive, from tailoring reports to hide their deception under the guise of controlling access.

The industry loses 4% of credit unions every year. Some of those due to fraud or poor management of assets.  In these cases, the surviving credit unions are left to clean up the mess – perform crucial damage control – and earn back the trust of their members and employees.  Many credit unions are already taking critical steps to create transparency in the way data is shared across their organization.  These will be the survivors.  Is your credit union taking the necessary action to ensure transparency when sharing data within its organization?  CU Direct’s Advisory Services can help your credit union implement data transparency plans that better protect your members from internal fraud.

About the Author

Michael Cochrum
Michael Cochrum is the Executive Lending Advisor for CU Direct.