Credit Union Disaster Recovery Mistakes to Avoid – Direct Deposit

by Robin Remines

If you’re like most credit union leaders, you’ve spent the last decade aggressively encouraging your members to participate in Direct Deposit. The benefits were obvious – faster access to funds, more secure than regular mail and without fail, you quickly became the members primary financial institution (PFI) as your relationship grew beyond that first checking account to other products and services. No relationship is without expectations. Members entrust you with their hard earned money and expects that it will be available and waiting for their use on the scheduled date of deposit. During a disaster, this expectation only grows!  Post Katrina, NACHA actively encouraged FI’s to “Promote Direct Deposit as a Disaster Preparedness Tool”! So what happened?  In recent events, we’ve seen many financial institutions fail at providing uninterrupted direct deposit service to their membership further adding to the pain already felt. One example, Municipal Credit Union in NY has even received national publicity for its challenges.  Learn from their stories and avoid these costly mistakes.

Not prioritizing “direct deposit” as a critical function

Not all critical functions cause immediate financial ruin to your credit union. Some, like direct deposit, only become critical based on dates and length of outage. If your crisis happens on the day a major payroll is scheduled for processing, you and your members will feel the pain much faster. Additionally, the longer the outage, your credit union stands an increasingly high risk of losing those members.  Many credit unions overlook this process since it is highly automated and involves multiple parties. If you don’t recognize it as a critical process, you won’t plan for its recovery – simple enough.

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