The days of hiding cash in buried tomato cans under the back porch are long gone. Today people have access to a variety of financial vehicles to service their hard-earned capital. Technology has undoubtedly made accessing money more convenient than ever before and financial institutions are not what they once were. With the decline in brick-and-mortar facilities, the relationship between the financial institution and their customers has changed in significant ways. One of those ways is simply, there are more options. 
The emergence of technologies like artificial intelligence and crypto have changed the financial landscape. And while fintechs, such as PayPal and Best Egg, are quickly gaining in popularity, traditional banks and credit unions remain the primary financial vehicles for individuals and businesses.
Similar but Different
Both banks and credit unions are arguably more similar than they are different and both offer services such as loans, credit card applications and checking and saving accounts. However, they differ in some ways which affects how they operate.
Banks, which are owned by their shareholders, are for profit organizations. “Banks return their net income or what they call their profit to their shareholders in stock prices, demand from stocks and that type of thing,” explained Scott Arkills, president and CEO for Silver State Schools Credit Union (SSSCU). Banks also usually have a wider network range with access to more physical branches and ATMs and use more cutting-edge technology with their online banking and applications.
Credit unions are owned and operated by their members and are not-for-profit organizations. They exist to serve the community in which they are located, and profits go back to members.
“The sole purpose of credit unions is to serve individuals,” said Danny DeLaRosa, president and CEO of Greater Nevada Credit Union in northern Nevada. “We are cooperatives, meaning we are owned by our members. The simplest way to put it is, when we make money, we find ways to get that back into our members’ hands through better rates, lower fees and stronger community support. There is nothing wrong with the bank model, it is just a little bit different. They answer to investors; we answer to the individual members that we get to serve.”
Regulations
Both traditional banks and credit unions also have similarities in consumer protections and federal and state oversight, but differ significantly in their regulatory frameworks. Although banks are regulated by the Federal Deposit Insurance Corporation (FDIC), credit unions are regulated according to their charter, be that state or federal.
Federally chartered credit unions are regulated by the National Credit Union Administration (NCUA), an independent government agency similar to the FDIC that asserts public confidence through government-backed deposit insurance. Comparatively, state-chartered credit unions are regulated by the state in which they do business in and are insured by either private insurers or state agencies. For Nevada state-chartered credit unions, the Nevada Department of Business and Industry, specifically the Financial Institutions Division serves as their regulator.
Whether state or federal, being member owned and operated can allow credit unions more flexibility in their lending practices when compared to traditional banks. “Credit Unions are just as highly regulated [as banks] and their deposits are insured, offering members the same safety and oversight as traditional banks,” said Arkills. “At Silver State Schools Credit Unions, through Excess Share Insurance (ESI), we can and do up to $500,000 per account of depository insurance. Banks on the other hand offer a maximum of up to $250,000 in FDIC insurance per customer, not per account. A credit union member that has a total of $2,000,000 in deposits can break that into four separate $500,000 accounts and have all of their deposits insured.”
Credit unions are also able to offer members unique and creative solutions in times of hardship. For example, as a response to the recent government shutdown, Greater Nevada Credit Union offered special no-interest loans for six months. “We also defer[red] payments on existing loans for people who are impacted by the shutdown,” said DeLaRosa. “We find ways to do things like that for our community and for our members to help them through both the good times and the challenging times.”
Technology and Ease-of-Business
Despite the flexibility and financial creativity that credit unions offer their members, convenience and access have become a critical component of the financial industry and an expectation for users. And although banks carry the title of being technology leaders in the world of finance, digital acceleration is trending amongst credit unions.
Nationwide, the industry is investing heavily in innovative technology in an effort to enhance the customer experience by making the personal service they offer convenient for the member.
“People want an organization that is easy to do business with, and they want to partner with a financial institution that is purpose-driven,” said DeLaRosa. “People want relationships and trust with the organizations that they are doing business with, and they also want it to be convenient. We are investing heavily in technology and in ways to be able to reach people. We still have branches in rural communities and think that is a great way to reach those customers, but we also want to have online solutions.”
Some of those online solutions include providing customers with the convenience of virtual communications with their credit union via video chat. “We give our members the discretion to choose however they want to bank and where they want to bank,” said Arkills. “Whether that is on their desktop, their laptop, their smartphone, or their iPad, we are giving them options.”
Cybersecurity
Financial institutions have always been focal points for bad actors. And while fake checks continue to plague the financial industry, advancements in AI technology have taken financial scamming to new heights and amplified the threat against credit unions and their members. From fake phone calls to texts and emails with deceptive websites and links, phishing attacks continue to dupe even the most vigilant.
“We have found that cyber security threats often come from human error,” said Arkills. “Employees and our members need to be trained on what to do with cyber security threats. We have protective technology and multi-layered cybersecurity systems. But you could throw literally millions and tens of millions of dollars in that and if you never address human error, you would really be missing the big point.”
Part of addressing the issue of human error is by educating credit union members to the cybersecurity threats that exist, including the latest industry trends and hacker tactics. “It is hard to stay ahead of what is going on in the cyber security realm,” said Steve O’Donnell, president and CEO of One Nevada Credit Union. “It is an ongoing focus for us at One Nevada and the entire industry. There is a lot out there that is trying to trick members. We have a dual mandate in terms of making sure our systems are shored up and defensive, and that we are also educating our membership to the threats that are coming their way.”
He added, “The members play a vital role in that. We also do a lot of different things in terms of cybersecurity, like our consumer-facing initiatives, to make sure that we are educating our members and empowering them with more information and tools to avoid the financial scams that you see all the time.”
Many of the scams that are attacking credit unions and the financial industry at large are internal and aimed at employees. Employees have then become the first line of defense in identifying possible threats by learning to be attentive to questionable communications and suspicious activity including unusual patterns and access.
“As an organization, the best defense is really education,” said DeLaRosa. “We do a lot of cybersecurity phishing internally with our team members. We recognize people who do not click on links, and we work hard to make sure that our staff are not opening files or anything that is posed as if it were a threat. What we have found is that we have been able to lower the impact of [cybersecurity threats] significantly above industry standards. Education alone makes the biggest impact.”
Industry Growth
Credit unions play a major role in Nevada’s financial industry with a substantial number already in place. “It is not anticipated that there will be additional home-grown Nevada headquartered credit unions that will come online,” said Arkills. “What the state of Nevada is seeing is an expansion of growth from international credit unions like Navy Federal for example and also from neighboring states, most notably credit unions based in California and Utah.”
And, there is more and more crossover between the world of banks and the world of credit unions. This past summer America First Federal Credit Union announced the organization had entered into an agreement with Meadows Bank to purchase all of Meadows Bank assets and assume all of its liabilities. This acquisition is unusual in the financial industry and details of how the deal will play out will be seen into next year. America First was unavailable for comment. This move is breaking ground in the financial industry and expanding the possibilities of credit unions.
“As current board chairman of the Nevada Credit Union League (NCUL), I can assure you that Nevada’s homegrown credit unions continue to grow, expand their services and prosper as we have collectively built a collaborative network, that shares resources and knowledge and that strengthens the industry as a whole,” said Arkills.
People have options when it comes to their finances and choosing between a traditional bank or credit union is largely a matter of preference. While both are regulated and serve as trusted vehicles for saving and accessing money, they differ significantly in their methodology and focus.
“Credit unions are more advanced than most [believe],” said O’Donnell. “The credit union industry is a vital industry and does a lot to serve members. It is more than just loans and deposits. We have a lot of other services that rival the banks and the fintechs out there. We are a vital functioning piece of the financial institution industry.”
