Cash, Liquidity, and Payments: Things to Think About Should Cash Become a Hot Commodity
March 19, 2020
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By now, we are all aware that our current environment is changing by the minute and uncertainty drives behaviors. While we are not yet hearing huge rumblings in the credit union industry on the cash and liquidity front, it is prudent to consider the possibility of a swift change. Those who live in areas prone to natural disasters probably have a great place to start on this one. A few questions to consider include:
- How do we need to augment our plan, using the lens of coronavirus preparation nationwide, social distancing, and people working remotely? Are there other financial institutions and businesses stockpiling cash which may limit our access to cash if we need to increase it?
- Should we establish priorities, members versus non-members? For example, should we consider limiting cash withdrawals for non-members at ATMs? Cash advances at branches? If we prioritize members, how can we message to non-members and limit negative impact to our brand?
- If we are planning to significantly increase cash, what are the implications to security, insurance, policies, and procedures? How might our social distancing and working remotely impact these considerations? What are the implications if employees become uncomfortable handling cash due to concerns of contagion?
- Do we need to modify our liquidity stress tests? Should we review and potentially update our Contingency Funding Plan (CFP)? Depending on the level of detail in our CFP, do we need to define/update liquidity triggers and agree to the potential responses?
- What are the implications if we do not have access to our entire lines of credit, based on factors outside of our control? How could our lines of credit be impacted if other institutions start utilizing their lines of credit at a much faster pace? Should we consider borrowings now? If so, how much and for what term? What are the intermediate and long-term implications?
- How might our updated liquidity assessment influence our deposit pricing in the short-term?
- How can we better message our digital payment options?
- What, if anything, do we need to consider regarding potential increases in fraud alerts and fraud? How might changes in consumer purchasing patterns create an increase in false positives for fraud?
- How might we need to modify our card replacement and card issuance?
- How might call center support, including chat, need to change to help our members in this environment?
- If we have been piloting self-service on cards (members turning on/off access to cards), or digital issuance, what would we need to do to get comfortable expanding the pilot?
- Have we been piloting any automated responses that we are willing to expand to help with member service and free up staff for other things?
- What triggers do we need to have in place should the situation in certain service areas change quickly?
As institution leaders you are facing a series of decisions, many need to be made swiftly and some without precedent. The choices you make and how you implement them can have lasting impact – positive or negative – on your brand with your employees, members, and communities.
As we have said in previous blogs, we find it is better to test-drive these critical decisions before you actually have to make them.
When you are making decisions, where feasible, make them in light of your strategy and desired business model. For many, this can be an opportunity to fast-forward some necessary changes.
Call us. We are here to help you think and explore options. We have experience working with over 600 financial institutions, including 25% of the credit unions over $100 million in assets and 50% of the credit unions over $1 billion in assets.
We can appreciate how recent events are impacting the normal course of business and are happy to schedule time outside of normal business hours – early in the morning, late at night, or on the weekend, as needed.
You can reach us at 800.238.7475 | 602.840.0606 or email firstname.lastname@example.org.