B.C. credit unions band together to fight fraud

B.C’s 53 credit unions are taking steps to boost online security, fearing that fraudsters who have so far attacked mostly the large banks will turn their attention to the province’s growing credit unions.

“They could become a target,” said Credit Union Central of B.C.’s product marketing manager, Barbara Symons. She points to recent mergers involving some of the province’s larger credit unions.

Credit Union Central of B.C. is the umbrella organization for the province’s credit unions, which have 347 branches, 7,000 employees, almost 1.5 million customers and a total of $32 billion in assets.

“From a fraud perspective, they’re going to play the numbers game, and play with larger customer bases,” Symons said in an interview. “Credit unions haven’t been a big target yet, but that could change.”

While the higher security will cost money to implement, and will make it more difficult for customers to use the system, that must be balanced against the potential threat, she said.

“It’s really a trade-off,” said Symons.

In concert with banking software provider Fincentric Corp., Credit Union Central is planning to upgrade security for their credit unions’ online banking systems.

Among the features being considered is “two-factor authentication,” so that customers would need more than just a password to log on. The other factor could be an electronic token, a fingerprint, or voice pattern.

Last December, the U.S. Federal Deposit Insurance Corporation recommended that financial institutions upgrade from password-based, single-factor authentication to two-factor authentication.

A new formal alliance between Credit Union Central and Fincentric will make for smoother implementation of these and other upgrades.

Also under consideration, added Symons, are new methods of electronic funds transfer, including between accounts at different financial institutions, possibly via e-mail.

Announced this month, the alliance means there will now be a direct technical interface between Credit Union Central’s web banking system, called MemberDirect Services, and Fincentric’s retail banking system, Wealthview Banking.

Though the two organizations have worked together informally in the past, under the alliance, Credit Union Central and Fincentric will co-operate closely in a range of areas from product development to operational support.

Terry Wong, Fincentric’s director of product management, said that under the old, looser arrangement between Credit Union Central and Fincentric, communications about support were less efficient.

When customers found a problem, they would be unsure as to which organization was responsible, meaning that valuable time was wasted in tracking down the source.

“Through this partnership, regardless of where the problem resides, they can phone Fincentric or Credit Union Central and we will get it resolved, no matter what,” Wong said. “The customers will see Credit Union Central and Fincentric as one in this area.”

As well, both organizations continue doing product development, he said, which will now happen faster.

“In the past, customers haven’t always been able to take advantage of some of the enhancements, because they need the other side to also make changes to their system,” Wong said. “With our partnership, we are tightly integrated with respect to our development plans, such that between the two of us, we will try to make the functionality available in both our solutions. There’s real impact on our customers in that.”

Updating products will also become easier, he added.

“Customers can be more assured that we will keep their releases in sync with ours,” Wong said.

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