Credit Union Times - Centennial Edition - (Page I37) CeLeBrAtiNg 100 YeArS , SPeCiAL CeNteNNiAL editioN desert Schools FCU Led the Way in Branching By eileen M. cOurter CU Times Correspondent-at-Large PHOENIX — When AEA #1 Federal Credit Union opened a branch in 1969, it was a gutsy move. The decision to offer services at more than one location made what is today Desert Schools Federal Credit Union one of the nation’s first to move into branching. The strategy has proven virtually essential to the growth of Desert Schools, which was chartered in 1939 with 15 teachers chipping in $5 each plus a 25-cent membership fee. Desert Schools today has 64 branches and $3.2 billion in assets. Carlos Pacheco, senior vice president for retail sales and branch operations, said that when the board and management decided to establish a branch 40 years ago, it wasn’t a slam-dunk. “Credit unions then didn’t have a lot of capital,” he said. But in hindsight, especially with the boom that has occurred in metropolitan Phoenix since 1969, branching was not only brave but also wise. Desert Schools now serves three counties and 350,000 members. “Arizona has grown, and it has grown where there are not a lot of natural boundaries,” Pacheco said. “In this marketplace, especially in Maricopa County, there is just so much expanse. Branches absolutely make sense with such a large area to It wasn’t likely Annis King had any thought of multiple branches when she became the credit union’s first part-time paid employee in 1947. Her cozy office only needed to house a card file, 10-key calculator and line-o-dex. cover,” 9,224 square miles in that one county alone. “In Maricopa County, between 2000 and 2006, the population growth was 22.6%. The census estimate for 2006 was about 3.7 million to 3.8 million residents. Branching out has been an extremely important to get where are members are. It has been great for us, and has had a huge impact on us.” Desert Schools has also embraced such innovations as supermarket branches and shared branching, making access to the credit union easy for members who may move out into more distant suburbs, neighboring counties or even other states. Today Desert Schools itself has 22 locations that offer shared branching, and members can visit other credit unions that participate in the Financial Service Centers Cooperative. Supermarket branches are another venture that has paid off. Today Desert Schools has leased locations in Walmart, Albertson’s, Safeway and other grocery stores. Desert Schools’ experience reflects what many other credit unions moving into in-store branches have found during the past decade or two. “It has really helped us extend our reach, especially in newer communities we’re now part of,” Pacheco said. “We can establish a footprint without having the overhead of a huge brick-and-mortar location.” He cited as an example an in-store branch in a Safeway in Coolidge, located in Pinal County, where median income and home values are considerably lower than in Maricopa County. People see the Desert Schools office as they shop, and it provides some credibility. “It is a different environment. It requires employees who are good at getting out and interacting with the retail clientele who are there doing business with our partner. You really want to build relationships with shoppers and let them know what we have to offer,” Pacheco noted. Looking ahead, does Pacheco see a future for branches? After all, with today’s technology, much less tomorrow’s, a member can transfer funds, check account balances, apply for a loan and handle a wide range of other transactions sitting in front of a computer in the family room or den. “Technology does continue to play a much more important, integral part of our relationship with our members,” the Desert Schools executive said. “But we do find there still is–and in my judgment always will be even 25 or 50 years from now–a personal component that is involved when we are dealing with somebody’s money.” —ecourter@cutimes.com Credit Union Times, December 2008 No Longer Below the radar: CUs Join the target Lists of Fraudsters By linDseY sieGriest CU Times Staff Reporter HOBOKEN, N.J. — Once upon a time it could be said that credit unions were immune to fraud with their small-town, local structure and accompanying ability to know and recognize members. According to Tom Harkins, chief strategy office for Secure Identity Solutions, that onceupon-a-time ended as recently as three or four years ago. “Historically credit unions have been pretty lucky with fraud,” Harkins said. “The cases they’ve seen have been isolated, and they haven’t been targeted as big banks have. They know their customers and stayed under the radar until they started to grow and branch out and the risk factor grew.” Deb Geister, director of fraud prevention and compliance Solutions at LexisNexis agreed that credit unions needed to start becoming more con- Tom Harkins cerned about fraud issues over the past few years as they have expanded their member base. “Credit unions want to be more comprehensive and expand their population of members to keep doing what they’re doing effectively,” Geister said. Now, Harkins said that same small-town, local structure could cause credit unions to be a target as www.cutimes.com criminals start to revert back to basic theft and fraud tactics. One client Harkins recently worked with was a small credit union that had been the target of seven phishing attacks and had no clue how to handle it. “Many credit unions think that they’ve never had a fraud problem, and think that once it happens, they’ll deal with it, but you can’t put the genie back in the bottle. Credit unions need to have a disaster preparedness-type program in place” to handle fraud attacks, he said. Geister, meanwhile, noted that over the past five years, as large financial institutions have improved their fraud-prevention strategies, the fraudsters have moved downstream to smaller institutions. “They’re a lot easier to penetrate and they’re easy to target,” she said. Geister said that fraudsters are reverting back to old fraud techniques. She said there has been a rise in Nigerian and lottery scams using the Internet or e-mail, which are pretty old techniques. Before the days of online banking, Geister said that the fraud issues financial institutions needed to be concerned about were problematic, but easier to manage than the issues of today. Fraud techniques like check kiting and washing were easier for credit unions in particular to manage because they knew their members. (continued on next page) 37 http://www.cutimes.com
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