By Roy Urrico
In May 2024 New York-based Inclusiv, a certified Community Development Financial Institution (CDFI) intermediary that provides capital, builds capacity, develops innovative products and services and advocates for the community development credit unions in its network, announced a partnership with Des Moines, Iowa-based ViClarity, a provider of governance, risk, and compliance solutions. The goal is to improve the operational efficiency and regulatory compliance of small and minority depository institution (MDI) credit unions through advanced regulatory technology (RegTech) tools.
The new tech-based relationship introduced three crucial solutions – containing modules covering complaint management, a tracker for exams and audits, and vendor management – tailored specifically for credit unions with assets under $100 million or those designated as MDIs.
Andrea Lally, vice president of network engagement at Inclusiv, stated, "Our collaboration with ViClarity is a game-changer for small credit unions and MDIs striving to strengthen their compliance frameworks. This initiative is a testament to our commitment to equipping our members with cutting-edge tools that drive sustainability and growth in a rapidly evolving financial landscape."
Ogie Sheehy, ViClarity’s founder and interim global CEO, commented, "Working with the Inclusiv team to bring our award-winning technology to small credit unions has been a very rewarding process. The collaboration allowed us to work directly with the credit unions to understand their pain points and then work together to develop solutions that drive efficiencies and compliance rigor. The combined experience of Inclusiv, the participating credit unions and ViClarity is quite powerful and together we have created high-value solutions unique to this partnership."
The partnership also offers exclusive benefits for Inclusiv’s membership such as preferred pricing, ongoing regulatory updates, and comprehensive support from the ViClarity team. Members can expect simplified implementation processes, robust training resources, and proactive support to ensure seamless integration and maximum benefit from the platform.
Finopotamus chatted with Anna Foote, senior credit union operations and compliance specialist, at Inclusiv; and Sheehy from ViClarity about their expectations regarding the collaboration.
Making Tech Available to Smaller CUs
“One of the challenges we were trying to address, is to be able to make technology available to smaller credit unions who might have challenges with resources,” said Sheehy, “resources meaning financial resources or people resources. As part of our conversation, we started some dialogue with Anna (Foote)and the Inclusiv team, and found that the passion they had for wanting to provide solutions to credit unions was very aligned with our own.”
Sheehy said the partnership grew from there. The result is, “Ops and compliance expertise on the Inclusiv team side, coupled with ViClarity experience in the industry, allowed us to partner and come together in a very structured way to make technology solutions available to small credit unions.” Plus, the price point offered allows smaller credit unions to afford products on par with what bigger credit unions use.
Foote emphasized the importance of understanding the focus of a community development credit union. “It is a credit union that is mission-based, specifically focused on providing financial resources and access to education and resources that the community they serve in would not have access to.”
She added, “Our focus is specifically on working with smaller MDIs and smaller under-resourced community development credit unions. And that generally means under a $100 million in assets with minimal resources to support themselves.”
Overcoming Barriers, Fulfilling a Need
“Many of the barriers that we are finding (relate to) cost, because a $10 million credit union has to comply with all the same federal regulations as a $10 billion credit union,” said Foote. “It does not matter that you may be so small that you are working out of a church basement and that the only people running the credit union are all volunteers from the church. The NCUA does not care if you have an eight-person staff that is focused on nothing but compliance.”
Therefore, much of the work Inclusiv does is to educate these credit unions, get them access to resources and make sure what they are doing is more effective and efficient. “And when we find partners like ViClarity, and we are very aware of their reputation in the market, and they are as responsive as ViClarity has been, then we know we've got something that's going to work.”
Inclusiv wants to address significant pain points for its members that need an organization to advocate for them the most. Said Foote, “Because we are a collaborative organization, we are not going to build this on the sidelines and then offer it up like it is some great answer; it is not a magic wand.”
Instead, noted Foote, “We're going to actually find members of Inclusiv that are interested in working and collaborating in this process. When Ogie and his team said that is exactly the right way to approach this, we merged together in a partnership that was mutually acceptable because it was so clearly focused on addressing a need that is not out there in the marketplace.”
Addressing Specific Compliance Needs
Foote described Inclusiv’s role with credit unions. “We contract out to do certain things to help our member credit unions in the operations and compliance space. It is not unusual for us to go into a credit union and learn where they are struggling. And so sometimes it is us bringing resources to them. It is sometimes them coming to us and saying, ‘This is where our challenges are, can you help us?’ It is a two-way conversation because these credit unions are our members and they trust us. It is them and us working together to better understand their needs.”
Foote explained the partnership with ViClarity is very much focused on addressing some very specific compliance needs. “Whether you are state chartered or federally chartered, if you are federally insured, an NCUA examiner is going to come in and they are going to say to you, ‘How are you complying with these regs? How are you monitoring your compliance? How are you reporting to the board?’”
Unfortunately, that examination process is very painful for some small credit unions. Said Foote, “It is all being done on paper or in Excel spreadsheets or only partially done. And they are constantly getting feedback from their regulator that it is not adequate to the expectations of the regulator.”
She shed light on the process. “So, this is an attempt, a successful attempt in our opinion, to try and give (credit unions) the tools they need to both function more efficiently and effectively internally, but also be able to turn to their regulator and say, ‘Here's what we're doing to address it, and here's how we're reporting that out.’”
Foote continued, “That is helping our member credit unions to do something that is more than just be internally more effective. It is ensuring that they are working closely with their regulator to address compliance, not just the operational piece. And that has really been the focus.”
Designed by Credit Unions Peers
Sheehy discussed with Finopotamus how the partnership’s goals led to a collaborative project. “We actually got a core group of six credit unions to work with us over a number of sessions where we openly had dialogue. They shared experiences, they helped us understand better what their pain points were. It was a real nice way working with them in partnership as part of this collaboration and as opposed to us approaching them, trying to tell them what we feel the problems were.”
Active participants in the Inclusiv / ViClarity program include:
New York University Federal Credit Union, ($73.2 million, New York City)
New Covenant Dominion Credit Union ($2.5 million, Bronx, N.Y.)
Neighbors United Federal Credit Union ($64.4 million; Greenwood, S.C.)
Copper Basin Federal Credit Union ($57.5 million; Copperhill, Tenn.)
1199 SEIU Federal Credit Union ($90.5 million, New York City)
"Our credit union has benefited greatly from the collaboration with ViClarity and Inclusiv on this project. The audit tracking module has made it easy for our credit union to record, organize, track, and report audit results to our Board of Directors," said Tricia Ackerman, CFO, Neighbors United Federal Credit Union.
Not a Fit for All CUs but…
“If they're large enough and the solution that we have developed is not a good fit for them, we still refer them to ViClarity because we have confidence in the product that ViClarity has and the solutions that they provide to credit unions,” said Foote.
Foote said, “We still provide all of the backend compliance conversations. How do you do this? What are you doing with it? How are you presenting this to your regulator? What information should you be collecting and what you know is superfluous based on how they are using it? Ogie and his team focus on the technical support and it is that piece that has also been extraordinarily effective.”
Foote emphasized, there are many opportunities for organizations to lean into membership organizations like Inclusiv and say, ‘we've got this great product, this great thing, it's going to solve all the problems if you'll just introduce us to everybody in your membership.’ Ogie and his team stepped into this space understanding that this was not going to be a product that 50,000 credit unions are going to need. They were willing to come in and understand that there was going to be a limited use for this. This was not going to be an entryway for ViClarity to cross sell a product.”
Sheehy also stressed the goals of this Inclusiv/ViClarity partnership revolve around “our combined passions for doing this for the right reasons as opposed to for commercial and financial reasons.”
“The development of the solutions was done by the credit unions themselves in conjunction with us,” said Sheehy. “So, we became facilitators in the conversation. The solutions that we offer today are built by their peer credit unions. That is a very powerful fact as well, which differentiates this partnership.”