Head Start

Starting a new service, as any leader knows, is made easier with two things:

A good plan.

A sound understanding of the risks.

For credit unions enduring changing market conditions and growing scrutiny on consumer fees, non-interest income from business members could offer up new earnings. Enter Treasury Management Services (TMS).

TMS helps companies optimize their liquidity while identifying and managing potential risks. Ideally, TMS aids businesses in determining their working capital needs and creating a plan to maximize investments and capital in use. Recently, more credit unions have implemented Treasury Management Services to attract small and mid-sized businesses, grow assets, increase fee income, and generally become more competitive.

All good things, to say the least. But what about those risks?

TMS uses tools and techniques to efficiently handle a broad range of financial functions. But these tools are complex. And more complexity brings added risk. Five types to be exact:

• Credit Risk
• Fraud Risk
• Strategic Risk
• Reputation Risk
• Compliance Risk

If you’re thinking those risks impact every area of our credit union – you’re spot on. Generally, the pitfall is not including these risks in the initial conversation or planning. They crop up later, producing more work, longer timelines, and additional expense. But a good plan will account for them, and include areas like lending, legal, audit, and others.

So take heed, if you’re looking to start TMS at your credit union – revisit the risks above. Have they all been a part of the conversation? They should be.

Need more strategies for expanding offerings or seeing non-obvious risk? We’d love to hear from you.