Next Generation Switch Showed its Worth in Katrina, CUSC Says

DULUTH, Ga. – When two credit unions in Louisiana and one in Mississippi found themselves unexpectedly reeling in the wake of Hurricane Katrina in September 2005 they found they were doing so blindly. With headquarters’ buildings shattered or flooded out, branches closed and communications across the region either patched or non-existent, neither the $48 million Jefferson Parish Employees FCU, headquartered in Jefferson, Louisiana, nor the $7 million Sewage and Water Employees FCU, headquartered in New Orleans, nor the $1 billion Keesler FCU, headquartered in Biloxi Mississippi were able to serve their members whom storm evacuations had scattered for hundreds or thousands of miles. But they did not remain blind for too long. Through technical innovation that the Credit Union Service Corporation, one of the three nationwide shared branching networks, has been quietly putting into place for over a year, all three credit unions were able to begin shared branching early in the recovery process without many of the lengthy procedures and check-offs which have been required previously. “I think it’s important to note that in the case of all three of these credit unions we are talking about the credit unions becoming issuers in the system and not acquirers yet, but I am not surprised that we were able to put this into play so quickly” explained Craig Beach, marketing manager for the shared branching network. Beach used the terms which differentiated between a credit union whose members are able to conduct transactions at shared branching credit unions (issuers) versus credit unions which allow other shared branching participants’ members to make transactions at their facilities (acquirers). In general, becoming an issuer is often a bit easier the becoming an acquirer, Beach explained. The technical innovation that made this possible was the Next Generation Network switch, a switch that is wholly owned by CUSC and which allows the network to both carry more information per transaction and to use a more secure and affordable virtual private network for conducting the transaction, Beach explained. “The Next Generation Switch was really able to help these credit unions because of all the information that it can carry,” Beach said. The Next Generation Switch allows a teller in an acquiring branch who is trying to help one of that credit union’s members to see the birth date of that member, birth date of joint owner (if any), Social Security Number of both member and joint owner, date account opened, and the deposited check’s captured MICR information. The last is important because it will allow the issuing credit union to be able to allow instant access to even checks deposited out of state, Beach explained. Having the additional information allowed displaced credit union members who might not have had perfect ID still verify their identify to gain access to their funds, Beach explained, but the real benefit NGN provided was the fact the CUSC owns it. “Owning the switch enabled us to certify the credit unions very quickly,” Beach said, “we didn’t have to wait on someone else’s timetable. We could see what needed to be done and take care of it.” Beach also explained that using the shared branching capability didn’t rely on having the credit unions with their operating systems online the whole time. CUSC has put procedures into place which will allow the credit union’s members to access at least some of the funds offline if the credit union has to shut down its operating system for a time during the recovery. -