VyStar CU Digital Banking Scenario Proves the Particular Importance of PR in Credit Unions

By Sarah Snell Cooke

I know and like people at VyStar Credit Union. I’ve known VyStar to be an outstanding organization by all accounts. I know it still is.

The $12.4 billion VyStar is a Community Development Financial Institution-certified credit union. The Treasury Department does not just hand those out. These financial institutions have to already be doing the work to serve financially vulnerable and marginalized communities before they can be certified. Its certification has it working on increasing service to underserved markets even more.

VyStar has been greatly involved in diversity, equity and inclusion efforts, from hosting its LGBTQ+ Summit in October 2021 to participating on a panel during the NCUA’s DEI Summit on Employee Resource Groups.

The credit union has always been innovative from its fintech investments, including technology CUSO (and VyStar’s online and mobile banking provider) Nymbus – to the tune of $20 million and space in its Jacksonville headquarters (that’s gotta be awkward) – to its purchase of banks (VyStar’s saga of the attempted purchase Heritage Southeast Bank ended with the mutual termination of the agreement the morning after I drafted this piece).

According to local news outlet Action News Jax reporting, pre-launch simulations did not mirror real-world experience and thus led to “unforeseen circumstances.” I could comment on that, but tech is not my area of expertise, so I won’t.

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But Public Relations Is

The most important thing that’s been said by VyStar is that member data is secure and has not been hacked. The credit union also refunded fees to members caused by the outage through June 10.

However, given the lack of engagement since the first 2 weeks – and it was not enough during that period – conspiracy theories have run rampant, whether among the 10s of thousands of members who’ve commented on the credit union’s social media pages or within the credit union community.

VyStar built trust among its 100 of thousands of members through all the ways I mentioned above and more over its 70 years in business and is well-known in the credit union market. Look how quickly it can be tarnished; it will come back though (keep reading for more on that).

Member-Owners

The credit union took far too much time and shared too little with its credit union member-owners about what was going on, the facts around the digital banking problems, and the steps it was taking to resolve the issue. All of the interviews I saw and read were obviously following a set of talking points, but not very good ones. Responses were vague and even a bit self-pitying, referring to having “the weight of the community on our shoulders.” The connotation is they’re feeling overwhelmed and looking for sympathy. Not the message to send to members who aren’t sure whether they’ll be able to buy groceries or make their rent payment because somewhere along the lines, the credit union or its partner screwed up.

VyStar has apparently employed a marketing and PR agency, which boasts McDonald’s and BuzzFeed as clients on its website. They appear to be good at what they do. I find it interesting a credit union would choose that type of agency.

Credit union legend and member-owner advocate Chip Filson wrote in his blog about VyStar, “Members are the owners. They should do more than vent frustration by exercising their power to choose their representatives for the board. They should take back their ‘home’ if they truly want to see the credit union ‘do right’ for its members and communities.”

Maybe they should. But will they? Maybe these members, who are fed up after a month of early 2000s-style online banking access, will actually leave. But will they? Nope.

VyStar has more than 800,000 members. Say 1% actually make the effort to change banking providers. It would be unfortunate for VyStar, but it’s not going to put the credit union out of business. Eventually, this snafu will straighten itself out and blow over. People will forget. [Did you remember VyStar’s online banking going down (for a much shorter time) during its provider change in 2016? Me either.]

Read 7 Step Plan for Crisis Public Relations

Credit Unions

Credit unions already are seen as behind the fintechs, neobanks and big banks on technology.

Consumers already are confused about what credit unions are and what they have to do with ‘unions.’

Consumers already don’t understand how to join or why they’d even have to ‘join.’

Credit unions already are slipping in satisfaction indexes to below the banks for the last five years.

Credit unions are often painted with the same broad brush, so while credit union leaders might be relieved – even spreading snarky gossip – that this isn’t happening to them, it kinda is. Read on for more about that.

CUSOs

Nymbus has been silent on the issue as far as I can tell. No PR. No social media. No website announcements. Perhaps it was decided VyStar, as a major investor in Nymbus, would do all the talking.

However, if I were a credit union executive on one of Nymbus’ platforms, which provides critical business services like digital banking and core, I’d have about a zillion questions. Maybe the CUSO is answering them on a one-on-one basis. But, as you’re all aware, credit unions have one hell of a grapevine. Being a journalist in credit unions was a great deal of fun because of what you picked up from the rumor mill – and a lot of it was pretty darn accurate even if we wouldn’t report on most of it.

Also, see above: Credit unions already are seen as archaic technologically, and because credit unions own CUSOs, it’s not a good look for CUSOs nor the collaborative movement as a whole. I applaud VyStar for its innovation efforts, but by putting itself on the cutting edge the credit union was bound to get a few nicks.

Oversight

The NCUA is seeking third-party oversight over credit unions’ business partners. It’s pretty illogical that the NCUA is the only banking regulator that does not have this authority. Regardless of how it happened, this is a prime scenario for the agency to point to in supporting its position. Particularly as credit unions own CUSOs, the NCUA should be able to dig in deeper. Wow, one time I’m not against increased oversight.

Additionally, members are working toward a class action lawsuit against VyStar. This is another area in which being a cooperative gets a little tricky. Because credit unions are owned by their members, they are actually only harming themselves by suing. Per Chip’s advice – if the members don’t like how the credit union is being overseen by the current board, it would be best to take back ownership of the credit union by running for board seats.

Read 4 ROIs of Public Relations

This situation is a PR nightmare for all credit unions, CUSOs and other business partners.

The Critical Importance of PR for Credit Unions

As I wrote in this CUinsight opinion piece, no matter how great your organization is – like VyStar, bad things happen. Building a pre-existing relationship with the media won’t keep them from publishing negative news, but you’ll be more likely to have a voice in the story. Working your public relations on a regular basis will help everyone understand all the good your credit union or business partner is doing to help mitigate when the stuff hits the fan.

I provided this perspective in the CUinsight article: I was recently researching some credit unions’ charitable work, and about 10% had 1) no information about it on their websites, 2) little to no information about it on their social media, and 3) when I Googled them, all I found were posts about robberies at their branches.

This is NOT the first impression your credit union wants to make on potential members [Similarly, it is not the impression business partners would want to make on credit unions!], and public relations efforts can help that. As a cooperative, not-for-profit community that holds a tiny, stagnant fraction of the financial institutions’ marketplace, public relations – that neglected ugly stepsister to marketing – is often ignored when it’s actually the most critical component of awareness and engagement.