The future of credit unions is community


Two weeks ago I gave the closing keynote at the Boards of Directors and Supervisory Committees Conference of the U.S. National Association of Federal Credit Unions in the beautiful Hawaiian island of Maui, on the topic of Profiting From Technology Trends.

The credit union sector in the U.S outperformed commercial banks after the financial crisis according to the very interesting ILO study Resilience in a downturn: The power of financial cooperatives, moving from 42.8% to 45.0% market penetration to a total over $1 trillion in assets, while in the same post-GFC period credit unions increased their market share in most other regions in the world.

However credit unions do not have the financial resources of major banks, and are challenged by the rapid pace of how technology is changing consumer financial services.

In my keynote I provided a very broad-ranging view of technology trends, bringing it back to implications and the action required for the financial sector.

However the key point I kept coming back is that the biggest opportunity for credit unions is in tapping the power of community, using technology to facilitate the very real community that credit unions already embody.

Credit unions are effectively owned by their members, so any profits go back to members, usually in the form of more attractive pricing. Moreover they almost always service existing communities, brought together by profession, geography, or both.

As such there is an opportunity for technology to be used not just to provide convenient and useful financial services, but also to create value for communities in ways that are hard for the more diffuse relationships of commercial banks.

Community is shifting to the heart of all business. Technology is now enabling community-based business models such as credit unions to leverage the true power of community they already embody.

This can include everything from enabling financial mentoring between members, lending to support community initiatives, helping individuals and groups to learn effective financial habits, encouraging and enabling sharing and sale of goods between members, helping connections to be made to help people through challenging transitions in their lives, supporting ventures by members to provide services to their community, and far more.

The possibilities are immense, enabling by technologies of connection. A future of credit unions that amplifies the power of community will see them make further increases in their share of personal financial services. The opportunity is there to be seized.