Report
422
Number
May 02 2017

Reimagining Credit Unions: The Federal Option, Lessons from Europe, and Digital Lending

What would it look like to reimagine credit unions based on the latest research into organizational innovation, consumer behavior, and ever-changing regulatory systems? Filene brought together financial industry perspectives from Europe and Canada to explore opportunities and challenges shaping the credit union sector.

Report Number 422

Executive Summary

Financial institutions are operating in an environment of increasing uncertainty. But they also benefit from access to shared knowledge, new opportunities, and innovations that could fundamentally change the way they do business. What would it look like to reimagine credit union operations based on the latest research into consumer behavior, or on the story of a thriving bank that seems to have broken all the rules for achieving success? What if we went back to the drawing board to envision new regulatory systems, governance structures, and mechanisms for shaping organizational culture?

Reimagining Credit Unions: The Federal Option, Lessons from Europe, and Digital Lending brought together financial industry perspectives from Europe and Canada to discuss the opportunities and challenges that will shape the credit union sector in the years to come. Held in Toronto, Ontario, the event focused on ways that credit unions can thrive despite challenges and continue to promote the unique value of cooperative finance.

What Is the Research About?

Six presenters and a panel of credit union representatives contributed their perspectives to the question “What does the future hold for credit unions?”

Glenn Campbell, the director of the financial sector policy branch at the Canadian Department of Finance, shared the federal government’s perspectives on the credit union sector.

David Losier, UNI’s vice president and chief financial officer, discussed his organization’s process of becoming the first Canadian credit union to obtain a federal charter.

Ryan Buell, of Harvard Business School, revealed how operational transparency can have a positive impact on customer perceptions of value. Buell also shared examples of how credit unions are testing out operational transparency approaches with their members.

Through a case study of Swedish bank Handelsbanken, Dennis Campbell, of Harvard Business School, explained how the bank’s strong positive corporate culture has generated consistently high profitability, customer loyalty, and employee satisfaction.

Stefanie Schulte from the German cooperative association RWGV shared how Germany’s cooperative financial sector supports the country’s resilient economic model through lending to small and medium- sized enterprises (SMEs) and its deep knowledge of local economies.

Dionne Pohler, of the Universities of Toronto and Saskatchewan, shared her research on credit union governance, exploring the challenges that arise for credit unions and the ways they can maintain their competitive advantage compared with traditional banks.

And finally, in a roundtable discussion, three credit unions that have partnered with or developed their own online lending platforms discussed what they’ve learned and what they would recommend to others.

What Are the Credit Union Implications?

The breadth of opportunities currently available to credit unions is exciting—new tools and emerging ideas will change the way credit unions interact with members, employees, the government, and each other. But before making organization- wide changes, credit unions should take stock of their core values, goals for the future, and the challenges they currently face.

Recognizing that there is no one- size-fits-all regulatory scheme, governance structure, or online lending platform, credit unions must instill in their leadership a strong sense of their unique institutional history and identity. They should work diligently to shape strong positive corporate cultures that prioritize members and their needs. Additionally, they should look for opportunities to bring members high- quality financial services, and provide touch points between members and staff that allow employees to feel that their efforts are meaningful and appreciated.

Finally, credit unions can increase value by partnering with financial technology firms that integrate well with their current products. This better serves their members by providing user-friendly access to finance.