Disclaimer: While the author is employed in the credit union system, the following article represents the author’s ideas only and does not necessarily represent the views or opinions of his employer.
Historical Perspective of Credit Unions
In the beginning, credit unions were formed to provide access to credit and banking services to people who would not otherwise have access to them. Access to financial services and products was needed to accomplish something that would improve their livelihood, and by extension their communities. The survival of their community was also important to their own survival and quality of life, so there was an inter-dependency between member and their communities.
In the past, it was not uncommon for a credit union membership to be made up primarily of one “community” where that community was a particular religious group, a particular profession (e.g., teachers or steelworkers), a particular geographic location, etc. With the development and adoption of universal co-operative principles, credit unions are now generally open to anyone and therefore their memberships represent a kaleidoscope of communities. They are typically now a community of communities. Nonetheless, the members of a credit union still depend on their individual communities for the quality of their life and their communities are dependent on the existence of financially stable members for their existence. The inter-dependency has not changed over time.
This change in scope of member communities served by a single credit union has made it necessary for credit unions to explicitly re-think how they are connected to and how they help their memberships in maintaining and building their communities and their own personal quality of life.
The financial and economic advances we’ve seen in Canada and the significant growth of a middle class over the past century have not changed the fact that people need access to financial services and products to improve their situation. We all need ways to receive payments, make payments, save for retirement, manage the risks of life, fund our own and others’ education, acquire shelter, and food. Financial products and services are integral in the delivery of those needs.
It is important to note that financial services and products are essential to successful existence within society. Lack of access to make or receive payments, for example, will stymie effective participation in society and within the communities that a particular member exists. These products and services are not “nice to haves”; they are essential services in a well-functioning society. Therefore, the need for services that credit unions provided to their members has not changed; for example, there are still members of our communities that have difficulty accessing financial products and services.
What has changed, however, is that there are threats to credit unions. More members of our communities do not have difficulty accessing required financial products and services as banks and other providers have seen that it can indeed be very profitable for their shareholders to not ignore the financial service needs of average consumers. And, other providers have evolved to serve the under-banked or unbanked (albeit at predatory prices).
Credit unions, in delivering financial products and services to their members are doing what they’ve always done – they are providing an essential service to their members to allow those members to make their personal situations better. When the whole of a membership’s individual situations are improved, so too is the situation of the members’ communities improved. It is the quality of the communities to which a member belongs that has a direct bearing on the members’ ability to enhance their life experience. The quality of the communities is dependent on the quality of the members that make up the community. Assisting members in enhancing their financial wealth in order that they can improve their communities (however they define community) and thereby further improve their own individual life situation has been a long-standing “mission” of credit unions and co-operatives and continues to be relevant today. However, there are many viable alternatives available to members from which they may obtain financial products and services. So an important question that all credit unions need to answer is “Why would a potential member choose a credit union over a bank?”