A credit union is a financial institution owned by its members. Credit unions got their start in Europe in the mid-1800s, then spread to Canada, and finally made it to the United States in 1908 when the St. Mary’s Bank Credit Union of Manchester, New Hampshire opened its doors. Most commonly formed in rural areas lacking access to traditional banks, credit unions filled a need for savings and lending services and provided them to local communities or groups of people. As of September 2010, there are more than 7500 credit unions serving more than 92 million members in the United States alone.
Credit unions are a cooperative financial model, are usually not-for-profit, and generally operate with fewer assets than banks. As of 2010, total assets of all U.S. credit unions were $926 billion, versus $12,067 billion for banks. Credit unions offer many of the same services as traditional banks: savings, loans, checking, credit cards.
Credit unions are subject to similar federal and state regulations as banks. The primary agency controlling credit unions in the United States is the National Credit Union Administration (NCUA), and was formed in 1934 when the Federal Credit Union Act was established. Deposits are insured through the National Credit Union Share Insurance Fund (NCUSIF). Regulations imposed by the federal government includes guidelines for handling interest on deposits, loan issuance, dividend payments, record-keeping, customer service, and customer security and privacy. As with banks, regulatory pressures are likely to increase over time, according to some industry experts. That may require credit unions to develop new business models or partnerships in order to compete effectively.
Because they tend to be smaller than banks with few branches or just one branch, adopting technology is somewhat easier for credit unions – they are more “nimble”. However, their size is also a disadvantage – they don’t have as much operating capital to invest in infrastructure as a traditional bank. . Credit union members want the convenience of online banking and electronic documents, and the ability to do transactions whenever and wherever they are – that means the Internet and mobile devices. Credit unions must have technology solutions to keep them in compliance with the federal regulations regarding member data and transactions, along with security and privacy. The solution: find technology that can serve their membership more efficiently, comply with regulations, all the while maintaining a budget. Credit unions are finding creative ways to use technology to accomplish those three goals at once.
Credit unions offer the usual technology tools that all banks commonly have today: online banking, automatic bill paying, debit cards and of course, ATMs. But some of the credit union ATMs talk to you, along with cashing checks and accepting deposits. Credit unions with active websites now offer web chat enabling Member Services Reps (MSRs) to talk directly with members about their accounts or services.
One web chat services offers a “PC anywhere” service whereby the MSR can direct members to other websites during the chat session, such as used car dealers or other resources. They can also help members fill in online forms. Automatic account notification is also actively used by some credit unions to alert members about their account balances or upcoming loan payments. Drive-through banking stations use remote MSRs on a video screen, who might be located in another time zone.
Many credit unions use cell phone or smartphone apps to help members find their nearest branch, make purchases, or do online banking wherever they are. Clearly, it’s not just banks that are tech-savvy any more – credit unions seem to be actively adopting technologies to stay in the game.