Prepare, Embrace, Innovate: A Call to All Credit Unions
Written by Jed Meyer, President & CEO of St. Cloud Financial Credit Union
As the CEO of St. Cloud Financial Credit Union, I've had many conversations with leaders from credit unions (small and large) who express concerns about the cost and complexity of investing in new technologies. It's understandable to feel overwhelmed or skeptical about innovations like cryptocurrency, digital assets and distributed ledger technology, especially when these trends can seem like intimidating fads. However, I believe that to ensure the future relevance and sustainability of the credit union movement, we must shift our mindset and embrace innovation head-on.
It's easy to bury our heads in the sand when faced with rapid technological changes, letting others develop our future in this space without our input. Many of us have seen trends come and go, and it's natural to be cautious. However, dismissing innovations as mere fads can put us at a significant disadvantage. The financial industry is evolving, and our members' expectations are changing. They seek secure, efficient, and modern financial services, and it is our duty to meet these needs. Just as merchants drove the mass adoption of debit and credit cards due to their desire for more secure payment methods and faster settlement times compared to checks, there may come a time in the not-so-distant future when merchants will drive mass adoption of payment processing and settlement on the Bitcoin Lightning Network. If local financial institutions aren't careful, they risk being left behind in this next evolution. Prepare by seeking knowledge and understanding, embrace what you can do today, and innovate on what you expect to need tomorrow. Doing nothing now would be similar to saying no to interchange income at the advent of plastic cards' mass adoption.
One of the greatest strengths of the credit union movement is our ability to collaborate. Historically, we've turned to Credit Union Service Organizations (CUSOs) and fintech companies to help us navigate technological advancements. These partnerships aren’t just a stopgap, they can also be proactive collaborations that allow us to shape the future of our credit unions and the industry. A strong, comprehensive strategy—starting with the end in mind and working backward—is essential when partnering with fintech's. Consider what the full landscape will look like in the future: how are you preparing, what are you innovating on your own, what single solutions will you integrate from fintech's or CUSOs, and how will these fit into your long-term strategy? CUSO/fintech partnerships are a strategic way to innovate without bearing the full costs and risks of developing new technologies in-house, but these relationships must align with your broader strategy.
Our partnership with DaLand LLC is a prime example. By leveraging their expertise, we are about to launch our CU-Digital Asset Vault™ , which enhances our service offerings and keeps us competitive. For our membership and community, it ensures that their digital assets are secure and kept local. This collaboration has allowed us to adopt advanced technologies without overwhelming our resources. This vault launch is only the second step (education was the first) in a series of strategic initiatives we have designed for our full development in this emerging space over the next 10 years. We have already developed and tested what we believe will be the next steps in this space and are ready to launch as regulations become developed and succinct.
Changing the Mindset: From Intimidation and Apathy to Opportunity
It's time to challenge the mindset that innovation is too daunting or only for the big players. Here are a few key points we considered that you might find helpful:
A) Service to Members: I challenged our credit union to quantify the positive impact we create (a future indicator), rather than just measuring how well the business is doing (a lagging indicator of past decisions). This is a different way of looking at how we serve our members. By adopting innovative solutions, we can offer better, more secure, and more efficient services. In turn, this approach enhances member satisfaction and loyalty while ensuring that member wealth stays within our local community. It also helps credit unions and local financial institutions solidify their relevance and importance to local consumers and economies well into the future.
B) Movement Relevancy: To remain relevant in the financial landscape, we must evolve. This is nothing new for us, but there is one distinct difference: the form of money and the rails through which value is transferred are changing. We must recognize that the “same old” ways are not coming back, and a new way of doing business is emerging—one that we haven’t seen for some time, if ever. Innovation ensures that we continue to meet our members' needs and attract new ones, securing the future of not just our credit union, but of credit unions in general.
C) Sustainability: Embracing new technologies is not just about staying current; it's about long-term sustainability. By adopting forward-thinking solutions, we position ourselves to thrive in a digital future rather than scrambling to play catch-up with someone else’s plan, strategy, or product set--or, worse, finding ourselves irrelevant all together.
D) Collective Strength: Collaboration is in our DNA. By working together and leveraging partnerships with CUSOs and fintech companies, we can achieve more than we could alone. This collective strength is a powerful tool for innovation.
Practical Steps for Smaller Credit Unions
Engage in Continuous Learning: Stay informed about industry trends and technological advancements. Attend conferences, webinars, and networking events to learn about new opportunities. Seek out the experts in your community—they do exist—and consider partnering with them, as we have with the creation of the MN Crypto Council. Additionally, learn from outside of the credit union space to uncover even more opportunities.
Explore Partnerships: Look for CUSOs and fintech companies that align with your needs and values. Engage in dialogues to understand their long-term strategy in this space, how you can grow with them, and how their solutions can help you innovate without overextending your resources.
Adopt a Growth Mindset: Embrace change and view it as an opportunity for growth and differentiation in the market space. Encourage your team to be open to new ideas and solutions. While there are plenty of pressures on our business—on our balance sheets, income statements, and more—we know that at our credit union, we can make the numbers stronger without growth and slowing down. However, we also recognize that this approach could be as much a recipe for extinction as poor financials. We must do both: grow and manage our financials through that growth. This is our only option for long-term survival. It is a new mindset—thriving versus simply surviving—not only today but in the future.
Collaborate with Peers: Form alliances with other credit unions to develop new, diverse revenue-generating opportunities, and to share costs and resources. This collective approach can make advanced technologies more accessible.
I've been talking extensively about the evolution of money and why it's critical for credit unions—regardless of size—to recognize and embrace this change. Now, I want to personally urge you to take action. The landscape of financial services is shifting rapidly, and it's not just the big players who need to adapt. This is not a space I think we should outsource our core functions or rely on others to figure things out for us.
Your credit union has the power to thrive in this new era, but it requires a willingness to innovate, collaborate, and navigate. We must invest into who we expect to be and then execute because defensive strategies won’t save us this time. The steps I've outlined aren't just abstract ideas; they are actionable strategies that can ensure your institution's relevance and sustainability. Let's move forward together, turning the challenges of today's technological advancements into opportunities for tomorrow's success.
Now is the time to be bold, to innovate, and to secure the future of our credit union movement. Are you ready to take the next step? I am game to collaborate and would love to learn with you as we navigate this emerging space. Let’s go!