The data has proven challenging, if not troubling: three billion people around the world are underbanked or fully unbanked. That’s 40 percent of the world population. In America alone, 39 percent of individuals would fail to come up with $1,000 to cover an unexpected emergency expense.
The good news is there are now at least three billion cell phone users around the world that can offer financial services a direct line to reach, partner, and work with such member-first financial cooperatives like credit unions. Unprecedented access like that gives those members a lifeline to weather those difficult life moments and unexpected emergencies.
The power of this new era in technology also represents an opportunity for social impact to be a dominant cause through the credit union movement. “No distance is insurmountable,” Accion’s Michael Schlein once said. “No transaction size is too small, and we have the data to find people we didn’t have before.” That data, and other available metrics, can help measure social impact by tracking the outcomes of strategies in new ways by focusing on how credit unions impact people and their communities.
The incoming board chair for the Credit Union National Association (CUNA) Tony Budet encouraged people to focus on the impact they have on people rather than their cooperatives’ balance sheets. “Did you put 100 families in homes through which they are better positioned to build financial wealth?”, he asked. “This is not semantics. Our language, our stories matter, and our metrics matter. We’re in the people business, so our metrics must focus first on the human impact, rather than financial impact.”
Creating social impact and effect change
Credit unions have long endeavored to enhance the lives of their memberships and the communities they serve. Many of the cultural and societal issues that cause harm to those communities, however, are deeply-rooted and defiant, and effecting fundamental change requires grass-roots-level action.
It is an unfortunate temptation in philanthropy to focus on frivolous instead of structural issues. But only by grasping these structural challenges that we create for ourselves the chance to reimagine and overhaul the structures that support them. How might credit unions take advantage of the resources they have to address convoluted societal and community challenges? Employing a systemic approach to social impact gives credit unions a distinct and measurable opportunity to build both social and financial capital in such neighborhoods and communities that have historically been denied access to necessary resources, therefore blazing a new trail for economic renewal for tens of thousands of community members.
One financial asset critical to social impact initiatives should include fast, accessible, and affordable access to funds when low-income residents have more month than money. Pervasive financial instability among America’s homes threatens the future of such communities’ family structures. Almost 50 percent of all America’s households and two out of three households of color don’t have enough savings to sustain themselves for three months if their income were disrupted.
Through their local credit union’s social impact programs, including an easily-accessible mobile life event lending platform like QCash, members will finally have fintech that offers fast funds in six clicks in 60 seconds of applying. These products are not only “handy” to have, but consumers’ expectations have risen to the point of expecting these digital capabilities to be available when and where they need them.
Finding your credit union’s advantage through social impact
Social obstacles ranging from economic inequality to climate change have been magnified due to the direct and indirect effects of the COVID pandemic, war in Ukraine, and the recent inflationary spike. Credit unions can play an outsized role in addressing these financial health and inclusion challenges in ways that not only spreads the movement’s unique, community-oriented philosophy but introduce practical methods that promote economic stability and growth, for both members and the organization.
To find success in community outreach, your credit union must take a strategic and systematic approach to your credit union’s community giving efforts. That often means making the tough decision as to which causes to support and invest. Deciding on a clear objective and a mindset of consistent, solution-based community partnership, credit unions can contribute to, and achieve, long-term structural change.
As the credit union movement fights in the never-ending battle for continued relevance, the industry must keep a constant eye for opportunities to openly draw attention to why potential members should become a member. As Millennials and Gen Z push the envelope for corporations and businesses to take more of an active role in improving society, quantifying and communicating your financial cooperative’s social impact may represent the competitive and differentiating advantage.
Besides offering impact through simply data and growth metrics, credit unions have the potential to find greater success by attracting, recruiting, and retaining industry talent who are specifically looking to be associated with pro-social financial cooperatives. After all, it’s already clear the benefits of adopting social impact initiatives in credit union strategic community planning and business decision-making are powerful and should not go unexamined.
If your credit union is ready to embrace small dollar lending fintech to your suite of credit union products and services, please visit our website and request a demo.
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