Credit unions have long been known for their commitment to serving members and communities. As not-for-profit financial cooperatives, credit unions prioritize the financial health and wellness of their members over generating profits for shareholders. This unique philosophy positions credit unions as key players in the fight for financial inclusion and the empowerment of underserved communities.
For example, credit unions offer consistently lower interest rates on used-auto loans, providing an annual financial benefit of approximately $1 billion to their members. By ensuring access to core financial services, credit unions prevent vulnerable individuals from falling prey to predatory lenders and excessive transaction fees.
Meeting the unique needs of underserved communities
In 2021, Stepping Stones Community Federal Credit Union in Wilmington, DE, partnered with the Department of Corrections for a program that allows people incarcerated in three nearby prisons to set up savings accounts to help them get back on their feet. The program had 482 active accounts totaling more than $300,000 as of November 2023.
The goal is to make sure they have funds for when they're released, and that they can pay fines, have money for an apartment deposit and for transportation,” said CEO Blanche Jackson. “It gives people the opportunity to save, have services, and start building wealth in a lot of our underserved communities.Low-income designated (LID) credit unions have also made significant contributions to the financial well-being of their members and communities. As of December 2023, 53.1% of LID credit unions had a specific focus on serving low-income communities, offering affordable loans, higher savings yields, and lower fees compared to other financial institutions.
LID credit unions also have:
- Made 32.4 million loans to their members.
- Originated $13.5 billion in small business loans, supporting local entrepreneurs and job creation.
- An annual economic impact of $93 billion.
- Provided $67 billion in financial benefits to consumers.
- Contributed to the national employment landscape, with an employment impact of 470,000 jobs.
Between 2004 and 2018, while bank branches declined by 1,700, credit unions increased their branches by approximately 1,700 in the same period. This expansion demonstrates the credit union commitment to reaching and serving underserved communities.
We have to be intentional about financial inclusion,” said Corey Tresidder from Guadalupe Credit Union. “Our staff reflects our community, and they tell us when they see or hear things that don't seem fair.
Guadalupe Credit Union in Santa Fe, N.M., exemplifies this commitment by serving rural communities, low- to moderate-income areas, Indigenous communities, Hispanic families, and new immigrants. They offer tailored products such as subprime loans, ITIN lending, payday loan alternatives, and emergency cash loans. Additionally, one Guadalupe branch adjusted its hours to accommodate working class members, demonstrating their dedication to accessibility.
Being intentional about financial inclusion
Intentionality is key to identifying and addressing the unique needs of underserved communities.
Financial inclusion efforts not only align with the credit union mission but also improve their reputation and visibility within the communities they serve. In addition to offering products and services tailored to meet the unique needs of their community, they also support the community through disaster recovery efforts, financial education courses, and partnerships with local organizations, as a way to boost membership and business.
As needs evolve and grow, track where you can be most supportive,” said Jessica Jacobson from CNote, a women-led impact platform that uses technology to unlock diversified community investments to increase economic mobility and financial inclusion.
Moves toward greater financial inclusion
For credit unions looking to enhance their financial inclusion efforts, the first step is to know their community.
Data analytics can help, but also being present in the community and searching for those groups who aren’t being served and who are often ‘invisible,’” said America’s Credit Unions Vice President of Diversity, Equity & Inclusion Samira Salem, Ph.D. “And then you need to do some introspection and understand who you are and how you’re perceived in the community. Do you need to do anything to signal to community members that you’re trying to reach (existing and potential members) that you are a trusted partner? Does your staff and leadership reflect your community?
Address barriers by identifying and addressing friction points that may exclude certain members. This involves being truthful and genuine in reviewing policies, procedures, and terminology for potential negative impacts. Additionally, credit unions should continuously learn from and collaborate with other organizations working towards financial inclusion.
Financial inclusion is a critical component of the credit union mission to serve and empower their members and communities. By offering tailored products and services, actively engaging with the community, and continuously learning and collaborating, credit unions can break down barriers and unlock opportunities for underserved populations. As champions of financial inclusion and community development, credit unions have the power to transform lives and build stronger, more resilient communities.
Participating in Financial Counseling Certification Program (FiCEP) training helps credit union employees learn ways to deepen relationships with members – helping to ensure that you get to know them better.
FiCEP provides the skills and knowledge required to guide members to sound financial decisions. Since Americans often learn about finances from their families and friends or just go it alone, the need for expert help is real.
