Credit unions may not have as solid a digital strategy as they think – and that’s definitely the case if they’re not including blockchain or distributed ledger technology as part of that digital strategy.
That’s the word from one analyst who spoke last week at the Credit Union National Association’s 2018 Governmental Affairs Conference in Washington.
“I hear mostly that people have a mobile strategy, which means mobile banking,” said John Ainsworth, president and CEO of CULedger, a builder of blockchain-based products for credit unions backed by CUNA and Mountain west Credit Union League. “But how do you think about the future of the consumer with Internet of Things, ecommerce and blockchain?”
Ainsworth’s remarks came during a breakout session that included a group of credit union leaders discussing their own digital strategies, along with how blockchain and CULedger’s self-sovereign identity could fit into that. Having just announced the launch of MyCUID earlier in the week, Ainsworth said CULedger’s goal is for credit unions to leverage the technology to enhance member engagement, increase member acquisition and have a stake in the next level of technology.
Only when a credit union builds a digital strategy can it begin to talk about how blockchain fits into that strategy, Ainsworth said.
“This is the fourth industrial revolution,” he proclaimed, adding that he believes the greatest use case for blockchain with CU industry leaders is identity protection.
“How I explain it to my 10-year-old is that back in the day there was a safe deposit box where I kept all my valuables safe,” Ainsworth said. “The vault was at my financial institution, the custodian that I trust. All we’re doing is digitizing that experience to reaffirm that you are the custodian and trust agent for your member.”
Ainsworth was joined by Chris Saneda, chief operating officer at Virginia Credit Union and incoming chair of the CUNA Technology Council. Saneda explained that for his credit union, a digital strategy looks at digitalization through data, process and innovation. Data is about getting to know members personally and being relevant to their needs. Process is about how new digital tools can enhance member experience. Innovation is a buzzword that Saneda uses to talk about forward-looking opportunities.
Tony Boutelle, president and CEO of CU Direct, said blockchain and distributed ledger technologies offer credit unions – and the companies that serve them – an opportunity to make sure they don’t get left in the past.
“We don’t want to end up like Blockbuster,” he said. “We don’t want to wake up tomorrow and find that there is a new way of doing things.”
Chris Shockley, CEO of Virginia Credit Union – which has invested $250,000 into CULedger’s self-sovereign identiy – believes blockchain may be as transformative as the internet.
“Throughout our memo for this, we said that there’s a great potential to lose money,” Shockley said. “What this is about is this: Remember when there were these things called websites that were coming about? We said they don’t make any sense, but maybe we need one because it seems like there’s possibly a reason that they will become relevant.”
Ron Amstutz, executive vice president of Desert Financial Credit Union, believes self-sovereign identity gives members the ability to take control of their own identity. “That takes a lot of concern off of us from having to manage that kind of data and just compliance overall” he said.