A recent BankThink article by Aaron Klein got it wrong when it questioned the National Credit Union Administration’s actions to modernize credit union field-of-membership rules.
The advents of the internet and of social media have fundamentally and irrevocably altered the way we think about communities. Ultimately, geography no longer dictates where we work, how we socialize or how we build relationships with one another.
It’s only logical, then, that the instruments and services we employ to support these evolving communities, including financial services, should be updated accordingly. We applaud the NCUA for its leadership in this area.
“Common bond” or field-of-membership concepts were originally tools for determining creditworthiness, not a concession or condition of the special mission of credit unions. Creditworthiness tools have evolved considerably in the past century; it makes sense that the concept of field of membership would also evolve.
We support the NCUA’s proposal because credit unions merely wish to continue to competitively provide the most consumer-friendly financial products and services in the market, and, as always, with the members of their communities in mind first.
But the fact of the matter is that while financial services have raced into a new millennium of technology, the Federal Credit Union Act hasn’t been meaningfully modernized in nearly 20 years.
In the end, credit unions should be allowed to serve their communities with a law that reflects the realities of the 21st century, not one that hems them into an outdated structure envisioned during the Great Depression.
As Klein wrote in his article, credit unions were founded to promote thrift among members and to create a source of credit for provident or productive purposes. Modernizing field-of-membership rules would not change this; it would not change the purpose of credit unions.
It’s our communities that have changed.