SEATTLE—CUNA shared further details on its plans to introduce a CU distributed shared ledger platform—or blockchain—during its America's Credit Union Conference here, telling attendees that the more credit unions are involved in the project the more successful the effort will be.
During his presentation, CUNA Chief Operating Officer Rich Meade also said that the shared ledger platform may debut by next summer, but more likely the end of 2017.
Last week CUNA announced that in partnership with the Mountain West Credit Union Association it has worked to develop a concept for a credit union system-wide "permissioned distributed shared ledger," commonly referred to as a blockchain.
“Credit unions were the original peer-to-peer lender, why not be the first peer-to peer-shared ledger,” said Meade. “There is great potential and promise. At CUNA’s Governmental Affairs Conference in Washington, (CUNA President and CEO) Jim Nussle challenged credit unions to be the disruptors and not the disrupted. This is an opportunity for credit unions to be the disruptors.”
Meade acknowledged that credit unions tend not to be leaders in innovation and technology and instead fast followers.
“I am not saying we will necessarily be the first distributed shared ledger platform (for financial institutions), but hopefully we can do our own and do it our own way,” said Meade, pointing to the blockchain effort by the R3 consortium of money center banks. “Credit unions have the opportunity to create a credit union only network, which in itself is really cool. We won’t have to get on someone else’s platform.”
The applications for the ledger are numerous, said Meade.
“There are a number of promising applications, one around member identity and biometrics that may be the most promising, but certainly not the easiest,” he said.
Meade cited other uses, in addition to payments, such as around lending and assets in terms of titles.
“We don’t want to get ahead of ourselves and on a project like this, with so many possible use cases, your mind can wander,” said Meade. “But I want to emphasize this project is all about proof of concept—meaning we want to prove the concept and evaluate whether we can network together and whether or not the network can verify transactions. Because if we can, the potential uses or applications that can be put on top of that network are—while not limitless—quite a few.”
Meade said the more credit unions that come aboard the more secure the network will be.
“There is really no limit to the size,” he said. “My bigger concern is not having enough credit unions than too many. That said, I would not want to start with 6,000.”
The effort, too, will include CUSOs. Members of the National Credit Union Roundtable were apprised of the effort before last week’s announcement. Meade said that currently there are at least eight large credit unions participating, PSCU and CO-OP Financial Services, and three leagues.
“This has been growing quickly,” Meade said.
A next step will be to assemble the project’s structure and governance.
A committee will be created under the direction of Meade and Mountain West Credit Union Association President Scott Earl.
“My hope is that we can get organized and begin working next month,” said Meade. “We are talking about quick adoption, and to me quick adoption means months not years. So I envision starting this summer with the hope of concluding next summer—but more likely the end of next year.”
Recognizing that blockchain and its applications within financial services can be a daunting if not confusing concept, Meade said CUNA will introduce a series of webinars and will have pages of resources on culedger.com, a new website launched that will continue to be built out as the overall project progresses.
Asked what might happen to credit unions if they do not move forward soon with their own distributed shared ledger platform, Meade said that would be concerning.
“There is a concern that if we don’t act we will be left behind or forced to use someone else’s platform and pay higher premiums to do so,” Meade said.