NEW YORK—The National Federation of Community Development Credit Unions and EPL have finalized an agreement on the development of CU Impact, a shared banking platform specifically designed to help credit unions deliver affordable financial services to low-income consumers in underserved communities.
Each year, 90-million Americans living in unbanked or underbanked households pay more than $90 billion in fees and interest to payday lenders and other lenders outside of the financial mainstream, the Federation explained.
“CU Impact will enable the Federation's member community development credit unions to expand more effectively access to safe, affordable banking products and services and reach more of these underserved households,” the Federation said.
The CU Impact initiative will combine the Federation's expertise and experience in working with unbanked and underbanked consumers with EPL's pioneering i-POWER system to create the first core platform that will support, deliver and measure the impact of credit union products and services that build the financial security of low-wealth members, the Federation stated. By aggregating the accounting, compliance and processing functions across credit unions with a shared mission, CU Impact achieves economies that allow credit unions to invest more in their members and communities.
CU Impact will serve the Federation's member CDCUs, which provide credit, savings, transaction services and financial education to more than five million residents of low-income urban, rural and reservation-based communities across the U.S., and hold over $52 billion in community-controlled assets.
In Development For Three Years
The CU Impact initiative has been in development since 2013, when Citi Community Development provided financial support and expertise to the Federation to determine the feasibility of building a dedicated core banking system to power the growth and impact of credit unions.
“Today, the Federation is announcing a grant of $599,500 from The W.K. Kellogg Foundation for enhancements to CU Impact for the automation of small dollar loans and matched savings accounts,” the Federation said.
"CU Impact will change how credit unions, community partners, funders, local governments and regulators think about our industry's ability to improve the lives of low-wealth consumers," said Cathie Mahon, Federation president and CEO. "Credit unions of all sizes will be able to share and multiply the impact of successful local programs, and the Federation can focus on product and investment innovations with national impact. We are deeply grateful to both Citi Community Development and The Kellogg Foundation for sharing this vision of financial inclusion with the Federation."
"We are excited to support the CU Impact platform," said Carla D. Thompson, vice president for program strategy at the W.K. Kellogg Foundation. "CU Impact will allow families to better access affordable financial services and work toward achieving financial security, which we know can prepare children for success in school and life."
'Critical Milestone'
"Until now, credit unions serving low-income households have been using fragmented and high-cost processing systems, limiting their ability to roll out scalable products and services designed to build the assets of low-income members," said Bob Annibale, Citi's global director of inclusive finance and community development. "Under Cathie Mahon's leadership, the Federation has made remarkable progress and today's announcement is another critical milestone. A new modular and flexible technology platform will provide credit unions with quality and consistency in processing, reporting, and analytics – and the many shared cost and efficiency benefits of a common processing platform will enable Federation members to devote more of their resources to serving clients."
Birmingham, Ala.-based EPL is owned by Dedagroup, an IT company which has more than 30 offices worldwide and an active presence in 40 countries.
How Agreement Works
Under the terms of the agreement, the Federation will purchase preferred stock in EPL, and EPL will match the Federation's investment in CU Impact on an ongoing basis. A software advisory committee of leading CDCUs will prioritize CU Impact software design and enhancements. Discounted pricing and a transparent, best practices contract and negotiation process will also be available to Federation members.
"As cooperatives, all credit unions are interested in improving the financial well-being of their members," said Robin Kolvek, EPL Interim CEO. "Credit unions can expect a robust platform that will help them innovate, collaborate and grow with state-of-the-art tools, apps and delivery that meet the needs of low-income consumers where they are today and where they want to go tomorrow."
Credit unions interested in learning more about CU Impact should contact Blake Myers, Federation fintech director, at bmyers@cdcu.coop.