MADISON, Wis.–The challenge of financial inclusion, diversity and equity isn’t one limited to the United States. Nor is the solution, according to a panel of three credit union leaders.
Speaking to a webinar hosted by the World Council of Credit Unions, “An International Perspective on Financial Inclusion, Social Justice and Credit Union Regulatory Advocacy,” were NCUA Chairman Rodney Hood, CUNA President/CEO Jim Nussle, and WOCCU President/CEO Brian Branch.
Both Hood and Branch noted the issue of financial inclusion and equity is not exclusive to the United States, but that regulators and credit unions around the world have been among the first to tackle and seek resolutions to those challenges.
Many people around the world, said Hood, are witnessing similar inequities in their own societies and communities, and the common question is where might the remedy be found.
“There is no silver bullet, but there are some things we can do as leaders in financial services to help,” said Hood.
Among the first steps leaders can take, according to Hood: stress the importance of diversity, equity and inclusion (DEI) for all, and understand such efforts aren’t just for those at the top of an organization but for everyone.
Discussion Welcomed
“We welcome the discussion around need for DEI,” said Hood. “But I will confess sometimes those discussions make me a little uneasy. If we are just replacing a bunch of holders of Ivy League degrees on the board with another group of holders of Ivy League degrees, it’s hard to see how we are making a difference. We are not addressing the root of the issue.”
Hood said his objective is to get beyond the idea of DEI simply being about inclusion and to think of it more holistically and in terms of broad participation by a group of people, “because it’s broad based, because it makes a big difference in people’s lives, because it breaks the cycle of dependence. It would go a long way toward easing these inequities we are seeing today.”
Hood said credit unions are the “ideal” institutions to address the problems posed by a lack of inclusion.
“I urge credit unions to take the lead on financial inclusion and to bring more people into the financial services arena,” Hood said.
Four Principles
It’s a process that isn’t about a comprehensive policy agenda, but instead based on a set of guiding principles, according to Hood. Those principles include:
- CUs asking themselves if they are doing everything they can to reach those with low and moderate incomes; if they are also including the disabled in their outreach, and if they are extending services to people in hard-pressed urban areas and underserved rural areas
- Using financial technology in ways that will result in greater financial inclusion
- Continued innovation in financial products that promote greater financial inclusion
- Investing in more financial education and in more fin ed training
Leaning In
CUNA’s Nussle said credit unions can’t just wait for DEI initiatives to grow organically and must instead “lean into” those efforts.
“You can provide people equal rights and access, but if they don’t have the ability to make a decision, to make ends meet, then they are not going to have much freedom or control over their futures,” Nussle said. “Can we do more? You bet we can.”
The Q&A
Greg Newman, manager of corporate communications with WOCCU, moderated the webinar, including posing the following questions for panelists:
Newman: What has been impact of pandemic on credit unions’ ability to commit to DEI?
Hood: Credit unions have stepped up to the plate in more ways than we could have imagined. As a regulator we have been issuing letters to credit unions to let them know we want them to work with their members and to reach out to members who need them most. But credit unions should not wait on me as a regulator to tell them to do the right thing. They are doing it of their own volition.
Nussle: I think credit unions have had the same gut punch as everyone from COVID 19. They are the financial first responders in America and they are the ones people turn to in a crisis. Credit unions have figured out on their own, very nimbly, very capably, very passionately, how to provide services to their members. Even though credit unions have not traditionally been commercial lenders they leaned into commercial lending because so many small businesses don’t have a relationship with any financial institutions. Credit unions made almost $10 billion in PPP loans. I don’t think any did that because of or in reaction to diversity, equity and inclusion. It was natural. We have this natural DNA to do it and as we look to the future we will have to lean in even stronger and in areas where we haven’t thought about it in the past.
Newman: What do you think about the chairman’s comments?
Branch: Many of the financial standards today are set at the international level and many of those standards are set to address the risks from big commercial banks. Many of those standards are not, word for word, appropriate for credit unions. Much of what we do is about addressing regulatory burdens and constraints before they reach the regulators.
When we talk about fintech it’s not just about efficiency, it’s also a tool to go deeper with inclusion. We talk about the proportionality of applying international standards and how important that is to financial inclusion. These restraints can keep FIs from serving underserved populations.
In survey of credit unions we have done, for the last seven years the top challenge identified has been regulatory burden. This year the top-of-mind issue is digitization and digital transformation. The COVID crisis has demonstrated that those credit unions that are able to provide service and grow in this environment are those that have been able to deliver in the digital channels. It’s not just about convenience, it’s a channel about safety.
Hood: We now have the opportunity to serve a whole generation that grew up with iPhones. They do not look at it as a convenience, it’s a consumer demand, so credit unions must make that investment.
I think another area we must be mindful of, and I am particularly watching, is that fintech and digital are important, but we must place and equal amount of emphasis on cybersecurity.
Newman: How are credit unions responding to the challenge of inclusion around the world?
Branch: This is a challenge in many countries around the world with different populations suffering inequity and injustice. What is inspiring about the credit union system is that in these countries you very often find credit unions at the front lines finding ways to provide people with a better life.