A changing financial services industry and a challenging economic environment—including growing volatile income and income and wealth inequality, as well as a thinning social safety net—make it difficult for millions of people to meet their immediate financial needs. Many have been left out of mainstream financial services, and many turn to non-bank alternative financial service providers (AFS) to access basic financial services.
What is this Research about?
Taking advantage of the opportunity to grow through inclusive financial services requires much more than new products. It requires a new approach to service. In The Unbanking of America, Filene Fellow Lisa Servon explores why and how people turn to AFS, and in this brief, we build on this research to provide guidance for service enhancements and innovations that can help credit unions meet the unique needs of this growing market. At the core of an AFS-informed approach to credit union member service are the following key principles:
- Transparency of services and fees
- Welcoming, no-judgement service
The argument is a counterintuitive but powerful one: as credit unions seek to expand their memberships and be more inclusive financial service providers, they can leverage the overlooked service strengths of AFS providers to better serve their members, grow their memberships, and provide affordable and convenient financial services with the goal of improving the financial well-being of their communities
What are the Credit Union Implications?
The inclusive banking opportunity for credit unions is twofold. The financially underserved represent new members and an important market for credit unions. At the same time, putting the financial well-being of members front and center in credit union strategy, offerings, and operations offers a significant point of differentiation in a competitive financial services marketplace.