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REAL Solutions: Solving the Financial Service Needs of America's Working Families

With an increasing number of credit unions investigating how to help the underserved, Filene developed a program called REAL Solutions to assist in efforts to reach out to new member populations. This study provides a progress report on the activities of credit unions involved in the REAL Solutions program.

Executive Summary

An increasing number of credit unions are investigating how to help the unbanked and underbanked who may be underserved, or served only by the AFS sector at a higher cost. One issue facing credit unions is how best to structure their organizations, subsidiaries and products to fulfill this mission.

We explore data and insights into the viability of providing check cashing services, payday lending or other complementary AFS services at credit unions and/or credit union related organizations via a program called REAL Solutions®—Relevant, Effective, Asset-building and Loyalty producing. The often innovative and always targeted programs undertaken by credit unions to serve these segments of society are a demonstration of the credit union promise to operate first in the interest of the consumers who use their products and services, rather than for a small group of stockholders who invest with the expectation of profit.

What is the research about?

This report explores how REAL Solutions meets a market need—why it was established, who is involved, and what products are being offered by participating credit unions. It examines empirical data gathered by the Filene staff regarding which types of products REAL Solutions’ partners believe have the greatest potential and the populations they find most in need of assistance.

Additionally, we identify the business case for serving limited-means households and how market leaders in a variety of industries have vaulted to a position of prominence by serving a heretofore-neglected portion of the market. Alternative financial providers have found innovative ways to serve limited-means consumers to the financial detriment of the consumer. Credit unions have both a historical and a unique market position to improve the services being delivered to underbanked households. By providing services to these populations, credit unions can demonstrate to the makers of public policy that their traditional mission is alive and well in the twenty-first century.

What are the credit union implications?

By far the most important consideration in undertaking a program to serve the needs of low-wealth individuals and families is a desire to do so. As you will see in the case studies, credit unions can live up to their philosophical and cultural principles regardless of the size and scope of their resources. Service to members is the taproot of the credit union idea. Some members have very large dreams, and some have small ones. Whatever their dream, the credit union is there to help its members.

This report is sponsored by the National Credit Union Foundation (NCUF).