Cash, coins, and crypto: Rethinking your digital strategy while there’s still time

For over a century, credit unions have stood as pillars of financial stability and inclusion, offering a safe haven for those underserved by traditional banks. These institutions have been more than just financial service providers; they have been cooperatives dedicated to the conservative stewardship of their members’ funds, shielding them from the volatile swings of larger economic forces, and empowering them to earn better returns on their deposits. In a world where big banks often (always?) prioritize profits over people, credit unions have remained steadfast in their mission to serve the underbanked, providing critical financial services to those who might otherwise be overlooked.

Historically, the mission of credit unions has been rooted in community and trust, providing access to loans and financial services to those who might otherwise be overlooked. This ethos of service has been at the core of their operations, ensuring that members are protected, and their money is securely managed. In stark contrast to their for-profit counterparts, credit unions have always placed the needs of their members at the forefront, operating with a level of transparency and accountability that fosters trust and loyalty. These qualities have enabled credit unions to build strong, lasting relationships with their members, who view their credit unions not just as service providers, but as partners in their financial well-being, and friends in their communities.

However, the nature of money itself is undergoing a dramatic transformation. In the past 25 years, we’ve witnessed a fundamental shift in the way money is used and stored. What was once a world dominated by cash and coins has rapidly evolved into a digital ecosystem. With the advent of online banking, mobile payments, and digital wallets, the financial landscape has been irrevocably changed. Today, consumers expect the convenience of digital transactions, and the ability to manage their finances at the touch of a button. This digital era has brought with it a reinvention of money, most notably through the rise of digital assets such as Bitcoin, Ethereum, and the myriad legitimate crypto assets and not-so-legitimate ‘memecoins’ and NFTs.

Remarkably, nearly 40% of adults in the United States have already incorporated these digital assets into their investment portfolios and digital wallets, using them not just as speculative investments but also as mediums for everyday transactions. The adoption of digital assets has been driven by a growing recognition of their potential to provide financial autonomy and hedge against inflation. For many, cryptocurrencies represent a new frontier in finance, offering opportunities for growth and diversification that were previously unavailable. As digital assets continue to gain traction, it is becoming increasingly clear that they are here to stay and will play an integral role in the future of finance.

A year ago, the idea of integrating digital assets into a credit union’s strategy may have seemed far too risky. Digital currencies were often viewed with skepticism, and the volatility of the market raised concerns about their suitability for inclusion in a traditional financial institution’s portfolio. However, the landscape has changed dramatically, with many banks looking to incorporate these assets into their holdings and offerings. With the introduction of Bitcoin and Ethereum ETFs, which provide a regulated and accessible means of investing in these digital currencies, the market has matured. Furthermore, the widespread adoption by financial giants like BlackRock and Fidelity has provided a significant endorsement of digital assets, signaling their legitimacy and long-term potential.

For credit unions, this presents a unique opportunity to rethink deposit and lending strategies in a way that includes digital assets. By embracing this new asset class, credit unions can not only meet the evolving needs of their members but also position themselves as forward-thinking institutions that are prepared to navigate the complexities of the digital economy. Integrating digital assets into a credit union’s offerings can enhance its value proposition, attract a younger, tech-savvy demographic, and ensure that it remains competitive in a rapidly changing financial landscape.

Yet, as with any financial innovation, there is a regulatory lag. The unfortunate reality is that regulators have not been proactive (surprise!) in providing guidance for local, community-focused cooperatives. Instead, they are waiting for industry leaders to pave the way, providing the input and expertise needed to shape future policies. This regulatory uncertainty poses challenges for credit unions, which must balance the need to innovate with the responsibility to protect their members’ interests—interests which are steadily moving away from fiat money and into cryptocurrency.

According to Fiserv research, 61% of millennials and Gen Zers want their bank or credit union to hold crypto. This makes complete sense: these are the institutions they know and trust. But, interestingly enough, 79% of users aren’t asking for these services. And when they do ask, only 3% of credit unions actually report tracking the information.

This is where credit union executives must take the initiative. The time has come to acknowledge these emerging financial realities and prepare your institutions for the future. This means not only being ready to safely hold digital assets on deposit but also building out lending and payments operations that support consumer loans, mortgages, and digital wallets. In doing so, credit unions can protect their members against the real and present dangers of inflation and federal budget deficits, ensuring that they remain relevant and resilient in this new financial era. By leading the way in the adoption of digital assets, credit unions can influence the development of regulatory frameworks that are both supportive of innovation and protective of consumer interests.

The question now is: Are you ready for the future of finance? The decisions you make today will determine whether your credit union thrives in the digital era or fades into obsolescence, much like record stores did with the advent of the iPod (or cab drivers competing with Uber, Blockbuster during the Netflix era, and Encyclopedia Britannica after the launch of Wikipedia).

How you answer this question is critical to the survival of your financial institution, and to the entire credit union movement.

At DaLand CUSO, we are here to help you navigate this complex and exciting landscape. By partnering with DaLand , credit unions can access the expertise and resources they need to develop a robust digital strategy, ensuring that they are well-positioned to capitalize on the opportunities presented by the digital transformation of finance. Don’t believe us? Just ask St. Cloud Financial Credit Union, who is leading the way by keeping their institution plugged in to the future of money.

The financial landscape is changing rapidly. Your credit union has a pivotal role to play in shaping the future of money. By embracing the reality that digital assets are here to stay, credit unions can continue to fulfill their mission of serving their members, while also ensuring that they remain relevant and competitive in an increasingly digital world. The time is now, and the future of finance is within reach. What steps will you take to define your strategy in the digital era? Are you prepared to lead your credit union into the future, or will you be left behind? The choice is yours, and the stakes have never been higher.