Credit Unions Now Plan to Back and Use Blockchain: The Competitive Race in the Financial Industry

We’ve written a lot about how the financial industry has begun to find the merits in blockchain and adopt it for more security and transparency. What we haven’t explored are alternative financial organizations like credit unions. They’ve been a little slower in adopting blockchain, even if they continually look for ways to compete with the bigger banks.

They may move ahead of some of their bank competitors thanks to a recent credit union consortium agreeing to support the above technology. Named CULedger, this group assembled last summer and comprised some of the biggest credit union names in the world. Basically, 55 credit unions (plus four of the biggest credit union service organizations) agreed to start using blockchain tech before the summer of this year.

It’s all spearheaded by the Credit Union National Association and Mountain West Credit Union Association.

Credit Unions Moving Ahead of Banks

With credit unions taking action now, they’re basically playing a strategy game in beating banks to the punch. Many of the world’s biggest banks already have a consortium organized to discuss using blockchain. Despite some banks moving slowly in using the technology, there isn’t a wide protocol in place yet to make it mainstream.

One reason behind this is the bigger banks have large corporate customers and don’t have as much incentive to help clients with transparency and privacy. Conversely, credit unions focus more on individual customers and helping them be able to bank in more secure ways.

It’s a major step forward in getting blockchain into the financial world, something the bigger banks may soon imitate.

Yet, how will blockchain specifically help credit union customers? The real incentive behind using the technology in banking is always symbiotic.

Improving How Credit Unions Function

First and foremost, credit unions want to use blockchain to help how they manage their organizations, including in financial transfers. Statistics show more people moving to credit unions lately for more individualized treatment and better services. You can expect this to increase dramatically once word gets out about blockchain use.

The other goal for credit unions is to become more competitive after continually trying to stand out amid big banks. Their focus is on scaling as well, something this technology allows you to do without creating a major expense.

In this regard, credit unions can easily accommodate more customers, perhaps giving banks a run for their money.

Safely Sending Money and Other Data Exchanges

Because blockchain is a digitally distributed ledger, it allows more transparency in data transfers. No doubt this appeals to many who want more transparent views into their financial data. Bringing this to credit unions is going to bring superior security since it eliminates any chances of fraud.

For sending money, it’s also going to become more convenient. Through a more secure network, money transfers in seconds without any fears of data being compromised.

It’s through smart contracts, though, where credit unions also have an invested interest.

How Blockchain Brings Smart Contracts to Banking

If you’re new to understanding smart contracts, it’s going to become a highlight in credit unions using blockchain. Basically, these are digitized versions of regular contracts that bring more control to how funds get transferred or who retrieves data.

What makes this important for credit unions is being able to give their clients more power on controlling their finances. More so, it’s an affordable way to deal with client finances rather than going through expensive intermediaries.

Overall, blockchain and using smart contracts can save credit unions considerable money to help them stay more competitive.

The real future of banking might soon evolve into credit unions leading the pack as a win for those wanting safer and personalized service.

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