CULedger, a credit union service organization, has inked a partnership with IBM to create blockchain services geared toward credit unions.
According to a report in Fintech Futures, the idea behind the project is to use permission-based blockchain technology so credit unions can reach more members that don’t have access to financial services. With a permissioned blockchain network, services can be shared between credit unions, which could improve identification authentication and compliance surrounding regulations, Know Your Customer, lending and payments. Under the plan, credit union members would be able to access CULedger via a digital credential dubbed MyCUID. Members would be able to conduct transactions with any credit unions that are part of the blockchain network.
“A cooperative model that helps improve the member experience while benefitting all credit unions is the ideal approach to ensuring the next wave of financial innovation for the credit union industry,” said John Ainsworth, CEO and president of CULedger.
Marie Wieck, general manager of IBM Blockchain, also noted that with the platform, credit unions can cooperate and receive shared value by exchanging sensitive data in a permissioned and transparent manner. “This decentralized approach using blockchain helps put the customer in control of their own identity,” she said.
The blockchain network will be offered to all credit unions around the world later this year, noted the report.
With credit unions and regional banks suffering in the wake of larger rivals and an explosion of FinTechs, this isn’t the first time credit unions have looked at teaming up to better serve customers and fight fraud. In October, federal regulators ruled that community banks and credit unions could pool resources to fight money laundering, helping them better fight financial crime and keep costs down. Regulators also recently mulled a change that would make it easier for credit unions to engage in the real estate underwriting process.