NCUA Board Member Rodney E. Hood Remarks at the World Council of Credit Unions Annual Conference Session: “Financial Inclusion in the Digital Revolution”

As Prepared for Delivery on July 26, 2023

Thank you very much for having me. I’m delighted to be here and to be among so many old friends, and what a pleasure to be in Vancouver. I hope everyone has an opportunity to get out and explore this beautiful city because there is so much to experience here.

Moreover, Vancouver is a place where cultures from around the world have come together over many generations— through trade, commerce, and a multitude of cultural and technological exchanges, which has served to make this ta truly dynamic, world-class international city. That makes this an ideal setting for sharing and exchanging ideas and experiences that might help broaden our perspectives on what’s possible for the cooperative finance industry.

So, I’m excited to be a part of this year’s conference and this session, which focuses on financial inclusion. Those of you who know me or might have heard me speak before know this issue has been among my leading priorities as a regulator, first as chairman of the National Credit Union Administration from 2019 to 2021 and now as a member of the NCUA Board. It’s a topic I could talk about all day, but instead, I’ll limit myself to a few opening remarks so we can move toward the discussion session and any questions you all might have.

And anyway, I’ve spoken to you all on this issue at some length already. When we met last summer in Glasgow, Scotland — almost a year ago to the day — I provided a relatively comprehensive overview of my thinking on financial inclusion, why inclusion needs to be a priority for the financial services industry, and, of particular importance, how credit unions and other cooperative finance institutions play an essential role in bringing more people into the mainstream of financial services. I also spoke of how prudent regulatory reforms and careful integration of fintech could help to bolster your institutions’ efforts to widen the circle of financial inclusion.

Rather than repeat those arguments, I’d like to take a different tack today and offer a few concrete examples of some of the great work that credit unions are doing around the world on financial inclusion and then use those as a springboard to our discussion. I think this is a valuable exercise because, at this point, I’m not sure we need to make the case for the “why” of financial inclusion, but we do need more focus on the “how.”

Perhaps the best way to do that is with a few stories that illustrate how people are addressing this challenge, at the grassroots community level, in diverse locations around the world. Because credit unions are doing some remarkable and innovative things in places where you might not expect it.

Take, for example, Colombia, where a credit union was seeking to improve service to rural areas, which, as you know, are not always easy to reach. So, they pioneered a corps of “field officers” comprised of credit union employees who would travel by motorcycle with iPads to provide service to members who lacked internet connections. They are, quite literally, going the extra mile to boost financial inclusion.

There’s a similar initiative in North Macedonia, where a credit union launched a microlending program for farmers using mobile technology. But they faced a hurdle with the farmers being reluctant to embrace smartphones and apps. So, they provided them with iPhones equipped with weather apps to help the farmers better manage their crops, which helped them grasp the power of these tools and paved the way for more connectivity through mobile services.

Or in Kenya, I’m told there’s a credit union deploying drones to assess activity in far-flung agricultural areas. The drones allow them to view properties and crops when underwriting loans, so they can assess production, determine damage after severe weather, and other uses. Again, a highly innovative approach to reaching places that aren’t easy to service.

Or look at Ukraine, where even while fighting a war for their survival, credit unions are seeking to modernize and expand their digital services to be more competitive in the financial services market and to attract more young members.

Those are all examples of digital technologies, but let’s not overlook what we might call the “human technologies” of organizing and offering services in different and creative ways. For example, in Guatemala, a credit union established a credit union service organization, or CUSO, to enable them to lend to small- and medium-enterprises. In that case, the credit union was able to open up new avenues for investment in local economies, while expanding financial access to entrepreneurs.

What I want to emphasize about all these examples is that they show how technology is being extended not simply as an end in itself but as a way to better connect credit unions with members and communities and as a way to expand access to financial services to marginalized and under-served communities. This is technology with a true social purpose. I really think this gets us back toward the original promise of what these technologies were supposed to achieve. And I hope we see many more such cases in the future.

I could easily list off a couple dozen more examples, but it’s probably not necessary and just these handful of examples illustrate how the credit union industry remains a vibrant, creative, and innovative part of the financial services ecosystem and how the ethos of “people helping people” remains as compelling today as it was a century ago when the cooperative finance movement really started growing and gaining momentum. Your mission is to keep that momentum going and to carry the values of the credit union movement forward for future generations.

I look at all these examples, and I’m encouraged because they reflect the spirit of experimentation and innovation we need. When we talk about financial inclusion, there is no “magic bullet” solution. We need a variety of approaches tailored to the realities of different geographic regions, different demographic populations, different economic circumstances, and so forth. When we share stories like the ones I’ve offered here, we add to our store of ideas and knowledge of what’s working in other places, and it helps us to imagine other possibilities.

And again, this sense of creativity, experimentation, and innovation is in the service of a clear goal: to expand the circle of financial inclusion. As the economist Robert Shiller reminds us in his book “Finance and the Good Society,” the financial services industry is “at its best when it serves ever-broadening spheres of society.” Events like this conference are an excellent way to talk about ways we can continue moving toward achieving such a worthy goal.

Once again, I thank you very much for having me, and I look forward to our discussion.