Social impact can be tricky to define. If you want to be technical, any action a person or business takes will have some sort of societal, or social impact. The growing cultural trend toward social impact understands the catchphrase to mean that it is an action a business or person intentionally takes to contribute to a social good or benefit. Social impact can be many things and apply to many fields and industries. Organizations like Habitat for Humanity builds homes for people in need, and small start-ups across the country are more frequently approaching their work through the lens of social impact, or the greater good the product or service will be bring. Consumers have more awareness and concern about the impact and social reputation of the brands they support, even more so than a decade ago.
This can and should be strategically important for credit unions. Credit unions are philosophically great at our mission, and our members can feel good that their deposits are supporting their local community. Our credit unions do a good job giving back to our individual communities through charitable efforts and philanthropic donations. As an industry, we offer excellent programs like the CUDE program to encourage leaders to think about big problems. We should continue to celebrate our differences in the financial services market loudly. Our members love us and are loyal to us. In our operations, sometimes we are not so great at social impact. It is easy to forget about because we have a wide range of projects, products, and problems. In an ever-evolving landscape, we are very busy keeping up with regulation, technology, security, and market growth. It is totally justified.
At the same time that we work to serve our members better through improved platforms and efficient processes, average Americans continue to struggle with paycheck-to-paycheck living. This study indicates that even high- income earners still manage expenses on a paycheck-to-paycheck basis. These are our true potential loyal members, because they are likely borrowing money to meet cash flow challenges. Our high-income earners with good credit can bank anywhere and can choose their lender based on interest rate and ease of access to product. Give them a reason to choose your credit union because they also know your products also positively impact people who are in financial situations that are even more challenging than their own.
Since credit unions are already known for their good, it only takes a step to evaluate your product suite and make sure you offer products that are accessible, fair and beneficial across the income and credit score spectrum. Oftentimes, a socially impactful product requires just an iteration or two from your current product line. Does your credit union offer second-chance checking? Are its overdraft programs fair, understandable, and designed to function as a true safety net instead of a debt trap? Creating a social impact involves understanding the alternative products in the market, particularly ones with abusive or egregious terms (think payday lenders), learning how consumers are using those, and then providing an alternative with reasonable terms. An institution considered to be socially responsible is intentional about the positive benefit they hope to create – credit unions are only a half-step from doing not only profitable, but incredibly impactful work on a broad scale.