Will blockchain help credit unions? Part 1

For financial institutions anticipating technology changes, blockchain is now the subject of a lot of talk and a little bit of action. It’s far too soon to make even educated guesses as to how revolutionary and disruptive it will become, notes Jonathan Patrick, strategic and innovation analyst and advisor at Jack Henry & Associates, Monett, Mo. “We’re just seeing the first contractions for the possible birth of a new technology,” he says. “There aren’t even real frontiers yet.”

That hasn’t stopped a group of CUs from contributing real money to perform real tests on ways blockchain might support CU operations. The project is called CU Ledger. Blockchain could be “a powerful way to connect consumers, merchants and financial institutions,” observes Rich Meade, chief operating officer and chief of staff of the Credit Union National Association, Washington, D.C., which is spearheading the project along with Best Innovation Group, Tampa, Fla., and Mountain West Credit Union Association, Denver.

Although CU Ledger will start by testing just a few specific “use cases,” the potential is huge, Meade asserts. “It could make communication faster, cheaper and more secure, although the benefits are impossible to quantify at this point.” Some would be back-office benefits. Some could be member-facing. Some certainly could involve payments. It could eventually replace the ACH.

 

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