By John L. Smith, Journalist & Author

When Americans hear the words “credit union,” it’s understandable that a certain image probably comes to mind.

It’s that of the friendly little savings and loan operation, one that usually exists in the long shadow of corporate banks with household names and seemingly limitless marketing budgets. Like a banking version of “Cheers,” it’s a place where everybody knows your name and is always glad you came. Large or small, credit unions seem quaint compared to the giants.

They’re the go-to savings and lending institution for groups such as teachers, firefighters, and members of the military. That hyper-local view is accurate as far as it goes: a federally insured, member-owned and democratically governed institution built not just with concrete and steel, but with high ethical standards, an emphasis on community and thrift and a strong sense social responsibility.

But the bigger picture, one that ought to make members everywhere proud, is even more impressive. Neighborhood credit unions are pieces of a greater mosaic of like-minded cooperative banks that span cultural barriers and speak many languages. They’re bound not by a corporate imperatives or quarterly profits, but by those greater values.

So it’s only fitting that one of those most responsible for developing the credit union phenomenon in America, Boston-based department store chain owner Edward Filene, was influenced not merely by Main Street, USA, but by what he saw on a trip to India in 1907. (Early cooperative credit associations are traced to the mid-19th century in German and Japan.) Filene’s journey is part of the history of credit unions that never loses its charm. On a visit to a rural town outside Calcutta, he observed simple, hyper-local cooperative banks in which neighbors helped each other through saving and lending. In an Indian culture dominated by men, many of the co-op banks were organized and run by women.

What Filene observed changed his life -- and the way many Americans would look at banking. When he returned to Boston, he was guided by the belief that similar member-based cooperatives, with the right set of values, could help improve the lives of even the most humble wage earners.

Less than a year later, Filene and Massachusetts banking commissioner Pierre Jay led public hearings that resulted in the passage of the Massachusetts Banking Act of 1909, the first comprehensive law of its kind in the nation’s history. Credit unions were about to come of age.
Filene practiced what he preached in his own business, creating the Filene Employees Credit Union. His employee-based model set him apart from the parish-based membership design Alphonse Desjardins used when in 1901 he founded North America’s first cooperative bank, Caisse Populaire, in Levis, Quebec, Canada. Desjardins himself lent expertise to the 1908 creation of the St. Mary’s Cooperative Credit Union of Manchester New Hampshire, the United States’ first credit union.
While their memberships differed, their core values were similar. And it’s fitting that two of the earliest innovators of the credit union movement understood the universal language of cooperative lending.

From these humble beginnings, the World Council of Credit Unions (WOCCU) reports that more than 85,000 credit unions banks serving 274 million members now reach 118 countries with $2.3 trillion in in total assets. For its part, the WOCCU has implemented more than 300 technical assistance programs in 89 countries.

Through its partnership with the UN and USAID, the WOCCU is in the field across the globe, working in Colombian villages to promote financial inclusion through micro-loans, and facilitating digital technology in storm-ravaged Haiti that is leading to financing for affordable housing.
Then there’s Ukraine, where subsistence and even larger farmers have long been shut out of the financial market and have been victimized by a lack of banking reform. Through the USAID-funded Credit for Agricultural Producers (CAP) project in association with WOCCU, since 2016 more than 4,800 new loans for farmers have been made to date.

The amounts of some of the loans may seem like diminutive sums, but they can mean the difference between prosperity and despair, between economic independence and the yoke of withering debt to a predatory lender. Those small successes can move whole nations forward.
It’s no wonder that when World Council President and CEO Brian Branch and his team went looking for a theme for International Credit Union Day in 2019, they settled on, “Local Service. Global Reach.”

Worldwide, credit unions carry on in a tradition forged by Desjardins, Filene, and President Franklin Delano Roosevelt, whose Federal Credit Union Act of 1934 helped a generation of Americans climb out of the pit of the Great Depression.

And it’s happening from Ukraine to Colombia, and Sierra Leon to Sri Lanka.

That’s a long way from Main Street and that friendly little cooperative savings and loan. But that’s a story worth telling in any language, and a global mission that deserves to be celebrated every day.

Find more information about John L. Smith here.