MIDDLETON, Wis.-In Bob Hoel's crystal ball, the year 2109 holds a three-tier financial system with most credit unions playing right in the middle.
"Three financial systems will emerge-and I am talking about personal finance," explained Hoel, the former executive director of and current research fellow with Filene Research Institute. "You will see a set of institutions that will serve an international economic elite. People will be very global, have quite a bit of money, and be well educated and connected. They will work across national borders. I suspect Canada will be more prosperous than the U.S., so people will have substantial holdings in Canada, as well as in southeast Asia. They will have special financial needs due to their international inclination."
Hoel sees a second "standard conforming" financial system for consumers, the "so-called normal folks" who do a lot of their banking electronically in a cashless society. People will be tracked electronically, and systems will monitor incomes, credit records, and net worth. Consumers will be scored regularly to determine how much they can borrow or invest. "Somewhat of a faceless system that operates like the power companies today, behind the scenes. The system will just work and you will not worry much about it."
A third, "non-conforming" system, will arise from consumers who do not fit into the other two categories, predicted Hoel. "In 100 years, a lot of foreign-born people will bring in their own cultures. They may come to the U.S. as guest workers and be expected to return in five years."
The Underground Goes Mainstream
Many who do business in this system will come out of the check-cashing market. "Like what Walmart is doing or what you see in drugstores in Chicago," Hoel said. "Another indicator that this type of financial system is emerging is the development of informal lending networks that are financing the buyout of distressed properties. An incredible underground lending network has emerged. This is not fringe, this is big business."
Most credit unions will do business in the conforming system with some making a go of it as non-conforming, Hoel said. "That is a decision you will make as a credit union."
No matter which system a credit union participates in, the reason CUs will be able to compete in 2109 is the rise of national credit union product and service networks, possibly 10, Hoel suggests, that will provide economies of scale. "This means many will share the same data systems. We know the regulatory burden from the NCUA and others will be impossible for some credit unions to handle themselves. So the network will handle a lot of the government and regulatory issues."
Hoel said the number of CUs could possibly expand as a result. "The number of credit unions in the future, whether that goes up or down, is up in the air. But it will not be that difficult for them to start up. They will simply tap into a large network and instantly offer all of its products and services."
