Rahm McDaniel is the head of banking solutions at NYDIG, the third-party custodian partnered with each of the first wave of credit union adopters. He sees two common threads among the early movers.
“They tend to be progressive in offering innovation to their members and conscious of member demand through researching the withdrawals going to crypto exchanges,” he says.
As an industry evangelist, McDaniel understands that his word only goes so far. “I can say it, but it’s entirely different for credit unions to do their own analysis.”
Credit unions’ focus on collaboration helped establish an early advantage in rollouts relative to banks. UNIFY Financial CEO Gordon Howe has been particularly forthcoming with data based on nearly five months in market.
Over this time UNIFY Financial has enrolled more than 8,000 members in its crypto offering despite minimal promotion. Additionally, “11% or 12% of our users came from an indirect or wholesale relationship,” says Howe, drawing a distinction from UNIFY Financial’s core member base.
Although too early to draw firm conclusions, this statistic is particularly intriguing to leaders like Schroeder who have long sought effective avenues to engage indirect members.
Howe has expressed interest in expanding his offering to a few widely held options beyond bitcoin, which at present remains the only digital asset NYDIG supports.
“Our slogan is ‘bitcoin for all.’ We clearly believe bitcoin has intrinsic aspects that make it attractive for people who fit well in a traditional banking environment,” McDaniel explains. “That said, there’s clearly demand for some other coins. We also believe compliance is absolutely required for innovation in banking, and right now we have sufficient clarity to move forward with one asset: bitcoin. When there’s greater clarity, putting additional assets in our platform won’t be difficult.”
Oklahoma’s Credit Union advertises its crypto services on a bus shelter.
Bloodied but unbowed
Given 2022 market trends, it’s a near certainty that members who have bought bitcoin through their credit union are currently in a loss position. This unfortunate timing hasn’t affected credit unions’ resolve, however. In fact, many express surprise at the lack of member blowback.
“They’re still coming on despite the price declines; they’re not flocking out,” Howe observes. “Those selling off would then come back and buy again. People have their own thresholds.”
This may be due in part to the demographics of the credit union crypto cohort, which so far has been consistent across institutions. The average age of an enrollee sits in the mid-40s, below the credit union member median but well above the average for those on nonfinancial institution crypto exchanges.
“We thought it would be younger—I guess it ties to the trust factor,” Schroeder speculates.
Average purchases have been in the $250 to $300 range, not exactly “bet the farm” transaction sizes.
Executives say a handful of members expressed displeasure with their credit unions’ crypto forays, although most are opposed on principle rather than those engaged in crypto. In response, leaders point out that the credit union isn’t placed at financial risk and that custody resides with the third-party partner.
Credit unions have taken active measures to avoid appearing to recommend crypto as opposed to making it available alongside a broad suite of products. Case in point: NYDIG has funded a cooperative promotion adding $5 of bitcoin to a member’s first purchase. Although Visions Federal members still receive the bonus, the credit union elected to disclose the offer only after the member decides to enroll.
“We ran an article in our member financial magazine, but otherwise it’s been word of mouth,” she says.
A “buy/sell bitcoin” option simply appeared without fanfare on their digital banking menu and was discovered by more members than expected. They were able to review and sign disclosures online and be passed seamlessly to the third-party partner’s site.
Perhaps the most visible form of promotion has been Oklahoma’s Credit Union’s bus shelter signage with a QR code and the statement “Bitcoin Made Easy.”
Credit Union Magazine’s Spring 2023 issue features the 2023 Credit Union Heroes and examines CUNA-League advocacy priorities, board leadership, the impact of financial well-being efforts, fee-related compliance issues, predictions for the year ahead, and more.
