CULedger, a credit union service organization (CUSO), announced a collaboration with IBM (NYSE: IBM) to pioneer new blockchain-based services to help credit unions provide a better experience for members. CULedger will work with IBM to use permissioned blockchain technologies to create an immutable audit trail that can be used to create new business models and transform existing business processes for credit unions. The companies also intend to help drive greater financial inclusion by extending reach to a broader range of new members.
The credit union industry serves more than 260 million members worldwide with over $1.7 trillion of circulating assets and is historically known for superior customer service. The adoption of blockchain technology will help build continued momentum among all demographics, as well as small and medium enterprises that currently lack access to financial services.
By creating a permissioned blockchain network where services can be shared among all credit unions, CULedger will improve services such as identification authentication, regulatory compliance around know-your-customer (KYC), lending and payments, while making it easier and more efficient for consumers to conduct any interactions that require authentication.
“A cooperative model that helps improve the member experience while benefitting all credit unions is the ideal approach to ensuring the next wave of financial innovation for the credit union industry,” said John Ainsworth, CEO and President, CULedger. “We are creating a network through which all members can join and access new services and enabling credit unions to become even more competitive while addressing new market dynamics where members are demanding even more for their financial services provider.”
Credit union members worldwide will also have access to a CULedger issued digital credential, called MyCUID that adheres to the privacy-by-design requirements of self-sovereign identity supported by the Sovrin Foundation. MyCUID will help credit unions support shared financial services which allows members to conduct transactions among any credit union on the network.
Blockchain’s potential value to the enterprise is expected to grow to more than $360 billion by 2026, then surge to more than $3.1 trillion by 2030, according to a recent Gartner report1. As the financial services industry continues to evolve, blockchain technology is being used to help address consumer demands for safer, faster and more efficient transactions.
“Credit unions will be able to cooperate and receive shared value from quickly exchanging sensitive data in a permissioned, individually controlled and transparent way. This decentralized approach using blockchain helps put the customer in control of their own identity,” said Marie Wieck, General Manager, IBM Blockchain. “The work underway between CULedger and IBM will also lay the foundation for new kinds of services and collaboration among credit unions as we work together to scale and extend the network.”
Initial services on CULedger’s blockchain network will be available to credit unions worldwide beginning later in 2019.