View moreBy Becky Reed
There’s no shortage of uncertainty in today’s credit union industry — rising interest rate pressure, ongoing merger waves, competitive threats from fintechs, and a regulatory environment that hasn’t caught up with the pace of change. But here’s the truth: disruption doesn’t have to be something that happens to us. It can be something we choose — strategically, proactively, and unapologetically.
With the most recent firings of two NCUA board members, what if we used this moment not just to survive — but to redesign the system in our favor?
I’m talking about a fundamental shift in how we think about regulation, starting with a bold reimagination of our federal regulator. We don’t need a banking regulator in disguise — we need a Cooperative Innovation Regulator. And the NCUA, appears to be willing to evolve, to become exactly that.
The Status Quo Is Holding Us Back
Let’s be honest. The majority of the NCUA’s current regulatory model is built for a 20th-century financial system: risk-averse, compliance-heavy, and slow to adapt. That worked when innovation was linear and manual, and our competitors moved at the same pace.
But that’s not our world anymore. Fintechs are deploying features in weeks (just look at what BankSocial did in a weekend!). Embedded finance is making traditional banking invisible. AI is rewriting everything from fraud detection to loan underwriting. Meanwhile, credit unions, despite their unique position as member-owned, mission-driven institutions, are stuck playing by rules written in a completely different era.
We’re operating in a framework where launching a digital-first credit union is a regulatory headache (and FOM impossibility), where forming a fintech partnership is treated as a risk event, and where our regulator’s tools don’t match the complexity of our evolving business models.
That’s not a technology problem. It’s a regulatory design problem.
A Better Path: The Cooperative Innovation Regulator
Here’s what we actually need:
- A regulator that embraces innovation not as a threat to safety and soundness, but as a requirement for long-term sustainability. This has to be systemic — not just lip service from the top. This appears to be in the early stages of implementation.
- A sandbox specifically built for credit unions, enabling experimentation with DLT, AI, tokenized lending, and new partnership models — without risking our charters or reputations.
- Flexibility in chartering and field of membership that reflects how communities organize today — not just where they live or work. Digital communities need to be included as people are connected in ways unimagined previously. Imagine a credit union for Chess Enthusiasts, Gig Workers or Gamers.
- A new lens on capital, risk, and CUSO investment that allows us to be agile without compromising our core cooperative principles.
This doesn’t mean deregulation. It means modern, principles-based regulation that keeps our system safe while giving us room to adapt, evolve, and lead.
And it means NCUA must continue to change — structurally, culturally, and strategically.
Disrupt Ourselves — Before Someone Else Does
We can’t afford to be reactive. If we wait until credit unions are on the verge of irrelevance, it will be too late. If we wait for Congress or the Treasury to step in, we may not like the results.
This is our window. The time is NOW.
We need to organize. We need to speak with a unified voice — not just about what we don’t want, but about the future we do want. A future where credit unions aren’t just surviving the fintech wave — we’re riding the front of it, leveraging our trust, structure, and community ties as superpowers. We were born from Grassroots efforts — and our rebirth will come from those same roots.
The call isn’t just for regulatory reform. It’s for a complete mindset shift — from compliance enforcer to innovation enabler. From backward-looking supervisor to forward-looking partner. That’s the kind of NCUA we need in this decade — and that’s the kind of future the credit union movement deserves.
Becky Reed is a longtime credit union and fintech executive focused on digital transformation, innovation, and cooperative finance. She currently serves as COO at BankSocial and is the author of Credit Unions and DeFi: A Financial Renaissance.
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