One of the greatest ongoing challenges facing credit unions in this modern era continues to be their regulatory burden. Privately insured credit unions, in particular, face even greater hurdles because of the way federal and state regulations are sometimes written.

Federal and state regulations often default to terminology like “federally insured” or “NCUA or FDIC insured,” creating significant legislative gaps that exclude privately insured credit unions from key federal programs.

While we successfully advocated for privately insured credit unions to be included in the Paycheck Protection Program (PPP), this burden is significant and puts those credit unions on unequal footing simply because they choose to insure privately for the benefit of their members.

Along those same lines, the Consumer Financial Protection Bureau (CFPB) recently issued the Registry of Nonbank Covered Persons Subject to Certain Agency and Court Orders Final Rule, which exempts federally insured credit unions from registration requirements but does not extend the same exclusion to privately insured credit unions. This decision once again places an undue burden on privately insured credit unions, putting them at a competitive disadvantage and complicating their operations.

Addressing these inequities through targeted legislative and regulatory action is essential to ensure fair treatment, reduce unnecessary compliance burdens, and support the ability of privately insured credit unions to serve their members effectively.

So how can privately insured credit unions adapt to today’s regulatory challenges while still being able to fulfill their mission?

Advocating for fair regulatory treatment

A proactive approach to amend both federal and state laws is one key to addressing this issue. For state-chartered credit unions, this means allowing states the option to adopt a private insurance model. As regulations become increasingly difficult and economic uncertainty rises, offering a state-based option that’s reliable and tailored to a state’s specific needs can benefit not only credit unions, but also their members and communities.

Credit unions also need to continue advocating for a more inclusive regulatory framework that recognizes privately insured state-chartered credit unions and offers equal access to federal relief programs. Engaging with policymakers will help ensure that privately insured credit unions are included in future regulatory considerations and will have access to the same opportunities and resources as all other credit unions—regardless of their insurance model.

Finally, continuing to press for clearer, more inclusive regulatory language that addresses the unique circumstances of both federally and privately insured state-chartered credit unions will be critical in how these regulations are written.

The future: leveraging FinTech and innovation for growth

While recent regulatory challenges can be daunting for all credit unions, the rise of FinTech and financial sector changes presents a positive growth opportunity. FinTech solutions can help credit unions better serve their members, streamline operations, and offer innovative products that compete with traditional banks.

As new technologies transform financial services, credit unions require more flexible insurance solutions—solutions that private insurers can provide. While the federal government can be slow to adapt, private insurers are uniquely positioned to respond quickly to emerging financial opportunities. This flexibility allows credit unions to offer members innovative services without the constraints of a rigid regulatory framework.

By leveraging different FinTech options, credit unions can also stay competitive in the digital world by offering their members personalized, modern solutions while maintaining the security and soundness they’ve always provided. And, by helping them navigate the latest industry challenges and working with them to adopt new technology, private insurance will continue to play a key role in supporting the growth and innovation of credit unions.

Serving the community: now and always

Despite the regulatory challenges and the changing financial environment, credit unions continue to play a vital role in the overall financial world. They offer personalized service, lower loan rates, and offer support for those in need, including people turned away by other institutions. With strong ties to their communities and a deep understanding of the local landscape, credit unions offer essential help during financial crises.

Serving their communities has always been a core mission for credit unions. That’s why there is such a growing need to advocate for fair regulation, strengthen state-level relationships, and to embrace FinTech innovation. In the end, helping credit unions change and evolve will also allow them to meet future challenges and continue moving their communities forward.

After all, isn’t that what being a credit union is all about?