With respect to my esteemed colleague and co-editor Emily Claus, I have a bone to pick with her. In an article she wrote about outdated fields of membership, she asserted that the credit union industry’s existing model of community-based, occupational, and associational fields of membership has become outdated and is doing a disservice to members and credit unions.

Instead, she sided with a 2020 Filene report authored by Professor Andrew Turner of University of Wisconsin Law School in which he recommended switching to a model of membership-, relationship-, and identity-based fields of membership.

The argument was that as changes in finance and financial technology have “reduced the loyalty and social connection on which traditional FOM depend,” by sticking with the existing model, credit unions are fighting upstream in a transition from relationship-based business to service-based business.

But is the relationship really dead? Or have credit unions hastened the switch to service-based business as they have grown and lost touch with their immediate surroundings?

Fields of membership through the 20th century

Coincidentally, it was Edward Filene himself, the namesake of the Filene Research Institute, who helped get the credit union movement off the ground in the United States. After working to get the Massachusetts Credit Union Act of 1909 passed—the first legislation of its kind in the US—Filene organized the National Association of Peoples Banks.

Though that organization failed to gain traction, Filene was steadfast in his vision, and with the help of Roy Bergengren, another pioneer of the credit union movement, they formed the Credit Union National Extension Bureau. The newly formed CUNEB worked to establish legislation in more states, reaching 26 states by 1934, at which point the Federal Credit Union Act would be signed into law by President Roosevelt.

Under the newly passed FCU Act, credit union field of membership was limited to “groups having a common bond of occupation or association, or to groups within a well-defined neighborhood, community or rural district.”

From there, credit unions shot up all over the country serving communities, local businesses, and associations. Offices were established within the very businesses or associations they were built to serve. This arguably restrictive setup made sense at the time. Since all business was conducted hyper-locally and in-person, wide-sweeping FOMs were not necessary.

As the services credit unions could provide expanded, and the technology with which to conduct business with them, credit unions found themselves in a pickle. What do you do when you could keep growing, but your field of membership had capped out?

In 1982, the NCUA addressed this by allowing the addition of select employee groups (SEGs) into a credit union’s field of membership, effectively increasing the pool of individuals the credit union could serve, albeit still locally.

This proved troublesome to the banking industry, which did its best to argue against the expansion, but which ultimately resulted in the passing of the Credit Union Membership Access Act in 1998, which amended the FCU Act to make multiple common bond credit unions permissible.

The big bear: how the 21st century has shifted the model

The last 25 years has seen an explosion of credit union membership and assets. According to Federal Reserve Economic Data (FRED), total assets in 2000 were less than $500 billion. That number has grown to $2.4 trillion as of Q3 2025. Meanwhile, total membership of federally-insured credit unions has nearly doubled from approximately 77 million in 2000 to 145 million today.

At the same time, consolidation continues to be either a major issue, or a natural part of the process, depending on how you look at it. Federally-insured credit unions have declined from over 10,000 in 2000 to 4,331 as of Q3 2025. And the reasons for this consolidation are many.

The advent of online and mobile banking have made in-person service less of a priority, thus shifting the interaction between member and credit union away from relationship-based towards service-based (though consolidation was happening at a very high rate since 1970, well before the proliferation of the internet).

At the same time, credit unions seeking to expand their umbrella of potential members began increasingly moving away from occupation- and association-based charters towards community-based charters that could encompass all businesses and organizations in an area, rather than a smaller subset of SEGs.

Though many credit unions have thrived (thus the growth of members and assets), many smaller institutions found themselves increasingly competing to retain existing members and chasing new technology with fewer resources. As a result, the big fish gobble up the little fish with mergers, eliminating long-standing charters in the race to the top.

Admittedly, this is a bleak perspective of an industry that continues to pour value into the lives of Americans nationwide. Large credit unions are not inherently wrong, quite the contrary in fact! Though the individual connection to the member might be harder to come by, they are important ambassadors to a national population that often cares more about service than relationship.

And it would be doing them a disservice to suggest they do not pour money back into their communities. By virtue of the fact that they have more assets, capital, and bigger operating budgets, they can and often do very charitable things, as well as having the capacity to give back to members in the form of patronage dividends.

The little bear still matters

In her article, Emily argued for reshaping fields of membership yet further to essentially allow all credit unions to serve all individuals nationally—she lamented how she was not able to join a newly formed digital credit union with interesting products and services that was based states away. This raises an important question: were credit unions formed to serve the needs of their communities or to serve the needs of their members, regardless of how they become one?

This may seem like a trivial difference, but I argue there is a very important one in play here. When the community is determined that the members that join, it’s easy to lose sight of the people who need the most help. The local under- and unbanked can be forgotten in the rush to add members wherever they may be. And when membership becomes spread out, volunteerism and an owner’s mentality are further diluted.

When we look at the new credit unions that are being chartered, there’s cause for optimism. Haven Federal Credit Union was chartered to address an “an underserved community in the San Jose-San Francisco-Oakland area” and promote home ownership and financial education.

African Diaspora Federal Credit Union “will primarily serve members of the African Diaspora Council, Inc., headquartered in St. Louis. The Council’s mission includes promoting community self-help and financial and wealth-management education.”

And then there are any number of credit unions launching to serve low-income communities in Minnesota, Georgia, Tennessee, Kentucky, among others. These credit unions are not springing up to serve just anybody, but are the heart and soul of our industry: credit unions focused on helping those locally who need it the most.

It signals to me a shift back to the importance of relationship in one’s interactions with financial institutions. True, many of us, myself included, have the benefit of looking around for the best deal or service. To have a purely transactional relationship with our chosen financial institutions. But we also do not have to let it be that way simply because we can.

This credit union is just right

I will get off my soap box now, and take a moment to praise Emily for her exceptional work reporting for CUSO Magazine (and who knew about and encouraged this shameful hit piece).

It’s also important to recognize that the industry cannot thrive on the works of these new charters alone. Credit unions of all size contribute to the well-being of the industry. But the fact that these charters are getting established in the first place suggests that in some ways Emily is right: if the need existed to serve these communities such that a new credit union had to be stood up, could the credit union industry be reaching them some other way?

Yes, but perhaps not with the same level of attention that a locally-focused institution can. Changing how fields of membership work may make it easier for the discerning member to find the institution they want, local or otherwise, but it will not change that some members of our community need a more personal touch, and credit unions were designed to do just that.

Ultimately what matters is not the size of the credit union or how narrow/wide the field of membership is, but whether the credit union’s leaders keep the community as the central priority. That credit union is just right.