The financial services landscape is transforming at an unprecedented pace. At the recent COBA25 conference, industry leaders from across the globe gathered to share insights on how credit unions, building societies, and community-focused lenders are adapting to serve their members while staying true to their cooperative values. The conversations revealed both the challenges and opportunities that lie ahead.
Global Perspectives, Shared Challenges
A recurring theme across Asia, Canada and the United States is the challenge of achieving scale while maintaining community focus. The US has around 5,000 credit unions, but only 450 have assets greater than $1 billion. Similarly, in Canada, just 8 credit unions represent 50% of the sector’s $319 billion in total assets. This has led to consolidation, with 15-20 mergers annually in Canada and similar trends in other markets.
Yet scale brings its own challenges since many institutions struggle to balance their cooperative values with business pressures, risking mission dilution as they grow.
Technology: The Great Equalizer and Disruptor
Perhaps nowhere is the challenge more acute than in technology adoption. The Asian market faces particular difficulties, with many credit unions lacking the scale or infrastructure to compete with tech-driven lenders. This threatens to alienate younger demographics who are increasingly drawn to digital platforms.
However, the UK’s experience offers hope. Despite digital transformation, building societies are actually increasing their branch presence, suggesting that the human element remains crucial. As noted by the UK Building Society Association CEO, keeping ‘humanity at the centre of tech development’ is essential.
Leading Through Unprecedented Change
The second day’s plenary session with University of Sydney Business School professors, provided crucial context for these operational challenges, focusing on the leadership skills needed to navigate an uncertain future.
Practical Strategies for the Future
Embrace the AI-Ready Organisation
Long-held truths are unravelling, and organisations must adapt or risk obsolescence. The challenge isn’t just adopting new technology, but completely reimagining how value is created and delivered.
Rather than asking “Can AI solve this problem?”, successful organisations are asking “How can we structure ourselves to leverage AI effectively?” This means collecting the right data, formulating problems that machine learning can address, and creating value chains that benefit from automation while maintaining human oversight.
Importantly, this isn’t just about efficiency gains. It also requires organisations invest equally in risk mitigation processes, ensuring that AI enhancement doesn’t compromise security.
Build Collaborative Networks
The traditional model of controlling entire value chains is obsolete. Organisations must learn to collaborate with others – sometimes even direct competitors. The Canadian approach to fraud prevention exemplifies this, bringing together credit unions, tech companies, and telecommunications providers to share insights and combat threats collectively.
Focus on Productivity and Purpose
The next five years will be defined by productivity gains through the intelligent combination of virtual work, in-person engagement, and technological enhancement. However, this must be balanced with maintaining organisational culture and member relationships.
For credit unions and building societies, this means leveraging technology to serve their communities better, not just more efficiently.
The Path Forward
The convergence of global insights and academic research reveals a clear path forward for community-focused financial institutions. Success will require…
Adaptive Leadership: Leaders must become comfortable with continuous learning and technological adaptation. As noted in discussions, AI won’t be the last disruptive wave – the ability to navigate change itself becomes the core competency.
Values-Driven Innovation: The younger generation’s attraction to credit unions and building societies suggests that values-based banking isn’t just surviving but thriving. However, these institutions must innovate in how they express and deliver on these values in a digital world.
Collaborative Competition: The challenges facing the sector – from fraud prevention to housing affordability to climate change adaptation – are too large for individual institutions to tackle alone. Success requires industry-wide collaboration while maintaining competitive differentiation.
Human-Centered Technology: The UK’s experience of increasing branch presence despite digital transformation suggests that technology should augment, not replace, human relationships. The most successful institutions will be those that use technology to enhance their community connections, not substitute for them.
Conclusion
The financial services landscape is indeed changing faster than ever, but the fundamental mission of credit unions and building societies – serving communities that larger institutions overlook – remains more relevant than ever. The challenge is evolving how this mission is delivered.
Success requires embracing technological change while maintaining human values, building scale while preserving community focus, and adapting to new realities while staying true to cooperative principles. Those organisations that master this balance will not only survive the coming transformation but will emerge stronger, better positioned to serve their communities in an increasingly complex world.
The conversation at COBA25 revealed that while the challenges are global, the solutions are deeply local – rooted in community understanding, member relationships, and the enduring appeal of institutions that put people before profits. In an age of AI and automation, perhaps that human difference is the ultimate competitive advantage.
Contact our team to learn how Loanworks is already embracing these strategies to provide intelligent automation and creating scale for lending businesses.
