Open Banking, Brazil and CUSS!
Denise Wymore, Chair, CU De Novo Collective
Last week, I attended the Underground 20/20 in Vegas and CUs Unite in Suquamish, WA. Both events focused on saving small credit unions through collaboration and innovation and identified that legacy core systems continue to hold many small credit unions hostage. I learned that several countries are miles ahead of the United States in terms of financial institution technology, with Brazil leading the way. How can that be?
Credit unions in Brazil are widely recognized as tech-forward, often outpacing their US counterparts in digital offerings, operational efficiency, and member experience innovation. The reasons behind this technological divide can be attributed to a mix of socio-economic, regulatory, and strategic factors.
Key Technology Differences Between U.S. and Brazilian Credit Unions
1. Digital and Mobile Banking Innovations
Brazil: Brazilian credit unions have embraced digital transformation as a necessity rather than a choice. They lead with highly integrated digital and mobile banking platforms that provide members with seamless experiences for payments, transfers, loans, and even investment products. This digital-first approach was accelerated by a market push for financial inclusion and the need to service a large, geographically dispersed population with limited physical banking infrastructure.
US: In contrast, many US credit unions still rely on traditional banking models and legacy systems. While mobile banking has gained traction, US credit unions face challenges integrating newer, more agile technologies due to legacy system constraints and limited budgets. In addition, the many bank deserts in the US also have limited access to broadband and cell service.
2. Core Banking Technology
Brazil: Brazilian credit unions use highly advanced core banking technology, often supported by partnerships with fintech companies that facilitate real-time processing, automation, and AI-driven analytics. These systems are modular, scalable and easily integrated with external applications, allowing credit unions to add or update features quickly to meet member demand.
US: In the United States, credit unions frequently rely on older core systems that struggle with flexibility and scalability. As these systems were often built decades ago, integrating new applications or fintech services can be complex and costly. Consequently, US credit unions are generally slower to adopt advanced technologies, and many must work with limited automation, impacting operational efficiency.
3. Open Banking and Interoperability
Brazil: The Central Bank of Brazil has been at the forefront of promoting open banking standards, which enable interoperability between financial institutions. This has driven innovation, enabling Brazilian credit unions to partner with fintechs easily and offer members a wider range of services, such as instant payments, personal financial management tools, and integrated digital wallets.
US: Until recently, the US open banking regulations have been less robust, and interoperability between institutions remains limited. Without a mandated open banking framework, US credit unions face hurdles in integrating third-party solutions and often operate within “walled gardens” that restrict innovation. This lack of openness limits the competitive advantage credit unions can offer and slows the rollout of innovative financial products.
The Path Forward for Small U.S. Credit Unions
To bridge this gap, US small credit unions need to consider adopting more collaborative technology models, such as shared services or cooperative technology platforms, to help spread the costs of technology upgrades. Mitchell Stankovic and Associates (MSA) has courageously taken on the challenge of unshackling credit unions from the burden of legacy technology so they can move forward the industry vision for excellence in member experience in a big way. The project is called CUSS, Credit Union Shared Services and the white paper was revealed at the Underground.
By focusing on scalable digital solutions, US small credit unions can better position themselves to offer the level of technology and personalization seen in Brazilian credit unions, ensuring they remain competitive and responsive to evolving member expectations.
