Companies around the world are launching innovative solutions for financial—and social—problems. What lessons can credit unions take from these innovations?
With Al Gore walking the red carpet last night to pick up an Oscar for his documentary An Inconvenient Truth, the Visa GreenCard is planning its launch in the US at an opportune time. Rather than racking-up frequent flier miles, initial-launch consumers in the Netherlands can save the planet—a few trees at a time. RePay International calculates the carbon emissions associated with each purchase on the GreenCard and then plants the necessary number plants trees as a form of carbon offsets. Trees are currently planted in the Netherlands, Ecuador and Uganda. According to the company, consumers who have the GreenCard use it three times more than the average credit card.
Using cell phones to pay for purchases isn’t anything new in some of the more affluent European countries. But in the developing world? Now, it’s a reality. Globe Telecom, the second largest telecom in the Philippines, handles an estimated $100 million in “G-cash” transactions a day. G-cash is a text messaging service that allows consumers to receive cash, pay bills, and make purchases using a prepaid card in their cell phone. With 1.3 million current subscribers who are mostly low-income and lack traditional bank accounts, the telecom industry is bringing more citizens into the mainstream of financial services.
Microfinance has been changing millions of lives for years but has only recently been noticed by the mainstream media thanks to the Nobel Committee and Muhammad Yunus. Yunus’ Grameen Bank survives through a system of trust and peer support. Initially, the bank identifies groups of five potential borrowers, then lends to only two. Once a track-record of payment (principal and interest) has been established, the rest of the group is eligible for loan. Their current repayment rate is more than 95%. Prosper.com brought this concept to the US through its online peer-to-peer lending model, also with a model based on group lending.
Engage in the conversation—tell us what you think about these ideas and how credit unions can get involved in revolutionizing the way American consumers manage their financial well-being.