A spin on affinity banking: Affinity banks, which cater to a specific group of people and provide tailored solutions that aren’t found at traditional banks, have become widely popular in recent years. Typically, the bank is formed first, then it sets about creating a supportive community for its members.
- A prominent example is Greenwood, which caters to Black and Latino Americans. After its 2020 launch, the neobank acquired social network The Gathering Spot and began offering community collaboration spots such as workspaces, meeting rooms, event spaces, a restaurant, and a bar. It later acquired Valence, a networking platform to assist the Black community with professional development and job recruiting.
But AKA took the reverse approach: It used its social network of members to inform and build a financial institution that would best support its members’ financial needs and goals. This fits with the core definition of a credit union.
Will it succeed? For Members Only isn’t the first credit union backed by a Greek-letter organization.
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Omega Psi Phi Fraternity Federal Credit Union was founded in 1986 and boasts assets under management of $2 billion as of June 2021.
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Phi Beta Sigma Federal Credit Union was also established in 1986 and has just under $900,000 in assets under management as of September 2022.
But there are instances where this type of organization did not last.
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Kappa Alpha Psi Federal Credit Union shut its doors in 2010 after the NCUA determined it was not well capitalized and had no significant prospects of achieving sustainable capitalization.
For Members Only will need to stick to its core mission of lifting up the community and developing Black wealth to ensure that it lives on to serve generations of AKAs.
This article originally appeared in Insider Intelligence’s Banking Innovation Briefing—a daily recap of top stories reshaping the banking industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.