Aux ,

Banks provide a lot more services than credit unions or building societies. Banks also provide B2B services. So there's no scenario for everyone to move away from banks. I'd say that Britain has one of the most advanced financial markets with many different players like building societies, challenger banks etc, but traditional banks still have plenty of business to do. What usually happens here is that people actually use multiple service providers for different purposes. Having 5+ accounts is normal here.

litchralee ,

This sort-of happened in the USA, in a small way, during the fallout of the 2016 Wells Fargo scandal. Public sentiment of the big-name, national retail banks was awful and credit unions capitalized on the moment with advertisements contrasting profit-centric national banks with local, cooperatively-owned credit unions.

In this article where consultants to credit unions were queried a year later, there's still some questions as to the long-term effects that may have benefited the credit unions.

I once came across a comment somewhere online that suggested -- sadly without hard evidence -- that the scandal may have been a win-win, since the sort of customers willing to uproot themselves from Wells Fargo tended to have smaller balances while still incurring the bookkeeping costs. And that credit unions were able to scale up to take in new customers while saving on advertising dollars.

It's a plausible idea, that a new equilibrium would be found in the banking market. Logically extending the idea further, though, would lay bare how much additional integration credit unions would have to do with each other to achieve a truly seamless customer experience. Of course, with more young people mostly sticking to online and mobile banking, this might come in the form of backroom operational improvements, rather than a revamped brick-and-mortar experience.

ryathal ,

Banks would go out of business and credit unions would look a lot more like banks. This is assuming both business and personal accounts move. If just personal accounts move, not much happens.

algorithmae ,

One of the main things I kinda ran into recently, credit unions are set up for private accounts and don't do business accounts very well. I bought a car recently and the business owner was telling me that it was a hurdle to deal with large amounts of money on a regular basis with his credit union, and he didn't have issues with his conventional bank in that regard. I don't know the specifics unfortunately but it does make sense.

wildbus8979 ,

If you want your answer, have a look at Desjardins in Quebec. They have something like half of the total marketshare.

Desjardins Group ranks 4th among the Safest Banks in North America according to Global Finance, and its capital ratios and credit ratings are among the best in the industry.

asdfasdfasdf ,

IDK why people are interpreting your question about the mechanics of everyone switching at the same time. It sounds to me like you're asking more about the bigger picture problems it would solve with society, not whether the sudden change would be able to be handled by the banks. Is that what you're looking for?

Moving to a credit union is a great idea. I did a long time ago and haven't looked back.

There are some things they don't offer, sure, but then for stuff like investments I use dedicated platforms for those which is a better experience anyway.

Twoafros OP ,

Thanks for your answer. You're right, I was hoping to get more answers on the bigger picture change that would happen to society. Particularly since coops and credit unions are more democratic in nature, I wonder how different society would be with more direct control of how they money is managed.

Tarogar ,

Real scenario: you wouldn't see that happen.

Hypothetically it could cause economic collapse because now there wouldn't be money to back up all the loans that are outstanding. Followed by mass layoffs of people and all the other fun stuff that comes with it.

slazer2au ,

If you get paid via direct deposit and pay with everything via a card or a mobile app, a cu can replace your bank.

If you want complex investment options than I doubt all CU can do that, but I am sure there are some that can.

If enough retail depositors withdraw all their money and moved it to a CU I suspect they may trigger bank run limits which would cause other banks to preemptively limit withdrawals.

Twoafros OP ,

Thanks for the answer!

You mentioned paying for everything via card or mobile. Does that mean credit unions offer no options to withdraw cash?

Also can banks permanently limit withdrawals or transfers?

shortwavesurfer ,

I'm going to answer the last part of the question, banks and credit unions and these institutions absolutely can, will, and do limit withdrawals. When you don't physically hold your money and it is in an institution, it is no longer your money, it is an IOU with conditions that can be rescinded at any time for any reason.

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