A cooperative financial institution (CFI) is a type of financial institution it is the umbrella term for deposit taking financial co-operatives that are owned and controlled by its members. CFIs are created to serve the financial needs of their members, rather than to make a profit for a small group of people, they financially benefit all their members.
CFIs include credit unions, savings and credit cooperatives (SACCOs), financial services cooperatives (FSCs), and financial cooperatives (FCs). These terms are often used interchangeable.
CFIs include credit unions, savings and credit cooperatives (SACCOs), financial services cooperatives (FSCs), and financial cooperatives (FCs). These terms are often used interchangeable.
CFIs are guided by the principles of cooperation, democracy, and social responsibility. They offer a variety of financial services to their members, including savings and fixed deposit accounts, loans, and investment products. CFIs are committed to providing fair and affordable financial services to their members and to reinvesting profits back into the community.
Additionally, CFIs typically have lower fees than for-profit banks. Because CFIs are member-owned, they are also more likely to invest in their local communities. For example, a CFI might offer small business loans or support community development projects. Ultimately, CFIs exist to promote economic opportunity and stability within their communities.
Because they are member-owned, CFIs are not driven by the profit motive. Instead, they focus on meeting the needs of their members and supporting the well-being of their communities. This focus on service, rather than profit, is what sets CFIs apart from for-profit banks and other financial institutions.
Around the globe CFIs continue to inspire great loyalty and confidence. As literature demonstrates, credit unions are the only financial services institutions that weathered the 2007/2008 economic crisis and did not receive any bailout from government. This saw a quick rise in membership,
member deposits, as CFIs were perceived to give people a measure of control over their financial destinies.
More-over, the people-centred actions of CFIs, driven by volunteers and employees dedicated to serving their peers – a more satisfying purpose than earning money for a select few – are fundamental to the CFI difference.
Such CFIs offer many of the same products and services as commercial banks, however they differ in a number of ways: