3 minutes
Extending Member Protection
When the banking world was shaken in 2023 by the failures of Silicon Valley Bank, First Republic, and Signature Bank, deposit insurance became a front-page issue. Businesses, nonprofits, and municipalities began asking whether their funds were truly safe, and many shifted balances to institutions that could guarantee broader coverage. For credit unions, this was a challenging moment. Members wanted the trust and service cooperatives provide, but without a way to insure deposits beyond the $250,000 NCUA limit, credit unions often could not compete.
That limitation is now disappearing. Through ModernFi CUSO—the first deposit network built exclusively for credit unions—cooperatives can now offer Extended Insurance Accounts with access to up to $15 million in NCUA coverage per relationship. These accounts allow members to hold balances well beyond $250,000 while still enjoying the peace of mind of full NCUA insurance.
The process is straightforward: deposits are divided into amounts under the insurance maximum and placed across participating institutions in the network. For members, it feels like one seamless account with their trusted credit union; behind the scenes, every dollar remains insured.
The impact for members is transformative. A nonprofit CFO managing grant funds, for example, may be required to keep all deposits federally insured. Until now, that often meant scattering millions of dollars across several banks and juggling multiple logins and tax forms. Even if that nonprofit wanted to keep all of its funds with a local credit union, it couldn’t. Extended Insurance Accounts change the equation, allowing the organization to consolidate funds where it already enjoys personalized service and community connection. The same holds true for municipalities navigating RFP requirements, small businesses managing payroll accounts, or high-net-worth households seeking both safety and simplicity.
For credit unions, the opportunity goes far beyond meeting member needs. Extended Insurance Accounts open access to relationships that were previously unattainable, such as public funds and nonprofits that require full coverage. They also enable deeper wallet share with existing members who already rely on their credit union for loans but keep large cash balances elsewhere. And in uncertain times, they help retain balances that might otherwise flow to larger banks. Since 2023, the extended insurance market has tripled to nearly $500 billion, illustrating both the urgency and the scale of this shift.
Equally important, deposit networks reflect the cooperative advantage at the heart of the credit union movement. No single institution can extend millions in insurance on its own, but together, credit unions can. By pooling resources through shared infrastructure, cooperatives can offer solutions that rival the largest banks while maintaining the member-first ethos that defines them. It is a continuation of a long tradition: just as credit unions came together to create shared branching, nationwide ATM access, and cooperative card services, deposit networks represent the next evolution in collaboration.
Extended Insurance Accounts should be seen not as a defensive measure, but as a growth strategy. With ModernFi CUSO, credit unions of all sizes and designations can provide members access to millions in aggregate insurance across network credit unions*, source funding on demand, better manage their balance sheet, and potentially grow revenue by competing for larger relationships. The next decade will be shaped by which institutions can win and retain the confidence of large-balance members.
With deposit networks finally available to credit unions, the system has a chance to lead and to ensure the cooperative model serves the full breadth of member needs.
*A list identifying ModernFi CUSO network credit unions can be found here. Certain conditions must be satisfied for “pass-through" deposit insurance coverage to apply.
