Far western Nome, Alaska, is off the road system — more people drive ATVs and snowmobiles than cars. Credit Union 1 (CU1) took this into account when constructing a new branch in Nome: the drive-through window is lower to the ground than usual.
In southeastern Alaska, the credit union’s Skagway branch opened in 2025 in response to a written request from the borough assembly. It’s closer to Canada than it is to most of the rest of the state, and most residents shop across the border. The branch can make transactions in both American and Canadian currency.
“That is how we think about serving rural Alaska,” said Mark Burgess, president/CEO of Credit Union 1, which anyone living or working in Alaska can join. “We decide what communities we want to serve and go talk with them and observe. Everyone has different needs.”
There are challenges for a credit union covering the vastness of Alaska. For some inexplicable reason, Kodiak has an abundance of coins, and transporting them out of the community requires a ferry trip and a five-hour drive. When employees are out sick, regional branches provide coverage for a cluster of locations that can be 300+ miles apart. For building repairs and expansions, construction crews travel from Anchorage to as far as Juneau in the southeast or Kotzebue above the Arctic circle — accessible only by plane or boat.
But when a new branch is announced, membership in that community increases dramatically before it even opens; Skagway has seen membership triple since opening last year.
“There are a ton of logistics, but the pay-off is that it really makes a difference in the community,” said Burgess. “People are grateful we make the effort.”
A Closer Look at ‘Banking Deserts’
Of CU1’s 16 branches, six are rural and some, like Nome and Kotzebue, are not accessible via road. All of those rural communities were financially underserved before CU1 opened a branch. They each had a bank, but those banks tended to focus more on businesses than families and didn’t offer all of the services community members needed.
The need for financial institutions in underserved rural areas is not unique to Alaska. While the term “banking desert” has gained some traction in popular usage, it isn’t completely accurate.
That distinction is explored in the 2024 research paper “Do ‘banking deserts’ even exist? Examining access to brick-and-mortar financial institutions in the continental United States.” Andrew Van Leuven, one of the paper’s authors and a professor at the University of Vermont Department of Community Development and Applied Economics, said in an interview that the analysis found that there are very few banking deserts in the continental U.S., partly because previous studies didn’t account for credit unions and farm bureaus, only banks.
The researchers went on to determine a more helpful indicator for a community’s banking access: whether they are well-served or underserved. They found underserved communities are most likely to be lower-income and more rural places. Van Leuven said that economists look at ways the market is not producing optimal outcomes and envision policy fixes.
“The historic patterns of underserving rural and low-income places by FDIC-regulated banks, that’s just logical,” said Van Leuven. “Not-for-profit, mission-driven organizations like CDFIs or credit unions care about a certain subset of the population they’ve identified needs help. It’s about, ‘if people are being served, we are accomplishing our mission.’”
Across the country, Element Credit Union is a Community Development Financial Institution (CDFI) that designs products to align with their mission of serving low-income underserved areas in rural West Virginia. As a CDFI, it is more likely to be making a smaller financial profit, but also more likely to successfully reach those that others may not serve.
The designation gives Element Credit Union the flexibility to offer small-dollar loans and lines of credit for local businesses and nonprofits, explained the CEO, Linda Bodie. Loans are evaluated on character and ability to repay rather than credit scores. Everyone has a fair shot of getting a loan, though they might get different interest rates. Thanks to outreach efforts, 20% of their members are rural residents.
Digital tools, like this Interactive Teller Machine, are part of the solution for financially underserved rural communities. (Photo courtesy of Credit Union 1)
Technology Solutions
Because of West Virginia’s winding roads and small communities, there’s one thing Element hasn’t done to serve rural members: open any new branches. Instead, it has been on the front lines of digital banking. Members could deposit checks online beginning in 2004, and in 2009 it became the first financial institution in the world to have a dedicated iPhone app. Now Element offers 100% digital everything, from lending services to funds access.
“Our digital technology came from rural members not being able to reach a branch, but now 95% of our members are comfortable being digital,” said Bodie.
Even with a physical presence, Alaska’s CU1 also has turned to technology in more remote Alaskan branches. Hiring qualified loan staff in towns of fewer than 4,000 people is difficult. Instead, members apply for loans through branch-based private advisory rooms. Members begin talking with a trusted teller, who then connects them remotely with a specialist for the rest of the process. While CU1 implemented the technology to better meet the needs of rural members, they are now using it in urban branches as well.
There’s no doubt that digital solutions are important. According to an FDIC study, over the past decade the use of mobile banking as the main method of account access for most households increased almost ninefold. But they aren’t the whole solution. The same study found that while the use of bank tellers fell by more than half, this approach continued to be most prevalent for those in lower-income households, older households, and households outside of metropolitan areas.
And there’s evidence that a relationship can be a factor in lending transactions, for both the lender and the borrower. As Van Leuven said, “Trust is hard to automate.”
Getting Creative With Rural Challenges
The next step for CU1 is looking to serve smaller Alaskan communities – those with perhaps 400 year-round residents – without a fully staffed branch. One option: an automatic branch, where members could take care of all financial services with visual and verbal connection to a remote staff member. Interactive Teller Machines can already do almost anything staff in a branch can: cash checks securely, open an account, secure a loan, make a payment, get help with an online banking issue. Currently, that option is only available at established CU1 branches.
In West Virginia, Element combines technology with a high-touch model to ensure members can access customer service whenever and wherever they are. The customer service is personal — a real person answers the phone to provide solutions and answers. It makes a difference to those without a physical branch. To provide a physical presence, Element’s leaders are exploring options for offering part-time office hours by partnering with existing local businesses. In six to nine months, they plan to test the office-hours idea in a community 30 minutes from one of their urban branches.
Credit Unions have more flexibility to try new things than large corporate banks. Credit Union One, Element Credit Union, and their peers are using that flexibility to seek better solutions for rural residents.
“The nice thing about experimentation, you get to see what works and what doesn’t work, you get to learn,” said Van Leuven. “We are going to have to be innovative, exploring the middle ground between what we have and the alternative, which is nothing. We can’t preserve in amber the way things have been, but I am optimistic.”
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