What Credit Unions Are Learning About Dementia, Fraud, and Financial Behavior

By Cameron Huddleston, Carefull

Credit unions are in a position to catch and alert older adults to the early financial warning signs of cognitive decline.

A growing body of research shows that financial behavior can serve as one of the earliest indicators of cognitive decline.

For credit unions and other financial institutions, a landmark study suggests that they are in a position to see the warning signs in financial transaction data years before doctors typically detect cognitive decline. It does not imply, though, that they should be attempting to diagnose dementia among members.

“I think financial institutions can protect older adults without getting anywhere close to playing doctor,” said Joanne Hsu, a researcher at the University of Michigan and one of the authors of the study. This distinction is critical: the goal is not diagnosis, but early awareness and prevention of avoidable financial harm. The right strategy can mitigate dementia-related financial losses early enough to preserve the well-being of aging members and their families.

What the Research Shows

The study led by researchers at Johns Hopkins Bloomberg School of Public Health, University of Michigan Medical School and the Federal Reserve Board of Governors is the first to provide large-scale quantitative evidence that the first place to look for dementia is in financial transactions.

Hsu and her co-authors analyzed credit files and dementia diagnoses of more than 81,000 Medicare beneficiaries. They compared financial outcomes of beneficiaries with and without a dementia diagnosis for up to seven years prior to a diagnosis and four years after a diagnosis.

The researchers found that those who were diagnosed with dementia showed a pattern of late and missed payments on credit accounts six years before a clinical diagnosis. Those with a lower educational status missed bill payments as early as seven years before a diagnosis of dementia. These financial symptoms didn’t show up with any other health conditions – only dementia.

Since this study was published, the volume and complexity of financial scams targeting older adults has increased dramatically, particularly those exploiting behavioral changes, confusion, and social engineering. What was once a subtle signal has become a critical risk indicator for financial institutions.

Four Takeaways for Credit Unions

The financial warning signs of cognitive decline extend far beyond late or missed payments, Hsu noted. While the study relied solely on credit bureau data, the findings point to a broader set of behavioral changes such as erratic spending, duplicate payments, and increased exposure to scams or exploitation that may surface years before a clinical diagnosis. These patterns highlight a powerful opportunity for credit unions to recognize risk earlier and intervene thoughtfully.

Credit unions can detect early financial warning signs of dementia. Doctors can’t see if patients are experiencing erratic financial behavior, leaving those with dementia at risk of making potentially serious financial mistakes for years before a diagnosis. Financial institutions, on the other hand, “are already in the business of looking for erratic behavior,” Hsu said. AI monitoring systems can enable credit unions to identify changes in member behavior that would otherwise go undetected by clinicians, members and their families.

Credit unions can alert members and their loved ones to changes in financial behavior. For early detection to be effective, information needs to be shared. Credit unions could alert members and their joint members or trusted contacts to changes in members’ financial patterns, Hsu said. Such a solution could empower people with unbiased data and allow them to take action to avert future losses.

Credit unions can profit from mitigating losses related to dementia. “The kinds of things that we know happen to elders with Alzheimer's disease, there's really no upper limit to the magnitude of losses that can be incurred by a person,” Hsu said. And the losses aren’t limited to just one member. The bulk of bank and credit union deposits are held by adults 60 and older, and nearly 15% of adults 70 and older are diagnosed with Alzheimer’s disease.

“I think there is the potential for additional profit for financial institutions that can mitigate losses,” Hsu said. “I don't see this proposition as an altruistic proposition for financial institutions. I think this can be mutually beneficial.”

Credit unions can attract the next generation by protecting the older generation. If older members lose money to dementia-related mistakes, their adult children can be quick to blame financial institutions for not intervening. On the flip side, financial institutions that actively play a role in early detection and notification of behavior changes can prevent losses and earn the trust of members and their families. “You want to keep those parents and grandparents happy,” said Hsu, who noted that her longest-tenured account is at the bank where her parents have accounts.

Regulatory Expectations Are Catching Up

Regulators increasingly expect financial institutions to support trusted contacts, document outreach, and take reasonable steps when financial exploitation or vulnerability is suspected. Behavioral and financial insights may offer a scalable approach for financial institutions seeking to support these expectations while preserving customer autonomy.

Detecting Financial Warning Signs Is Easy With Carefull

Carefull is a digital platform designed to help catch money mistakes that are common to older adults through financial account, credit and identity monitoring. Not only does Carefull’s smart monitoring technology identify late, missed and duplicate payments, but also it determines what is normal behavior to catch changes that can be early warning signs of cognitive decline.

In addition to money mistakes, Carefull detects and alerts users to unusual transactions and signs of fraud. And its Trusted Contacts feature allows aging adults to grant view-only access to family members who can act as another set of eyes on a loved one’s finances. By providing Carefull, both your older members and the next generation are alerted to issues that are easily brought to resolution all within the Carefull platform.

Connect with Carefull to learn how credit unions are using behavioral insights to protect older adults, retain deposits, and build family trust.