New partnerships between credit unions and co-op retail societies were discussed at a lively session on fair finance at the Co-op Retail Conference.
Chaired by journalist and former Newsnight presenter Kirsty Wark, panellists including Claire Blackburn (head of governance and assurance at Glasgow Credit Union), Jo Phillips (director of research and innovation at the Nest Insight) and Matt Bland (CEO of the Association of British Credit Unions) explored co-operative ideas to tackle financial exclusion and significantly grow the sector.
Wark asked participants about recognition, visibility and ambition, acknowledging that credit unions – like Penilee in her home city of Glasgow – performed a vital role, but far too few people had heard of them.
“Credit unions provide loans for everything from Christmas to holidays, which is a lifeline to poor people,” she said in a passionate opening statement.
“But they only serve a small percentage of the population. As the average school child has never heard of credit unions, perhaps we could start with pocket money clubs.”
She also believes there is an opportunity to reach out to an elderly population feeling increasingly marginalised as high street banks move online.
“If MPs are setting up their surgeries in supermarkets, why don’t credit unions set up in co-op supermarkets?” she asked.
Philips shared behavioural insights into the financial challenges facing people in their everyday lives. “Many people in Britain are facing a new cost of living crisis with energy bills again set to rise with the war in the Middle East,” she told delegates.
“To give context, a quarter of families could not afford to pay an unexpected bill of £250 – but this rises to a half among low-income households. We know people who are in debt are much more likely to suffer from a range of other problems, from poor mental health to being unemployed.”
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Bland said that just 2% of people in England have used a credit union; the figure in Britain was a little better at 4%, but it was much higher at 34% in Ireland. There was a great opportunity to expand credit unions through stronger relationships with co-op retail societies, including employer auto-enrolment schemes.
This is already happening in some regions, including Scotland, where Scotmid’s long-standing relationship with Capital Credit Union gives employees the opportunity to save via payroll deduction.
“With the government commitment to double the size of the co-op and mutual economy,” added Bland, “we could easily double the 1.5 million members of credit unions through working together and empowering people through fintech.”
“A good example is the collaboration with the mayor of Manchester to introduce loans so people can get an annual bus pass to the city and then pay it back over a year. This enables them to start saving on travel from day one. We also have 120 employee partnerships, many with auto-enrolment, which have seen thousands of people saving at source. To grow the sector at scale, we would welcome more partnerships with co-op retail societies.”
Low brand recognition is another barrier, and one witnessed by Blackburn, who said she had not heard of them until she applied for her current role with the Glasgow Credit Union. Since joining the organisation, she has tackled the misconceptions and lack of profile by visiting schools and universities. Once people know about credit unions, she argued, they are much more likely to become members and open an account.
“When children learn about credit unions, they go back and tell their parents,” she said. “Students faced with big loans to pay for their education are also very open to becoming a member when they know about us. Credit unions offer lower-income households a flexible way of saving, which recognises that their ability to put money aside was often sporadic.
“For example, if someone starts saving but they cannot pay in due to an unexpected bill or emergency payment, we can give them a break from saving. You couldn’t do that with a bank.”
