Global co-op banking apex celebrates centenary with Brussels conference

Delegates at the ICBA event looked at issues including digitisation, sustainability and compliance

The global apex for the co-op banking sector met last month for its centenary conference, which looked at pressing issues such as efficiency, digitisation, sustainable development and regulatory compliance.

Held in Brussels from 17-19 November, the International Cooperative Banking Association (ICBA), a sectoral organisation of ICA, also celebrated its landmark anniversary with a look at its legacy and future plans.

ICBA grew out of the International Co-operative Banking Committee set up in 1922. The committee’s founding members were seven European consumer co-operative banks. In 1964 membership was opened to all co-op banks and central co-operative credit organisations directly or indirectly affiliated to International Co-operative Alliance (ICA). In 1984 ICBC became an international specialised organisation of ICA, switching to its current name in 1992. Its membership now includes over 50 member institutions around the world.

In a message of congratulations, Simel Esim, Cooperatives Unit manager at the International Labour Organization, said: “We understand the responsibility for such a strong and long legacy. Our historical commitment to the international co-operative movement is unaltered.”

ICA president Ariel Guarco also congratulated the ICBA. “This is a milestone that deserves to be celebrated and valued in front of the entire world co-operative movement,” he said.

During one of the sessions Toshiaki Ono, financial sector specialist at the World Bank Group, explored his organisation’s role in supporting co-operative financial institutions through its Center of Excellence on Cooperative Financial Institutions. The centre works with the ICBA to organise webinars, hold international symposia and produce podcasts.

Related: ICMIF celebrates its centenary with global gathering in Rome

Digitisation was also on the agenda. Sylvia Okinlay-Paraguya, CEO of the National Confederation of Cooperatives (Natcco), described her organisation’s experience with Kaya, a co-operatively owned, led, and governed payment platform launched in 2016. In 2021 Natcco launched an improved version of the platform, along with an app that enables users to make and receive payments.

“Digitisation is not just about technology, it is also about mindset,” she said. “This highlights the importance of shared services within the Federation and its members to invest in technology, which individually and especially the smaller and even the large co-operatives cannot afford. The technology should be shared among the co-operative so it can be afforded.” 

Badri Kumar Guragain, CEO of the National Cooperative Bank of Nepal, talked about co-operative financial institutions in his country, which has a long history of informal saving and credit community groups. Nepal’s constitution recognises co-ops as an important pillar of the national economy, and the bank is working with members to address challenges around digitisation, youth engagement, prudential regulation and improving staff members’ competency.

In Israel, where five major banks hold 93% of the national market share, the co-operative banking sector is only beginning to emerge. Yifat Solel, board member of OFEK-Credit Union and Israeli Cooperatives Alliance for Social, Economic and Environmental Justice, described the hurdles facing activists in her country as they try to establish co-op financial institutions. 

Registered in 2012, OFEK gained 3,000 members within a year – but meeting the €25m (£21.48m) capital requirement to operate as a financial provider proved difficult. 

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Other regulatory challenges meant that a preliminary licence for the bank was obtained only in 2021. But OFEK has grown – it now has 12,750 members  and its services include loans, credit card and collective health insurance. It is planning to work with a correspondent bank to deal with international money transfers, invest in IT, start a fund for loans and investment for the Arab Israeli communities, and start a fund for environmental investments.

Challenges around digitisation and regulation were also discussed by Dr K Ravinder Rao, board member, ICBA and president of Telangana Apex Cooperative Bank, India. In his presentation, he described the difficulty of  digitising while continuing to serve older members, who mostly lack the technology to get loans online. The new Indian ministry for co-operatives sees digitisation as a priority, which could be an opportunity for the country’s financial co-ops. Other challenges, he added, include cyber security and allowing the regulator to do its job without compromising the co-op spirit.

For financial co-ops in the Caribbean, one major challenge is meeting regulatory requirements while competing with fintechs, which face no such constrains. Denise Garfield, general manager of the Caribbean Confederation of Credit Unions, said her organisation is working on producing governance guidelines for the sector (more details on p40-41). The region’s credit unions are excluded from the payments system but have signed a memorandum of understanding with central banks and hope to be included in the future. 

Related: Interview with the ICBA’s Bhima Subrahmanyam

The establishment of the Eastern Caribbean currency union could be an opportunity for credit unions, she added.

In Poland, the number of co-op banks and credit unions is decreasing due to mergers. One of the organisations serving credit unions is National Cooperative Council (NCC), which plays a key role in promoting co-operative financial institutions. NCC president Dr Eng Mieczysław Grodzki described the council’s areas of work, including adopting an code of ethics for auditing unions set up by co-operative banks and other financial co-op apexes.

NCC also supports all co-op banks and credit unions looking to change their organisational structure through vertical or horizontal integration and represents the sector in consultations when new laws are being discussed.

In Bangladesh, missionaries set up the Co-operative Credit Union League in 1979.  The sector had a presence on the land before the creation of the state – with over 26,000 credit co-ops in existence at the time on the 1947 partition – but most of these were insolvent.

The country is now home to 971 registered primary credit unions, many of which are represented by the Bangladesh Jatiya Samabaya Union (BJSU), an apex body whose support for the sector includes leading on government consultations over new legislation. 

The national sector holds 3,503 crore Bangladesh taka (£28.11m) in savings and 4,103 crore (£33.08m) in loans.

The conference also examined how ICBA can further advance co-op financial institutions at the international level. Dr Hans Groeneveld, director of International Cooperative Affairs at Rabobank, argued that all ICBA members should share data to get a global perspective and learn from each other.

“It is important to have someone tell the world what they mean and what impact they have,” he said. He suggested the ICBA ask its members what they deem to be the key issue going forward, and have them vote on the top three priorities for the apex.

Robby Tulus, former regional director for ICA-Asia Pacific, thinks the ICBA can have a dual role. Firstly, it should be lobbying governments – especially in the global south – for a level playing field for the sector and to enact separate laws for financial co-ops, supervised by a special government agency with full knowledge of the model.

Secondly it should promote the crucial role of the co-operative values and principles, this is an issue if the co-ops are big and leadership aspired to companies style, he said.

ICA director general Bruno Roelants praised the ICBA for doubling its membership over the past three years while doing valuable work – such as making contacts with the World Bank and other institutions, and conducting research on financial co-ops and the Sustainable Development Goal.

“This calls for more work,” he said. He thinks a key area of work will be to reinforce the link between the co-operative identity, legislation and practice from the point of view of co-op banks and financial institutions.

“Increasingly we suffer from pressure from regulators around the world”, he said, adding that a narrative is needed to counter the arguments that one side fits all and do a lot of advocacy. The ICA will need the ICBA’s help so that it can do the advocacy required, he added.

The ICA is also working with UNDESA on voluntary national reports on the SDGs; Roelants thinks this is another area where ICBA members can help in making sure that co-op finance is included.

In terms of funding the ICBA, he said the ICA had reached the limits of what it can allocate to the sectoral organisation, but that alternative sources of funding could be found among ICBA members.

ICBA president Bhima Subrahmanyam promised that his organisation will continue to support members in addressing regulatory and governance issues while seeking to create an environment where financial co-operatives and noted and recognised.