Swoboda Research Conference looks at credit union services in a changing world

‘It’s no use people loving credit unions if they are not borrowing from them. At the moment bankers are not worried about you … They need to be’

With the world changing at an ever-quicker pace, credit unions need to work harder to avoid falling behind, warned experts at last month’s Swoboda Research Conference.

Opening the event, held in Portlaois, Ireland, on 23 May, Dr Paul A. Jones, director of research at Swoboda and reader in the social economy at Liverpool John Moores University, recalled Swoboda’s first paper on Irish credit unions. Published in 2017, it pointed out that Irish credit unions were not fully meeting the financial needs of members and consumers.

Despite some changes since the report, such as greater commercial collaboration between credit unions, greater advocacy for regulatory changes and major developments in product and service delivery, Jones urged more work to stay relevant.

The first speaker, Charlie Weston, journalist at Independent.ie, agreed. “It’s no use people loving credit unions if they are not borrowing from them,” he said. The sector should also improve collaboration between credit unions of different sizes as well as between apexes. 

“At the moment bankers are not worried about you,” he added. “They need to be.”

Cathal Doherty, statistician in population estimates and projections at Ireland’s Central Statistics Office, presented findings from last year’s census. Net migration is more volatile and difficult to predict than the natural increase, he said. An ageing population is also an issue: although Ireland has the EU’s third highest number of working people for those aged 65 and over, the old age dependency ratio is on the rise. Another trend has been the return of Irish migrants, which started to rise in 2011. These statistics are important for understanding national and local demographics, he said.

A panel discussion followed, in which Weston and Dohetry were joined by Kevin Johnson, CEO at Credit Union Development Association; Mick McAteer, co-director of the Financial Inclusion Centre; and economist Alan McQuaid.

Johnson said the 2022 Credit Union Amendment Bill is a great example of collaboration in achieving regulatory changes. 

Related: Co-op Solutions report urges credit unions to adapt to changing consumer needs

McAteer pointed out that credit unions have a high penetration rate (proportion of credit union members among economically active citizens) of 113% in Ireland, compared to 10% for the rest of the world and 3% for the UK. 

But they need to make their low loans-to-assets ratio (28.4%) sustainable in the long-term – and respond to technological change, stay relevant to young people and react to the cost of living crisis.

McQuaid also stressed the need to respond to technological changes, such as automation, and urged co-ops to make use of the trust they enjoy in local communities.

Next up was a presentation from Lorraine Corcoran from Afanite, a Dublin-based consultancy working with non-profits, whose paper on credit union small loans in Ireland will be published in collaboration with Swoboda later this year. Her research looks at the commercial viability and economics behind loans of up to €2,000.

These are “bread and butter” for credit unions, she said, accounting for 49% of all loans issued by the sector in Ireland. But there is little active promotion of them, and no uniform product – which, she warns, makes it harder to reach new customers. Small loans are also admin-heavy and contribute little to income generation. She said credit unions should examine whether increasing the price of small loans would improve access to credit for riskier borrowers.

The next speaker was Andrew Price, senior vice president of advocacy at the World Council of Credit Unions, who praised Swoboda for its work, adding that “good quality research is critical to advocacy”.

He encouraged credit unions to explore ways to work together to tackle joint challenges. “The possibilities are endless,” he said. “What are the challenges or obstacles that you have to overcome? Is there a way to set something up that will address those needs?”

The conference also looked at the question of whether or not to expand common bonds. Catherine Byrne, from Dublin’s Health Services Staff Credit Union, said its efforts to offer services nationwide had proved challenging, as reaching members and potential members can be difficult. To address this, the credit union has been expanding its online offer and customer support, and switched to hybrid AGMs.

Paula Maguire from Lucan District Credit Union in Dublin stressed the importance of educating members – by getting out in the community, giving presentations, and answering questions. Her credit union operates in an area with a high immigrant population: most are skilled workers who played a key role in keeping the credit union afloat by taking loans during the pandemic. 

To attract a more diverse and younger board the credit union started offering qualifications. And with 95% of loan applications coming via the website or app, Lucan closed one of its branches to create a membership hub. Maguire argued that credit unions are not competing with banks – when Lucan launched its mortgage product, it viewed it as a unique credit union product for its members, she said.

Elaine Rae, from the UK’s NHS Credit Union, agreed that credit unions should not compete with banks but provide different, member-targeted services. In an attempt to reach more people across the UK, her credit union launched Safe Harbour, a confidential service open to all members, offering support to those experiencing economic abuse, helping them to take back control of their money. “It’s a really important piece of work,” she said.

Alan Roche from Heritage Credit Union in Dublin described his organisation’s work to develop a digital branch to reach customers who may not have time to visit their local branch. Heritage has also set out culture principles to drive behaviour change as it delivers services.

Miranda Flury

Closing the event was consultant Miranda Flury, president of Hawkeye Strategies in Canada, who explained how credit unions could use scorecards to assess their performance. This can convey the purpose, vision and strategy of a credit union and act as a tool to show staff and the board what matters in the organisation.

While there are different types of scorecards, including the Harvard Balanced Scorecard, their purpose is to get a 360-degree view of the business, said Flury. But she warned that credit unions can still fail if scoring 10+ on a scorecard.

Wrapping up the conference, Swoboda’s director of development, Nick Money, said the centre is to publish a paper on ESGs in credit unions and another on loan products. 

The next Swoboda conference will take place in Manchester in November.