Credit unions far from becoming irrelevant

Kieron Brennan, Irish League of Credit Unions CEO, addresses concerns about the general wellbeing of credit unions across the country

THERE seems to be an assertion among some parties that credit unions will need substantial State support in 2011. This is a purely speculative. In fact, no credit union to date affiliated to the ILCU has required a single cent of State support. Furthermore, the difficulties being faced by other financial institutions represent a great opportunity for credit unions.
Irish credit unions, including those in the Clare area, remain open for business and unlike other institutions, are still providing loans to their members. Far from becoming irrelevant, credit unions are being recognised as being different to other institutions. Credit unions in Clare continue to welcome new members to the movement every day and last year alone, over 40,000 new members all across the country joined their local credit union.
The close relationship between credit unions and their membership means that our fortunes are affected by theirs. In order for credit unions to continue to be a valuable source of financial support to members and their communities and in order to remain competitive, some credit unions may not be in a position to pay dividends as high as previous years. In some cases, credit unions have correctly prioritised additional provisioning and reserving over dividends. Many credit union members have found themselves in very difficult financial situations and hence credit unions must take this into consideration for now and for the future. This strategy will lead to the betterment of the movement as a whole and ensure the continued ability of credit unions to provide services to their members and the wider community.
The need for restructuring in the credit union movement has come under the media spotlight recently. The Registrar for Credit Unions recently stated, “Not all credit unions will make it through this difficult financial and economic environment in their current structure”.
The issue of rationalisation, or cooperation as it is called within the league, is a matter for individual credit union boards to decide upon. The ILCU will continue to facilitate credit unions that do choose to restructure. It should be remembered that restructuring is not by its nature a bad thing. In recent times, a number of credit unions have come together to conduct business and this has resulted in an overall better service to members, such as a wider range of services, additional office(s) and extended opening hours and I would anticipate that this would continue to occur.
It is untrue to say that credit unions are unable or unwilling to change and that State intervention will be required to effect transformation. The credit union movement recognises that change will be necessary but this does not involve sacrificing our ethos and core values. However, change does involve recognising that there may well be better ways to provide services to our members. The credit union movement is aware of the fact that our modus operandi, which has worked in the past, does not guarantee or entitle us to success into the future. To this end, the ILCU has recently embarked on two major projects, namely an ICT Strategy and a Payments Credit Union Services Organisation.
Significant progress has been made in implementing the ICT Strategy, which aims to enhance the movement’s operational efficiency and effectiveness and expand the products and services available to credit unions and their members. In this time of opportunity, key to credit unions’ development will be the ability to provide a broad range of financial services, which are attractive to existing and potential members. Last September, credit unions gave the green light to proceed with a Payments Credit Union Services Organisation (CUSO) to enable participating credit unions access to electronic payments and card services. Work is ongoing to bring this exciting project to a conclusion, which will position credit unions for continued future success.