Wednesday, 13 November 2013

Credit unions are still vital in local communities



The announcement by the Central Bank that for the first time in our history, a bank has taken over a credit union was a sad day for the Irish credit union movement which has delivered extraordinary service to its membership for more than 50 years.

The news is ever more disconcerting when one considers that in the last five years the Irish banks, which cost the state €64 billion continue to remain moribund. There has been no significant lending and their mortgage arrears problem continues to escalate.  In this environment, credit unions, while not shielded from the general economic difficulties, remain a coherent social and economic force in society.

It should be remembered that Irish Banks tripled in size (€201 billion assets to €621 billion assets) between the boom years of 2003 and 2008, borrowing heavily to fund this exceptional and unhindered growth. In contrast credit unions grew at much more modest rates, growing by 38% over the same period 2003-2008 (peaking at €13bn assets), and were totally self-financed throughout.

Notwithstanding the recent difficult climate, credit union membership continues to increase, especially over the period of entrenchment in the economy.  The increase in membership may also be as a result of the disenchantment Irish people have with the banks. The crisis and the way in which the banks have been dealing with their customers have had a huge impact on the reputation of the banks. In addition, banks seem to have withdrawn from the market for personal loans, particularly for small personal loans for things like education and communions etc..  Another important statistic is that savings in credit unions are up, and have increased by 0.9% for the 9 months to June 2013 to €10.5 billion.  This is remarkable given the reduced dividends paid by credit unions in recent years.

The recent announcements regarding the exit of international banks from the Irish financial services sector means that there is now more than ever, greater scope for Ireland’s credit unions to offer a vital link between the Irish public and accessible, community based financial services.  Therefore it is hugely important that the Government, and by extension the Central Bank, do everything they can to ensure that the credit union movement is safe guarded and protected.  The circumstances of the Newbridge Credit Union takeover will be revealed in the fullness of time.  In the interim, it is vital that we recognise and respect the social and economic role that credit unions continue to play at a difficult juncture in our history.  Newbridge Credit Union is an exception and not a rule.  However, credit unions must move forward with confidence.  It is important that we continue to be there for those in our society who need a helping hand, by offering small affordable loans to our credit worthy members and a secure environment for our member’s savings.

Friday, 8 November 2013

CUSOP



This week, the ILCU announced a very significant development for the Irish Credit Union Movement in terms a member services. We were delighted to hear that the Central Bank of Ireland has granted a Payment Institution Licence to the Credit Union Services Organisation for Payments ‘CUSOP’. This means that credit unions across the country will be able to provide electronic payment services to members nationwide. 

The new service will allow credit union members to have payments from a bank, employer or social welfare office paid directly into their credit union account by electronic transfer, enhancing the services already in place at your local credit union. In a time where many of the international banks are exiting the financial services market, more and more people are looking for a viable, community based provider of accessible financial services. We know that electronic services are in demand by members and that credit unions are eager and willing to offer them. 
The vision driving this initiative is that all credit unions who wish to provide payments services should be in a position to do so, thereby enabling them to provide more and better services to their members in the future.  We believe that reforming our payments system will provide cost competitiveness, greater security and convenience for 3.1 million credit union members nationwide.  The granting of this licence is a very significant step forward for credit unions members nationwide and will allow them an option to manage their finances through the credit unions system.