International Credit Union Day – A Welsh perspective
From Joseph Allen, Wales Policy Officer for the Association of British Credit Unions Limited (ABCUL)
It’s International Credit Union Day today, and that makes it a good day to talk about Welsh credit unions: what they offer, how they’ve developed, the challenges they’re facing, and why forging partnerships with employers is going to be such a big part of their future.
The basic credit union offer is a great one. Join up and you can save easily and securely, and you can access loans at affordable rates. You will also know that you are part of a financial organisation with a difference: an ethical and community-based co-operative that is owned and run entirely by its members.
The strength of that offer to the public is, to an extent, reflected in the statistics on credit union membership in Wales. Fifteen years ago there were about 10,000 members; today there are more than 72,000. That represents real progress, and over the last three years credit unions in Wales have grown faster than anywhere else in the UK.
As a result of that growth, credit unions are making more loans to members than ever before – more than £18m last year up from just £8m a decade earlier. They are also doing more outreach work in their communities – establishing young saver schemes in schools, tackling financial exploitation in prisons, and working with homeless charities to get people off the streets.
Yet the credit union movement in Wales is still young, and 72,000 members still only represents about 2% of the Welsh population (in Scotland the equivalent figure is 7%, in the USA 48% and in Ireland 75%). The challenge now is to shift credit unions from the periphery to the mainstream of financial services, and to do so at a time when the Welsh Government is no longer providing the level of support that it did in the past, when the public expect ever more sophisticated services, and when the competition from high street, doorstep and payday lenders is fiercer than ever.
Greater collaboration between credit unions will be part of the response to those challenges. As individual organisations some credit unions will always struggle to reach the scale required to capitalise and invest sufficiently in their service, but working with others it becomes possible.
But for most credit unions, building links with local employers and broadening the membership base by establishing successful payroll savings schemes are the priorities. Both in Wales and abroad, the strongest and most successful credit unions are embedded in work places across their communities. Membership is seen as an employee-benefit, payments towards savings and loans are taken direct from payroll and a virtuous circle is created whereby all parties benefit: employees through convenient access to a valuable service; employers through more financially-resilient, productive workers; credit unions through access to efficient payments and the diverse pool of members that they need to ensure that they remain financially sustainable.
Strong payroll savings schemes are already well established across Wales – both in the public sector with numerous local authorities and NHS trusts, and with some of the country’s biggest private sector employers such as Admiral, Airbus and Tata Steel. But building on these successes and spreading the message about what credit unions have to offer will be the priority from now until next October when International Credit Union Day comes around again.