A word from the Chair
As we come towards Christmas, I’m pleased to hear from colleagues around the sector that credit union lending volumes are coming back to ‘normal’, in particular in Britain, and in some cases records are being set. It’s great to see that after such a tough year, credit unions are still there to meet member needs.
At the same time, we are well aware that there are significant concerns about the pressure on capital, loan to asset ratios and the impact of negative interest rates arising from savings growth. In addition, there are worries about delinquency as unemployment grows. There’s work for us all to do here, and the next thing CFCFE will be doing is looking at the issue of asset/liability management. We’ll be in touch with you in the course of this research.
A very merry – if necessarily constrained – Christmas.
Ralph
CFCFE Publications, Podcasts and Events
Previously. Since our October update, we have made public our paper on how to run a virtual AGM and published a new paper on social impact measurement by Dr Olive McCarthy. Next week, be on the lookout for a paper we’ll be sending you by Todd Proulx on selecting a new core processor.
The Talking Credit Unions podcast sponsored by CFCFE has released another four episodes, covering recent credit union conferences, the value of international projects, interest rate caps and diversity in the sector. Catch up on CFCFE’s Audio page, and subscribe so you don’t miss the next ones!
On the way. Our paper on marketing to millennials (18-30s) is a little behind schedule but will be a Christmas or New Year present for you. In January, we will release the results of our survey on loan declines management, and we will complete our work to refine the social impact reporting method. We are undertaking an analysis of the UK movement’s financial performance, and we are also initiating an assessment of the options available for effective commercial management of ever-increasing savings balances (look out for a survey coming soon). Our SME lending project with the Financial Services Innovation Centre at University College Cork will extend to look at the exciting developmental work at Metamo, meaning it will be closer to spring than Christmas when finished. We have postponed our update of 2017’s governance manual as we are developing a relationship with St Marys University in Canada, which has a significant expertise in this area, and can help us really enhance that guidance.
Our themes for 2021 are: Business Model, Maximising Membership, Governance and Leadership and Efficiency and Effectiveness – our work will be focused on supporting these key areas for credit unions.
If you are a CFCFE member and are not getting information on papers as they are published, please contact Nick at nick.money@swobodacentre.org. All our papers can be found on our Research page, currently free to all to download, here.
Events
Been. On 25 November, we hosted a very well-attended webinar to discuss Olive McCarthy’s paper and to update on progress on the CFCFE credit union social impact measurement reporting method. There is now considerable appetite among credit unions, particularly in Ireland to undertake impact reporting.
To come. We will convene webinars to present and discuss the findings of our publications. We are still aiming for a full conference on Monday 29 March 2021 at the Clayton Hotel Liffey Valley in Dublin and online. The agenda will be set in the New Year.
Have credit union branches had their day?
Credit unions have traditionally served and built relationships with members through personal contact in branches and collection points in the community. Often, for many credit unions, having multiple locations where people could access the credit union easily was essential to credit union engagement and outreach. Even industrial credit unions often used workplace contact points to recruit and serve members.But times have changed. Credit unions know that, if they are going to compete effectively in the financial marketplace, they must offer high-quality digital and telephonic access to products and services as expected by many members today. Thus, a process of digital transformation is underway. More and more people are interacting with their credit union though the internet, though apps on their phones or on the telephone. But this process has largely gone hand in hand with a retention of branches, despite reduced footfall, for it was assumed that not everyone would be attracted to or be convinced to access the digital offering in the short to medium term.
And then came COVID-19. Practically overnight, many credit unions closed branches or restricted access and went increasingly online or on the phone. For many credit unions this was a major learning experience. Of course, all credit unions have suffered through the pandemic but those with the online technology and the requisite organisational ability have been better able to weather the storm. My own credit union was amazed to see thousands of its members, normally wedded to branch transactions, not only migrate to online and telephone services but also to suffer little detriment in so doing. Online and phone have become the new normal for thousands who, only a few months ago, would have shied away from anything less than a personal face-to-face service delivery.
COVID-19 is changing the credit union world. The critical importance of moving to modern IT platforms and digital services is clearer than ever – a realisation that is going to demand much greater financial investment in IT. But where does this leave the branches? Are they now just an outdated and unnecessary expense? Should funds spent on branches be redirected to the IT budget? Now that most members do not need or want to visit branches as they did in the past, they are happier and feel better served digitally or on the phone.
But does this really mean the end of branches? Even though a few credit unions in Britain and Ireland do operate entirely online, there is no apparent appetite among credit unions to exit from branches. For credit unions, branches display permanence and identity within the community. Even though most members do not use them, they value the reassurance that if they needed to speak to someone in person, they could do so in a place that is locatable and staffed by real human beings. Companies that disappear online without even an address, giving just an email and a mobile phone number, surely raise doubts in the mind of the consumer.
Of course, there will always be some members who value visiting the branch as a matter of course, and perhaps they will return post-COVID-19, but the jury is out on that for the moment. Nevertheless, a least one central credit union branch is going to be required for many years to come. How that branch needs to be designed to meet member needs is another question, but it is going to need to engender confidence in the credit union as a modern, contemporary financial institution. But how many others will be required? Well, that will be down to the strategic decisioning and resources of credit unions, but certainly very many less than before.
Paul p.a.jones@ljmu.ac.uk
