For the final part of our series of interviews with our CEO Ann Hickey we talk to her about what the future looks like for credit unions. Here’s what she said:
1. What do you think are the biggest challenges that you as a CEO of a credit union and your members are facing?
As a credit union, our biggest challenge is achieving financial sustainability. It is our aim each year to generate enough income to cover our rising costs so that we can pay out to our members in dividends.
Being embedded into our local communities to help and support ‘hard to reach’ people is also a big challenge for us which is why we heavily rely upon the strength of our partnership working to make an impact and help make people’s lives better which is at the core at everything we do.
We also look at what is going on with financial services and competing with high-interest lenders and those that offer ‘buy now pay later’ schemes is also a big challenge for us and our members. It can be so easy to take on unaffordable debt which, once you’ve signed up, is difficult to get out of. The ethos of credit unions all over the world is to help people get out of debt which is why all of our loans have a saving element attached to them. We actively work hard in turning borrowers into savers and when people get tempted with these ‘buy now pay later’ schemes, which look good value but then become a spiralling debt, it is harder to then help to people to manage their debt. We glad to hear that our regulators are aware of these schemes and are starting to investigate our concerns and the impact it has not only on the purse strings of our members but also on their general wellbeing and mental health.
Being able to provide our members with financial services when they face job insecurity and high unemployment is also a challenge for us as a credit union. We mainly serve coastal communities and they have been impacted hugely by the pandemic as hospitality and tourism is the biggest employer and with many being forced to close, it made a lot of members uncertain about their future. I’m glad that we’ve been able to continue to give guidance about savings and affordable borrowing through these difficult times.
2. What are your predictions for East Sussex Credit Union in the foreseeable future?
Our continuing aim is make a profit so we can pay out dividends to our members and to continue to grow the work with partners. I would like to see a bounce in our local economy as the higher cost of living and low wages is making life difficult for the people that we serve.
3. How are you looking to continually meet members’ needs both now and in the future?
We consult with our members on a regular basis and we try and meet their needs as best we can.
We hope to make further developments to our digital platform, as with better information, we will be able to see when our members need certain services and target them to meet their individual needs.
We will continue to keep our ear to the ground with partners and if there are any particular needs coming from our more vulnerable members, we will look for ways to continue to meet them.
4. What do you think the future looks like for credit unions?
Due to the regulatory requirements and the need to have highly skilled staff and board members to run credit union, the costs of running a small credit union are high and we rely on interest on loans as our main source of income. There have been a lot of mergers in the credit union movement to achieve economies of scale and I see this trend continuing into the future, where there will be fewer, larger credit unions serving communities. My hope is that although credit unions will be bigger, they will keep their identity and local touch as they each continue to serve their local communities.
When I attended a credit union conference in America a few years ago and I could see the future of the UK credit union movement changing. Currently in the UK, credit union membership is at 2% of the population. However, in the USA, it’s around 30% and in Ireland, it’s nearer 95%.
With the greater restrictions on high interest lenders such as pay-day Loan companies and the recent announcement that Provident have stopped their doorstep lending, and a greater awareness of using ethical services, affordable lenders should use this opportunity increase their membership. This is what affordable and ethical community lenders like credit unions need to be focussing on.
We are also leading the way in how members use their credit union accounts and offering a money management behavioural app, we are aiming to help members to change their attitudes and behaviour so that their money lasts longer. It’s quite a new revolutionary service which is great for us to be in partnership with. What’s unique about credit unions is that we encourage people to save as well as borrow ethically when they need it.
In order to develop further services that our members are asking for, such as current accounts and mortgages, we would need to be significantly bigger than we are currently are due to the investment that is needed to offer those services. However looking at the way our membership has grown over the last few years, we hope to be much bigger and more sustainable in the next 5 years.
