Much of the recent commentary on the slow death of the Irish Credit Union sector is greatly exaggerated. It evokes an almost-Dickensian reflection of times past when the "man of the house" was paid in cash and, on the way to the pub on a Saturday night, he dropped into the local credit union in a corner of the parish hall and, in the flickering candlelight, put down a few shillings to pay for Christmas.
It's all very Abbey Theatre and you can almost smell the candle wax, but that time is long gone.
Irish credit unions have modernised and are fighting back. They are professionally managed by qualified staff and are highly regulated by the Central Bank of Ireland. Undoubtedly, though, they are under serious pressure: a combination of impossibly low returns on investments and a massive ramp-up of regulation means the traditional business model of the credit union is being turned on its head.
To cope, credit unions are modernising and merging so that they can effectively compete for customers in the same financial services pool as the major banks and lenders. Building a sustainable future in that landscape is a real challenge.
On the plus side, credit unions have won the trust and confidence of their communities. But on the downside is the fact is that, no matter how large an individual credit union grows, it will always be dwarfed by the financial strength and expertise of the giants of the sector.
That is the harsh, honest reality and, if left unchanged, would leave little room for optimism. However, some progressive credit unions, driven by resilience and enterprise, are charting a new course.
By combining the power of 16 credit unions, Metamo creates critical mass in bringing together credit unions with more than €3 billion in assets and 480,000 members. It levels the playing field with the banks through a strong, commercial, collaborative collective with its raison d’etre to harness its combined strength for local advantage.
Crucially, Metamo also benefits from being a joint venture with Fexco – the leading Irish fintech and financial services player – which brings the sort of professionalism and commercial drive that will make this a success.
The model of Metamo is one where credit unions utilise state-of-the-art IT, where they employ smart professionals in their core areas of lending, investment, HR and financial advisory services, and where they have an asset base and financial security to rival anyone else in the sector.
Metamo’s vision is of a scaled-up credit union sector shaking up community-based lending in the same way that the likes of Revolut disrupted the traditional current account payments model.
The credibility of the model is demonstrated by a group of Metamo credit unions becoming he first community lenders to be approved to offer loans under the Government’s Covid-19 Credit Guarantee Scheme.
The approval is a strong endorsement of the Metamo approach after less than 18 months in business. Having lending decisions based in the community, by an organisation with a track record and local relationships, is helping to accelerate the deployment of much-needed capital to help businesses recover as we emerge from the travails of the pandemic.
Unlike Ulster Bank customers, members with loans, savings and accounts in a local credit union that they collectively own do not need to worry about their loan provider pulling out of Ireland any time soon.
Credit unions have been there for individual members, SMEs and agribusinesses for more than 70 years and will be around for the same again and more. We can do business by phone, email or app or, believe it or not (Covid permitting), folk can walk down the road to one of our local offices and speak to an actual person – an increasingly rare event in financial services as branch networks are repeatedly cut back.
Through crises, recessions and lockdowns, our customers have learned that the credit union will serve their community through thick and thin.
We are in challenging times but we have survived worse. We are developing a level of service and products to match or surpass anything that is available in the banking sector.
Metamo sees a bright future for progressive credit unions that choose to take a joined-up approach.
With the scale to influence change, the expertise to match the best in the business, and future-proofed technology, we will deliver a sustainable future for those who travel the journey with us.
Joe O’Toole chairman of Metamo Credit Union Group and a former Senator