Seminar told credit unions here could have bright future

CREDIT UNIONS in Ireland are facing a potentially bright future, a financial seminar in Dublin has been told. The seminar, The Future of Finance 2020, was told yesterday that both borrowers and savers would in the coming decade be more cautious and conservative than in the recent past.

Issues of trust between savers and banks over low interest rates, poor share prices, the cancellation of dividends and the stability of the banks themselves have deeply affected saver sentiment.

Similarly, sentiment is low among borrowers caught between paying increasing taxes to keep the banks afloat and increasing interest rates to shore up banks’ profitability.

However, according to keynote speaker Mark Myer, chief executive of independent think-tank the Filene Institute, credit unions around the world have largely retained the trust of their customers.

Mr Myer said that in the United States, where large numbers of mortgages were provided by credit unions, those loans had a very low failure rate. He put this down to the “local” nature of the credit union and the co-operative model in which the needs and strengths of savers and borrowers were recognised.

Mr Myer said the co-operative model was something customers could believe in at a time when sentiment towards the big financial institutions was low.

In the US, the credit union movement was respected for “not costing the taxpayer a dollar”.

It had been born out of the Great Depression and the need among individuals and small organisations for credit. The model of “winning over the hearts and minds” of customers had worked in the past and could have a bright future here.

Paul Walsh, chief executive of Cuna Mutual, which sponsored the seminar, said the sector in Ireland numbered almost three million members. It had thrived in the face of adversity from the 1960s, through recession, emigration, the Celtic Tiger years and competition from banks and cheap money.

The Filene Institute assesses issues affecting the future of consumer finance and credit unions in the US and around the world.