A research project is under way to develop a new vision for British credit unions, as movement growth flattens out and sector leaders look for ways to adapt to a fast-changing world,
The work is being led by Swoboda Research Centre and New Economics Foundation (NEF), which kicked off the process at a meeting in June (pictured). The goal is “a collaborative endeavour to build a shared vision for the sector for 2035, and a roadmap for how to achieve it”.
Nick Money from Swoboda tells Co-op News: “The credit union movement has developed amazingly over last 10 years but growth is starting to plateau, if you take out the expansion of the big players.”
Meanwhile, there is “uncertainty on the horizon over AI and digitisation of everyday life. Talking to our credit union customers, it was felt this was a moment to decide how they could be sustainable but work for society.”
Swoboda and NEF are being supported in the work by sector bodies like the Association of British Credit Unions (Abcul) and the Co-op Party, and is engaging with suppliers, financial inclusion organisations and policymakers such as the Treasury and regulators.
Last month representatives from all these stakeholders gathered for a meeting at the Friends House in London, where Ed Mayo, CEO of Pilotlight and former secretary general of Co-operatives UK, said: “The idea that a credit union is the best kept secret has gone on too long … They are part of a wider scene shaping financial inclusion more widely.”
The sector is challenging government round financial inclusion, and challenging banks round accountability, he added. “They combine the passion of opposition … with proposition around it, showing how things can be done in a different way.”
And the co-op model brings the sector advantages over social enterprises, said Mayo. “You are closer to the people that you serve – it’s members’ money. You have the benefit of a balance sheet –there is a higher failure rate in social enterprise. Your members participate and you have authenticity – with co-operative purpose and values embedded into legal and regulatory identity.”
But the need to adapt to a new era is clear, he warned. “At the moment it is a very tough picture for the people credit unions are there to serve. I can’t remember a tougher time for civil society.”
Other challenges for the movement include the need to build capacity for financial inclusion; the succession issue and generational leadership change; and growing pressure from regulators or stronger governance.
Related: Can the credit union movement seize the day?
And there is “urgent need for technological capability at senior management and board levels to meet digital consumer preferences and compete with the scale economies of banks and other providers.”
From Swoboda, Paul Jones told the meeting: “The last decade has seen immense change in terms of governance, management, digitisation and modernisation and growth and each are starting to plateau.
“There is still a growing need for accessible, affordable and ethical financial services in the context of recent economic, demographic, environmental and technological changes.”
The Swoboda/NEF project will look at a movement-wide revaluation of purpose, values, mission and operating/delivery models, with a “collective, collaborative inquiry into where we are at movement level.”
Responses to an initial survey for project, with 200 respondents, show a clear desire for growth and expansion, said Jones: 97% of CEOs and senior managers said agreed with this, as did 93% of all respondents.
But only 38% were confident about this growth for their own credit union, and only 19% felt confident about the whole movement.
As an example of how to turn things around, the event heard from Ciara Davies, CEO of Metro Moneywise, part of the Greater Manchester consortium, Sound Pound. This group of credit unions has driven growth by connecting with the opportunities of devolution and the creation of the Greater Manchester Combined Authority, and connecting with the authority’s strategic objectives. Initiatives include working with mayor Andy Burnham on finance for annual travel tickets, and partnering on green home finance as part of the regional retrofit strategy.
Working with the authority and other organisations has increased Sound Pound’s profile. The consortium allows the credit unions to pool resources, share risk, and act as a “disruptor” which has lent £500,000 to social enterprises. “The credit unions trust each, talk and collaborate a lot,” said Davies. “There are a lot of gaps in market where the financial services sector has not stepped up.”
The meeting also heard from stakeholders including Helen Undy from the Money and Mental Health Policy Institute, who said credit unions have a role to play in improving financial inclusion for people with mental health problems. This can mean designing services “for people who struggle to make a phone call”, she said, or creating services a carer can use on a member’s behalf. Debt collection can be “scarring”, she warned, calling for changes to avoid a loss of trust when things go wrong.
Erel Onojobi from the Runnymede Trust agreed, saying: “We need to work out why we’re trying to force people to fit into a system that wasn’t made for them.” Looking at issues around race, and the legacy of colonialism with “the sort of jobs people were allowed to do”, she argued for an “asset-based approach whereby communities can be agents of change, through community ownership and stronger civil society”.
Abcul CEO Matt Bland warned: ‘There is a real urgency in terms of the need for a bigger role for credit unions” – but, with outcome of the next general election far from certain, the sector should be aware that the current level of policy support might not last.
“There are challenges,” added Bland, whose own organisation has just refreshed its mission statement after a member survey. “Are we as good as we think we are? Are we perfect on how we deal with debt? Are we up for challenge of transformational growth? Are we meeting members’ needs? Are we as inclusive as we want to be? We need to ask difficult questions about consolidation, collaboration, fintech, growth.”
After the meeting, Nick Money told the News the goal of the project is not a simple blueprint, bearing in mind the difference between a large industrial credit union and a small community one. It is more a question of deciding on priorities for innovation – such as credit cards, current accounts, mortgages, and financial advice for members.
“Our objective is to launch in spring 2027,” he adds. “This year’s work is about the state of credit union nation, next year is what will 2035 look like, then we look at how to credit unions deliver on that vision.”