Credit unions may opt for mergers with tough challenges on horizon

SOME Irish credit unions will likely merge their operations as the movement battles through challenges ahead.

This is according to US credit union expert Mark Myer, who said that there were great challenges ahead for the movement but that it was fortunate that it had not cost the Irish taxpayer any money.

He said mergers could be the way forward for some credit unions, adding that leaders will need to seek out possibilities of consolidation or collaboration that is “realistically aligned with their strategic plans or expectations”.

“They will need to be prepared for incremental changes or transformational changes in financial services landscape and have the necessary competencies from the board and the manager in the era,” said Mr Myer, chief executive of the Filene Research Institute, US.

A survey among credit unions also found that nine out of 10 credit unions said they would consider working with others, including the possibility of mergers, if needed. The survey also found that just one in 10 are happy with the existing sector leadership, with the same number not optimistic that they will be here in the future.

Mr Myer was speaking at a seminar yesterday on the role of credit unions in Irish finance.

He said Irish credit unions need to invest in meeting the demands of the new economic era and the new generation of customers.

Mr Myer said the response by US credit unions to the financial crisis included cost cutting, consolidation, collaboration and attracting new customers with innovative products and services.

The survey, which was carried out in August, also found the majority believed that regulation was not a bad thing. However, it should be implemented with the ethos of the credit union sector in mind and there was strong support for a state stabilisation and liquidity fund.

Chief executive of underwriter, CUNA Mutual Europe, Paul Walsh, said that the findings show that change is vital if the movement is to be relevant and solvent in the future.

“The credit union will soon be Irish consumers’ last chance of getting affordable and accessible loans. It’s clear that they know they need to change and will benefit from a little support from their members.”