How UK CUs are Tackling the Industry's Biggest Hurdles
November 17, 2016 12:52 PM
Although big banks like Barclay's and Lloyds still dominate the UK banking space, credit unions scattered across England and Scotland are working hard to boost their profile and increase membership. As part of those efforts, a small delegation of credit union professionals traveled to Dallas recently for the jointly held National Federation of Community Development CUs annual conference and the CUNA Community Credit Union Conference. CU Journal asked members of that delegation to share their perspective on the biggest challenges currently facing the movement in the UK today. Not surprisingly, many of their top challenges will sound very familiar to U.S. credit unions.
Jackie Simpson, general manager at Somerset Savings & Loan in Bristol, England
Lending to millennials is one of the biggest challenges we face. We're looking at a lot more digital strategy and doing a lot more online, but it's about being responsive and knowing your customers, and checking in with them and providing products and services they will want to use at different stages in their life.
Beth Welsh, business development manager at Pioneer Mutual CU in Glasgow, Scotland
There's a lot of issues and we've discovered there are a lot of parallels between the issues Americans have and the issues that we have. One of the biggest ones is people knowing what a credit union is and why they should choose that over an alternative like a payday lender not just for the astronomical APR, but getting that message across that it's ethical lending, it's affordable finance. We may not have the marketing budget to get that message across, so the challenge is thinking of innovative ways to reach the millennial market and beyond that.
Kathryn Fogg, CEO Pennine Community CU in Lancashire, England
The biggest issue is growing the loan book. The loan books in the UK have more or less been static over the last two or three years because of the economic climate. But a big contributor is digital; we need to offer more digital services, which is a big struggle. [The Association of British CUs] is introducing a new banking platform to UK credit unions. It's not live yet and there are a lot of issues around it, but especially for the millennials it's something we need to do.
Phil Cole, CEO of Advance CU in Birmingham, England
The challenge for our credit union is to grow. We need more people to join and to save regularly, and to borrow when it's prudent for them. Part of that challenge is for us to develop the right products for what they need. We've got a cohort of members who tend to be quite low-income and not very aspirational, so they don't borrow very much. To make things more viable we need people who borrow more regularly and borrow in larger amounts car loans and home improvement-type things. We're not properly in that market and that's what we need to do next.
We can do loans for buying a vehicle, but we can't do secured [auto loans]. So that's an obstacle, because when you're doing an unsecured loan for a vehicle, the interest rate is too high. So you're not competitive, whereas if it's secured we could provide lower interest rates. There needs to be some legislation change for that, so we'll talk to regulators to see what we can do.
Trisha Butler, general manager at Drumchapel CU in Glasgow, Scotland
We were the first credit union in Scotland and we've been running for 47 years. For us, the problem is the regulators are coming in quite heavy now. A lot of my job now as the general manager is compliance to make sure everything is running okay, rather than dealing with members. It's more about compliance now.
