Press release

Report highlights dramatic growth of credit unions

Membership of British credit unions has tripled in the past 10 years, according to a report from ABCUL and The Co-operative Bank.

The research highlights the dramatic growth of credit unions over the last decade with the sector seeing a 400 per cent hike in its loan and savings portfolio. One in four credit unions now has more than 2,000 members compared to 3 per cent 10 years ago.

The report, Breaking through to the future, also sets out the key strategic issues for the future and concludes that the potential for the sector to grow further is significant, providing credit unions collaborate to achieve economies of scale and greater innovation.

Written by Paul A Jones of the Research Unit for Financial Inclusion at Liverpool John Moores University, it has been supported by ABCUL (Association of British Credit Unions), and The Co-operative Bank, which has been instrumental in supporting the credit union movement over the last decade.

Two thirds of credit unions surveyed in the research believe that Government policy has helped credit unions, with three-quarters saying that delivering DWP Growth Fund loans has directly assisted their credit union.

'It's rewarding to see just how dramatically the credit union sector has developed and grown over the last 10 years,' says Mark Lyonette, Chief Executive of ABCUL. 'In 1998, the research report Towards Sustainable Credit Union Development provided a catalyst for change in the credit union movement. I believe this new report provides a valuable route map for credit unions for the next 10 years and will play a key role in how the sector develops in future.'

The Towards Sustainable Credit Union Development report revealed that many credit unions had been established according to a particular model which resulted in slow growth, financial weakness and many being unable to serve more than a few hundred members. It argued for a business-focused approach to development and stimulated a process of transformation which has resulted in a new modernised credit union movement.

The new research outlines key challenges and opportunities for credit unions today.

Paul A Jones says: 'The priority for many credit unions is to continue to grow, developing a diverse membership, mobilising savings and achieving the financial efficiencies that will lead to a sustainable business. Central to this is the need for many to introduce a range of updated financial products and services to meet the needs of the modern consumer.

'In an increasingly challenging financial market, credit unions need to pursue greater back-office and front-office collaboration. This will enable economies of scale and greater innovation, yet allow credit unions to continue to provide a quality, local and mutual service.'

Mark Lyonette says: 'One of the key messages to come out of this report is the need for much greater collaboration between credit unions and it is pleasing to note that 83% of those credit unions polled said they would be prepared to collaborate with other credit unions on a much greater scale.'

The report also explains that credit union boards of directors need to demonstrate good governance and find the leadership to take their credit union to the next level.

Mark adds: 'With so much positive change and growth in the last 10 years, and a new legislative framework to look forward to, the future more than ever depends on the leadership and skills of boards of directors and of the executive managers of credit unions.'

The interim report is available on the Research Unit for Financial Inclusion website. Consultation on the report is open until 15 January 2009 and it will be published in its final form in spring 2009.