Tackling sector sustainability – remarks of Registrar of Credit Unions, Patrick Casey, to ILCU 2019 AGM

• Regulatory framework applying to credit unions is tailored and proportionate, and facilitates credit union transition to their desired future business model(s).
• Credit unions must focus on their commercial challenges with a business-led change agenda, to deliver sustainability.
• Strong governance and systems of control are critical to support business growth and ensure protection of members’ funds.

Speaking to the Irish League of Credit Unions AGM on Saturday 27 April 2019, Registrar of Credit Unions, Patrick Casey, discussed the need for credit unions to address the commercial challenges facing the sector. He noted the importance of credit union collaboration on business-led change to help the sector further develop its business model and indicated a number of emerging collaborative initiatives in that regard.

He noted that all financial institutions are adapting to changing consumer expectations with competitive dynamics today increasingly driven by technology-led new entrants, the disaggregation of traditional delivery systems and ever increasing digitalisation. He emphasised the need for credit unions to develop and enhance their business models in order to compete effectively and meet members’ financial service needs.

Mr Casey said the sector needed to address three commercial challenges in tackling credit union suitability – namely: (i) to increase revenues via loan growth and non-interest income; (ii) to improve operational effectiveness and address their cost base; and (iii) to improve delivery and engagement channels and develop associated expertise.

He observed how credit unions already benefit from highly respected brand, which combined with member trust and loyalty, was a competitive difference on which to build the future credit union business. He stressed that strong governance and systems of control within credit unions were integral to the safe expansion of the business model in order to meet members’ needs and ensure sectoral sustainability.

Mr Casey noted that many credit unions have yet to engage meaningfully in business model change, commenting: “Ten years on from the crisis, retail financial services continues to evolve and for too many credit unions, the gap is widening between where they wish to be and where they are. Meaningful business model transition has yet to gain sufficient traction. A failure individually and collectively to address business model change, has implications for sector sustainability.”

He concluded, “Sustainability is highly dependent on credit unions utilising the flexibility that already exists within the regulatory framework today, to optimise their competitiveness. The key elements necessary for credit unions to undertake meaningful business model transition are in place. It now rests with credit unions to drive the required change process. Those who lead the sector will best serve the long term interests of members by supporting a business-led change agenda.”