Registrar of Credit Unions address to Credit Union Managers’ Association Spring Conference 2019

06 March 2019 Press Release

Central Bank of Ireland

  • Credit union business model change is necessary to address future members’ needs and expectations.
  • Focus on regulatory change as a solution to address business fundamentals can divert attention away from responding to the real commercial and competitive challenges.
  • Credit Union boards and management need to determine desired business model and enabling strategies, to deliver diversified income and sustainable financial returns.

Full speech

Registrar of Credit Unions, Patrick Casey addressed delegates at the Credit Union Managers’ Association annual conference in Athlone. In his comments, he outlined the impetus for the sector to undertake necessary business model change given the financial performance and position of many credit unions.

Mr. Casey outlined three significant business challenges currently faced by credit unions, which will require collaboration within the sector and with others:

  • Enhancing competence and capabilities - enabling credit unions to deliver on members’ needs in the face of competition;
  • Addressing operational effectiveness and efficiency - by managing the costs to serve members; and
  • Expanding revenues through loan growth and non-interest income – bringing sustainability to the business model, while offering improved choice to members.

He welcomed key emerging business model developments in the sector, noting related new products and services. In that context, he highlighted the importance of the link between transitioning the business model and credit unions delivering on their members’ future needs and expectations in the face of competition.

Mr Casey expressed concern regarding an excessive focus on legislative and regulatory change as a perceived solution to addressing the sector’s business challenges, which can distract credit unions from overcoming the real commercial and competitive challenges. He noted that regulation was not the limiting factor on credit union business model development – citing both underutilised lending capacity which is in the process of being considered for further expansion, and the capacity for credit unions to obtain regulatory approval for new ‘additional services’.

Mr Casey emphasised the importance of credit union ownership of their business model strategy and development. In that regard, he referenced the supports provided by the Central Bank, including recent Business Model Strategy guidance that sets out key risk considerations and supervisory expectations credit unions should address when formulating and implementing business model strategy.

Concluding his remarks, Registrar Patrick Casey said:

“Credit unions benefit from a tailored and proportionate framework that is responsive to prudentially justified change. However, the regulatory framework is not a catalyst for credit union business development or for product and service innovation.

Successful credit union movements internationally have pursued their vision of providing a full service retail banking model. In transitioning, they have shown regulatory change responds to the needs of credit union business model transformation, rather than leads it.

The key elements necessary for credit unions to engage in meaningful business model change are in place today. It now rests with credit union CEOs to drive the required business change process, in order to provide valued choice to members on a basis that is sustainable.”