Northern Money Conference 2012

Six Years Back

Six Years Forward

Mark Lyonette Chief Executive

ABCUL

Credit Unions 2006 - 2018

Overview

•Growth and Coverage

•Legislation

•Savings, credit and access to cash

•Funding

•The Future Six Years Back

Six Years Forward

Credit Union Growth 2006 - 2011

•Membership up 58%

•Loans up 63%

•Savings up 70%

2006 - New legislation proposed“We will identify the strengths and weakness of the current framework

and produce recommendations for improvement and reform. “ Ed Balls MP – Economic Secretary to the Treasury, November 2006

2012 - Legislation comes into force “I want to see credit unions grow to meet the needs of their members

and communities they serve. The LRO is key to that and I am pleased that it has now passed through Parliament.”

Mark Hoban MP – Financial Secretary to the Treasury, November 2011

Legislation

Three key benefits of new legislation

1. Reaching out to new groups and making the most of partnerships

2. Organisations into membership

3. Interest on savings

Coverage

• 2006 – only 10 London boroughs with complete live or work coverage

• 2012 – all boroughs covered or will be within weeks - last few as a result of new legislation

• Rest of country, similar story – now very few geographical gaps

Savings

2006

Credit unions step in to offer

Christmas Savings Accounts

2012

Most credit unions offer Christmas Savings Accounts – Farepak victims still battling for compensation

Credit snapshot

2006- Squeeze just beginning - Crash still to come

2012- Payday loans making the

headlines - Other ‘sub-prime’ firms

thriving

Access to cash

2006

• ABCUL and 8 credit unions launch Credit Union Current Account

• Full ATM access, debit card etc

2012

• Now 25 credit unions with more keen to come on board

• Over 50 credit unions offering Credit Union Prepaid

Card

Funding

2006 • Growth fund –

600,000 loans from over 100 credit unions, 2006 – 2011

• Nearly £¼billion saved in lower credit costs

2012• £38 million Credit

Union Expansion Project - encouraging collaboration and mainstreaming of credit unions

Credit unions in 2018?

Often narrow range of customers

Limited range of channels lacking convenience

Narrow range of products sometimes basic savings and loans only

Operations often very manual, lack of integration between systems

All credit unions perform each business function independently

Range of IT software

Branding:“Poor man’s bank”

Credit unions in 2018?

Operations

Business Functions

IT

Broader range of members, age, income, employment

Wide range of channels including out of hours phone, internet, mobile, post office

Full range of products including automated bill payment accounts, general insurances, business banking, mortgages

Operations more automated, many shared along with business functions and IT platforms

Modern, convenient, high quality, trusted, inclusive, mutual, alternative banking service

Northern Money Conference 2012

Six Years Back

Six Years Forward

Mark Lyonette Chief Executive

ABCUL

Credit Unions 2006 - 2018

Why isn’t the credit union sector bigger in Britain?

Things people say.....

1. Poor legislation?

2. Credit unions don’t work in Britain, alien model?

3. Credit Union name is unhelpful, both credit and union can be negative words for many?

4. High cost lenders have more money to advertise than we have, we need a national advertising campaign?

5. Not enough central and local government subsidy?

6. And the truth.......

7. Most credit unions in Britain do not have a strong enough offering to attract most people in a highly competitive financial services market.

So what shall we do about it?

Show up where others are not

Recruit more talent to board & management

Share costs of infrastructure

and development

Credit unions in 2018?

Often narrow range of customers

Limited range of channels lacking convenience

Narrow range of products sometimes basic savings and loans only

Operations often very manual, lack of integration between systems

All credit unions perform each business function independently

Range of IT software

Branding:“Poor man’s bank”

Credit unions in 2018?

Operations

Business Functions

IT

Broader range of members, age, income, employment

Wide range of channels including out of hours phone, internet, mobile, post office

Full range of products including automated bill payment accounts, general insurances, business banking, mortgages

Operations more automated, many shared along with business functions and IT platforms

Modern, convenient, high quality, trusted, inclusive, mutual, alternative banking service