Talking Credit Unions from Swoboda Research Centre
Talking Credit Unions delves into the latest trends shaping the financial landscape, equipping credit unions with the insights they need to stay ahead in a rapidly evolving industry. This podcast also tackles key issues facing the movement, fostering knowledge sharing and collaboration. Featuring a diverse line-up of credit union leaders, experts, researchers, and industry suppliers, it offers valuable perspectives to drive best practices, innovation, and success.
Talking Credit Unions is brought to you by the Swoboda Research Centre, which works to support positive change and transformation in the credit union movement. (https://swobodacentre.org/).
The podcast’s current producer and host, Anca Voinea, is a trained journalist with over 13 years of experience in the co-operative and credit union sectors. To suggest a podcast topic or for any other inquiries, contact her at anca.voinea@swobodacentre.org.
Talking Credit Unions from Swoboda Research Centre
EDITION 36: The future of credit unions: growth, youth, and digital demands
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The credit union landscape is transforming rapidly across Ireland and Britain. Fresh legislation has created unprecedented opportunities for innovation – yet significant hurdles remain.
How can credit unions balance digital transformation with their co-operative ethos? What strategies will attract younger members while serving existing ones? These questions took centre stage at the recent Swoboda Research Conference in Dublin, where experts shared insights and solutions.
American credit union strategist George Hofheimer cut through the noise with straightforward advice: focus on "the boring stuff" – prioritising lending, optimising capital, aggressive expense management, and favourable pricing. This back-to-basics approach must underpin any future vision. Former EU Commissioner Mairead McGuinness cautioned against uncritical digitalisation, highlighting cybersecurity as a "hair's breadth away" from creating serious problems while emphasising that younger generations may not inherently understand the credit union difference.
The challenge of attracting younger members emerged as particularly urgent. Cédric Turini from the French co-operative banking network shared their multi-faceted approach: family-focused products, dedicated mobile apps, student loans without personal guarantees, and meeting youth on social platforms with accessible financial content.
As credit unions are considering how to engage with AI, Mark Kelly from AI Ireland shared his top tips for the sector.
Looking ahead, two major strategic initiatives promise to shape the sector's future. A government-led project in Ireland will examine development paths with input from trade associations, while Swoboda's "United Vision Project" aims to map British credit union evolution through 2035. With collaboration universally acknowledged as essential, the challenge now lies in implementation – through credit union service organisations, potential corporate credit unions, and joint initiatives that can deliver services beyond what individual institutions can provide.
As Dr. Paul Jones noted, credit unions aren't merely seeking research for academic purposes – they're looking for "a catalyst for transformation and change." He thinks the opportunity is immense, particularly given the millions who remain financially vulnerable.
Talking Credit Unions is a regular podcast dedicated to informing credit union practitioners, leaders, and opinion formers on a variety of industry topics. The podcast is sponsored by the Swoboda Research Centre.
Introduction to Swoboda Research Centre
Speaker 1This podcast is brought to you by the Swoboda Research Centre , the not-for-profit independent think tank serving credit union leaders in Ireland and Great Britain . At Swoboda , we're all about sparking positive change and transformation from action-focused research and inspiring annual conferences to tailored development programmes for CEOs and chairs and , of course , these podcasts . We're here to help you power credit unions forward . To learn more , visit swobodacenterorg . That's swobodacenterorg .
Speaker 2We hope you enjoy this episode of Talking Credit
Credit Union Growth and Challenges
Speaker 2Unions . The credit union world is changing fast and in many , many ways it's moving in the right direction . The value of mortgages issued by members of the Irish League of Credit Unions jumped by 41% last year , hitting 759 million euros . Meanwhile , in Britain , credit unions are also growing , with the latest Bank of England figures confirming steady rises in membership loans and savings , and with new legislation in both jurisdictions , there's now more room for innovation and expansion than ever before .
Speaker 2But it's not all smooth sailing . There are many challenges along the way , including cyber threats , the need to attract younger members and embrace digital transformation . So the big questions are how can credit unions prepare for what's next and what strategies should they be focusing on now to stay strong in the future ? These were some of the themes at the recent Swarovski Research Conference in Dublin , and in this episode I'll be diving into some of the key presentations and sharing what stood out most . One of the keynote speakers was George Hofheimer , a renowned credit union strategist from the USA . He argued that credit unions have an enormous opportunity to expand their market share by working together . He also told participants to focus on the boring stuff , such as prioritizing lending , optimizing capital , managing expenses aggressively and providing favorable pricing . But there's more to a credit union's success . According to him , there is an X factor involved as well , which has to do with leadership . Let's hear what he had
George Hofheimer on Strategy
Speaker 2to say .
Speaker 3So it's a fairly consistent model around prioritizing lending , optimizing your capital , managing your expenses aggressively and providing favorable pricing . These are the ingredients to a successful cooperative financial institution . We're talking about boring stuff , because this is what's going to get us to the future . This is what's going to enable us to be successful . The first and the most important thing is to realize your economy of scale , and it's not all about managing your expenses aggressively . It's the other side of the equation , too . It's generating and obtaining as much business as you can get from your members as feasible the X factors . This all has to do with strategy and the quality of management . These are the kinds of questions that credit unions need to be asking themselves . The essence of good strategy , according to Michael Porter , is choosing what not to do . As a credit union , you have a lot of opportunities , but actively choosing that .
Speaker 2George's presentation was followed by a conversation between Therese Conway from Collaborative Finance , CLG , and former EU Commissioner Mairead McGuinness , during which they explored some of the latest policy and regulatory developments in Ireland and the wider
Mairead McGuinness on Financial Ethos
Speaker 2EU . Mairead referred to the ethos of credit unions , warning that this might not be understood today , especially by younger generations in Ireland . She also encouraged credit unions to approach digitalisation with caution .
Speaker 4This is what she said , Maybe what I should start with saying is that what is money for ? What are banks for ? What are credit unions for ? It's to provide money so that at certain times of our lives or our business life , we have access to credit to do things , and it's very simple , but I think the industry is very complicated around what's its function , what are the services that are needed , what are the pricing of these services , and I think we need to encourage people to ask basic questions .
Speaker 4One of the biggest worries I have is around cyber security , and we're a hair's breadth away because the criminals are really good at . You know , every step that the industry takes , there's another step , and I think there's a bit of rethinking about the wonders of digitalization that it's all good and pulling back to say yes , but how resilient are we if things go slightly wrong or if they go in a really bad direction ? I think that is a high risk and that can impact financial stability . Uncertainty is impacting investment , which also impacts returns , so I think uncertainty is a real problem , but for a lot of us who would be in credit unions , you don't think of that when you're going in for your loan , and I think that credit unions can focus on just empowerment and supporting people , and I've heard that you do that already but that also has a cost .
Speaker 2Of course , we can't talk about the future of credit unions without tackling one of the biggest challenges
Cédric Turini on Attracting Younger Members
Speaker 2ageing membership . At the Suboda conference , cedric Turini from the Fédération Nationale des Castes de Parne , that's a network of cooperative saving banks in France , shared how they're trying to attract younger members . They're doing some really interesting things . For example , they're offering family-focused products , creating a separate mobile app just for young people and providing student loans without requiring personal guarantees . They're also meeting young people where they are on TikTok and Instagram , by sharing everyday financial tips in an accessible way , and they've made it standard practice to offer all customers over the age of 18 the chance to buy shares in their local co-op bank . And because younger generations are concerned about the environment , they're leaning into that too , by supporting youth-led social and environmental projects and offering savings accounts that invest in climate initiatives . All this costs money , of course , and Cedric warned that credit unions must be willing to lose money in the process of attracting younger members .
Speaker 5We don't have a perfect solution , which is why we have developed a strategy based on different kinds of actions , which I could summarize by attractive offers , tailored communication and initiatives that resonate with young people .
Speaker 2Final presentation at the conference was by Mark Kelly , the founder of AI Ireland , who had some tips for credit unions looking to use AI to improve efficiency . He said AI could be used for personalized advice , automated loan processing , real-time fraud detection , 24-7 chatbot support and data-driven marketing insights . But how should credit unions go about this ? Let's hear what he said
Mark Kelly on AI in Credit Unions
Speaker 2on the day .
Speaker 6You have got what no one else has the most trusted brand in this country . But how do we start to leverage it for a more frictionless experience ? How do you start offering additional services ? How do you become that verb like Revolut ? How do you start to give those data-driven decisions that are there ? If it was me in your business , what I would do straight away is I would create a tiger team and that tiger team picks one project to work on with a small steering group to try to introduce some type of AI feature that can improve customer friction to create a better type of service . Now you might be actually saying , well , I don't know how to do it . Well , chatgbt will actually talk you through step by step as a 10-year-old , what to do and how to do it , and Sony , in their IT department , I'm sure , will be able to actually do , fund and track results . But you have to go and audit your data . You need to make your data accessible .
Speaker 2To dig deeper into some of these issues
Conference Insights with Dr. Paul Jones
Speaker 2. I spoke with Dr Paul Jones , director of Research at Swoboda and Reader in Social Economy at Liverpool John Moores University . What was the overall atmosphere and energy at the conference and what did participants make of the presentations they heard ?
Speaker 7Well , I think there was an energy in the room . I think we're very pleased with the attendance . All the feedback has been very positive since and of course , it was surrounded by the day before and the day after with workshops for CEOs and chairs of boards of credit unions . So we tried to make it a full package of events over a three-day period . But the conference itself , I think it had a really good feel .
Speaker 7Credit union conferences usually have good feels . They're good people wanting to do good things , so it was great . We really enjoyed it .
Speaker 2So the theme was future horizons . Why did you choose this topic and how did it build on your previous conferences ? Your previous conference , in Manchester , I believe , was focused on collaboration .
Speaker 7The last one was focused on collaboration , so it was all about leadership , and it was about collaboration was part of that as well . But of course , talking about leadership , where are you leading ? Leadership is a directional thing . You're going somewhere , and so issues around the future of the credit union sector came up and we thought we would do a conference this time which was looking at the future horizons , the future direction of the credit union sector under a number of key themes . I mean there's a lot to that because the future is so important . Both in Ireland , irish credit unions are embedded in Irish society , but they have challenges . They have a new generation growing up which shows a little bit different . They're growing up in a digital financial age . So they've got issues around the future . And in Britain , we certainly have issues around the future about our credit union sector , which has really only yet managed to have about 3% penetration into the population .
Speaker 2Going back to some of the main themes or questions that emerged across the sessions . Did anything surprise you , either from the speakers or from the participants ?
Speaker 7In terms of what surprised me . I'd just pick up on two things . One was in talking about transformation and future development , kind of achieving future momentum towards this future horizon .
Speaker 7It was interesting that our speaker from America stressed efficiency . You can have the great ideas , the great vision , but really to actually achieve that vision you've got to be a well-run and a very efficient financial institution . And that was like kind of getting the basics right . It was a bit of return to basics . You know we can have the horizon , vision and vision envisioning , but you know you've got to get the basics right . So that was one thing that I was surprised that he focused on that to be efficient . The other one was about our presenter on ai , which I think was eye-opening , not just for me but for nearly everybody in the room , because what that was all about was the rapid pace of technological change that's on the horizon well , not even on the horizon , which is even here already , but talking about how it'll be even in a few years' time . So that pace of technological change and how it's going to impact on the credit union sector in both jurisdictions , ireland and Britain , I think was surprising , mind-blowing in many ways .
Speaker 2Going back to George Hofheimer's presentation , because you just mentioned it , he referred to a report by McKinsey Company which suggests how US credit unions should act in the future and gives recommendations , and George agreed with some of those recommendations , but he also had his own recommendations and he said that collaboration was a little overlooked in the report . Do you think there's a
The Importance of Collaboration
Speaker 2growing appetite for collaboration as a strategy to increase efficiency and expand services ?
Speaker 7Well , I think the argument about collaboration both in Ireland and in Britain has been won . I think everybody realises the future needs to be collaborative . So that is fundamental and George is right to point that out . Of course , in Ireland the collaboration really can have two main kind of organisational forms . We have what's called CUSOs , which are credit union service organisations , and then we have corporate credit unions . The CUSOs are a little bit easier to establish . These are where credit unions collaborate for certain basic functions that they're undertaking and there's some really good examples in Ireland . In Ireland they have CUSOs for mortgages , which has really expanded the credit union mortgage sector in Ireland . Now they're doing it collaboratively . They have a CUSO for agricultural loans . They've got collaborative CUSO for payment services . Many of the credit unions now offer current accounts and through that is , through a collaborative way forward , the Irish government has allowed in the regulation for the establishment of corporate credit unions which are a little bit different to CUSOs . This is where credit this is establishing a credit union for credit unions that could actually do the treasury management , do the financial . You know where you could lodge funds , excess funds and draw down money for lending In other jurisdictions around the world . That's really important and I think we might see some progress in that area in Ireland in the near future . There isn't a corporate credit union there yet .
Speaker 7As far as GB is concerned , collaboration also is very much on the agenda . We've got some examples , kind of smaller examples . We've got in Manchester we've got the Sound Pound Initiative where credit unions are coming together and you know some of their products and services they can do together , like a loan for the bus tickets and the tram tickets . This is not a massive but it's a step in the right direction in terms of collaboration . We've got another one in Scotland called CU Sheriff coming off for back offices between some of the bigger credit unions . But really in Britain it is going to be a big issue .
Speaker 7There's a lot we could do . Legislation has changed . Credit unions now could do car loans , are allowed to do car loans . How many credit unions are doing car loans ? None as far as we know . So there's a lot more they could do with car loans . We could do a debit card , but we can't do it individually . Credit unions can't do that individually , but together they could . So the future has to be collaborative if we are going to remain relevant to each other and something else that Cedric Turini said in his presentation was that when young people in France are asked to name a cooperative bank , they
Addressing the AI Revolution
Speaker 7name Revolut .
Speaker 2So , given the concerns about ageing membership , what do you think British and Irish credit unions could take from Cedric's presentation and from what French co-op banks are doing to attract young people ?
Speaker 7Well , that was a really interesting comment about Revolut , wasn't it from Cedric there ? Given the fact that over 60% of the banks in France are cooperatives , young people don't know this . I mean it's strange that actually they are cooperatives . They see it on the TV all the time the ads for Credit Mutuel . It's very cooperative about our members . There's something we're not getting out there . And what was interesting from Cedric's presentation ? We were very , very happy to have an intervention from a French cooperative bank who came to Ireland to share their expertise because they do believe in cooperatives , helping cooperatives . They came and that was really great and the number of things I gained from Cedric's presentation .
Speaker 7His presentation was on young people . That's why we asked him because there is an ageing demographic in Ireland and in Britain how do we reach out to young people ? And what was significant ? They've done a lot of research . I haven't seen this in Ireland and I haven't seen it in Britain . They have done a lot of research into the financial needs of young people .
Speaker 7As young people , they've done a lot of analysis around what young people are looking for , what attracts them , what moves them , and they've developed strategies for reaching out to young people , both in terms of engaging them as customers of the bank using services . So they've developed products and services which are young people oriented . They've got one where you offer the service to the whole family , so mum and dad get a loan , but the young people can actually get loans too and start saving in Kestepan . You know they'll start saving and then they can borrow through student loan , education and their messages are out there on social media , on Instagram , on TikTok .
Speaker 7The difference between a French cooperative bank and but one of the biggest differences who they can serve Our credit unions can only serve their members . Their court banks can serve both the general public and their members . They are very interested to get the message out to young people to be a member of the cooperative . So a lot of his education was about financial awareness and money management and all those sorts of things , but also education about the cooperative nature of the banks in France
Strategic Research Projects
Speaker 7, which I think that was really good , that we've actually got banks that are promoting actively the notion and the concept of cooperation for young people . He did admit he was a bit of an uphill struggle , you know , but at least they're there endeavouring to do so .
Speaker 2Another big topic at the conference was artificial intelligence , and you mentioned Mark Kelly's presentation earlier which touched on how credit unions could use AI . How do Swoboda members feel about this ? Do you sense a growing interest in AI among your members , or is there still some hesitancy ?
Speaker 7No , there is a growing interest . I was in a credit union in London just recently where they've introduced an AI functionality for their staff members . So you know that's all about the information about a credit union , everything you need to know about a credit union . You can just type it in and ask a question . It'll give you the answer there .
Speaker 7And then it means that it speeds up , instead of people hunting around with what's our policy in this or what's the what's theRA say on this , or they've got it all there instantaneously , which actually speeding up the efficiency of the organization , which , of course , is one of the things that George said you've got to do . You've got to become more efficient , and AI can contribute to organizational efficiency . So I think a lot of people are interested about it . I think the presentation at the conference in many ways , was for me as well . It was kind of mind-blowing . You know I mentioned that earlier about one of the things that's surprising the rate of change , the rate of technological change , particularly when it comes to AI . Now , of course , mark is an AI enthusiast . He was there and he sold AI to the folk , which is great , you know , to get people thinking about it . He was asked a question , though , which I thought was interesting , about ethics .
Speaker 7This is where maybe our credit union people might worry a little bit , or do worry a bit . There are big issues in regard to ethics , because AI is run by algorithms . Algorithms are based on data which is collected in the past , I guess , and they can be biased . There are issues . You know loan decisioning . You know who gets the loan based on what it notes already Instantaneous answer it can be discriminatory . Pending credit scoring can be discriminatory . It all depends on what data is going off .
Speaker 7People worry about lack of transparency . Ai gives the question in two seconds , so they worry about that . They worry about privacy and the use of data . Turning over all our credit union data to AI algorithms and I don't think we've really yet kind of come up with a kind of methodology around ethical auditing of AI . It's beginning kind of methodology around ethical auditing of AI is beginning , but I think this issue of AI and ethics will be very much on the agenda . We don't want to just turn our credit unions over to algorithms . You know that we need some kind of control and understanding of what's happening , but I'm no expert Tanka on ethical auditing of AI . It's as new to me as to many other people and that was why it's great to have that at the conference .
Speaker 2In your concluding remarks at the conference , you briefly touched on two strategic research projects underway in Ireland and Britain . How are these shaping your agenda ? Well ?
Speaker 7I suppose the answer to that is very much so . Really , these two projects are about the future . They are about the future development of the credit union sectors in ireland and in britain . They're two independent , separate projects . The one in ireland is initiated by the irish government in association with the credit union , the credit union sector in ireland , the irish league of credit unions and other trade associations , several in ireland . We've had conversations , conversations with Irish government officials about the project and we are hoping and we are planning that some of our research into the credit union system in Ireland will actually feed into that particular project .
Speaker 7The one in Britain , well , it's very different because this is a Swoboda project and this is going to be predominant in our work over the next two . This is a Swoboda project and this is going to be predominant in our work over the next two years . For the Swoboda Centre . This is called the United Vision Project and it's looking at the development of the credit union sector in Britain over the next 10 years . It's kind of aiming to be what will the credit union sector in Britain be like in 2035 ? We've come a long way in credit union development in Britain . I've been around in the sector for some 25 years and 25 years ago the credit union sector . It was a very different setup altogether . Now our credit unions are , for the most part , professional , financial cooperative institutions , free members , good quality products and services , but still we're not expanding . Actually , if you take out some of the biggest credit unions in the country half a dozen of them take those and put those to one side , the rest of the movement is flatlining in many ways . So this project is really to look at where we are now . How did we get here , what issues do we face now and how is our development going to look like over the next 10 years , both in terms of market trends , the social economy , about who will serve , what products and services will develop , how we'll be sustainable , and so on . So this is a big project .
Speaker 7We kick off next week , on the 10th of June , in Manchester . So this is going to be hopefully quite a significant project to move the credit union movement forward . So we voted as research . So I'd like to just add this one . We're doing this with the New Economics Foundation , by the way I should have added . So it's a collaborative project between the two of us , but we're not just kind of think tank people and academics who want to do research , you know , to publish in journals .
Speaker 7The only reason to do this is to be a catalyst for transformation and change in the sector over the next 10 years . So it's kind of exciting . We've got a lot of people coming , nearly 50 credit unions coming next week . The major trade associations are all involved , are all involved Abcol , ace , all the great associations . Because I think everybody realizes , or you know , knows , how far we've got . But the potential to develop in Britain is immense , particularly when you look at , say in the Financial Life Survey just of last year , the number of people in the country who don't save , who are financially vulnerable . The numbers are a million , you know , not in a few hundreds , you know . So that's the big project for the future .
Speaker 2And , in addition to this big project ,
Future Outlook and Conclusion
Speaker 2have you got any upcoming papers or workshops or events our audience should look out for ?
Speaker 7Well , the one that they should look out for the most . Number one is our conference in Britain . We do two conferences a year , one in Ireland , one in Britain , and this has always been in Manchester , but this time it's a change . We're now going to Liverpool in the iconic Liver building . It will be the Credit Union Conference on November , the 23rd . So that's the first thing .
Speaker 7Papers yes , that's what we're about , kind of publishing papers and research . Some of the ones that are in the pipeline which will be out in the next few months one will be on the Common Bond , which you know . There's been a consultation on that . Who can we serve ? So we have a paper written by a former CEO of a credit union on the Common Bond . We have one coming out on collaboration .
Speaker 7We spoke a lot about collaboration . This academic from Leicester has done a research project into collaboration in Ireland , so that's coming out . We've got a paper coming out from the University College Cork on sustainability , credit unions and sustainability . We've got one written by one of our American authors , quite interestingly , on credit unions and banks and what's the difference and are credit unions banks ? Well , kind of . Well , credit unions are a kind of cooperative bank , but what does that mean and what's the difference ? We've got one written by a group of students doing MBA , students at Manchester Business School writing and did a research project on the future of bank branches in Ireland branches in Ireland , bank branches . You know we're in a digital world . I talked about the pace of technological change , going digital more and more . So what about the branches ? What can they be ? How can they be relevant into the future if people want to keep them and there's a few more as well ? I think what we people , listeners , should do really is keep an eye on the Samboda website , because that's where you see all the information coming up .
Speaker 2Those were Paul's main takeaways and , as he said , these issues will continue to shape the agenda of credit unions as well as that of the Soboda Research Centre . As a millennial , what stood out to me the most was the urgent need for credit unions to offer more on-demand services and boost efficiency without losing their human touch . Ethical values still matter , especially to younger generations , but they need to be backed up by a smooth , modern experience . There's also a big opportunity to raise awareness about the cooperative ethos and how this sets credit unions apart . That's something we'll be diving into in a future episode . Thanks so much for listening and I hope you'll join me again next time .