“Strategy for the Movement” inspiring vision and purpose or blind spot ?
Irish credit unionism is struggling, captive of a vision for an Ireland that no longer exists.
Credit unions sprang from a time when the majority of Irish workers were unbanked. A time when meagre weekly wages allowed just a little left over for savings. A time when workers pooled their savings so they could borrow from each other.
Driven a need to improve circumstances, workers grabbed hold of the idea of a people’s bank. In time, hundreds of small community owned financial co-operatives sprang up.
Every parish had its study group, sponsored by the parish priest, as Catholic Ireland responded. Credit Unions were named after Saints, symbolically and subliminally leveraging off peoples trust in the institution of the Church.
During the 70’s and 80’s these little people banks prospered. It was a time of the famous TV address by Charles Haughey, exhorting the nation to tighten its belt as the IMF hammered at the door.
There where no more notches to tighten and hundreds of thousands emigrated. Those that were left bore the burden of high taxation and unemployment. It was a time for credit unionism and it delivered. A generation went to third level college financed by credit union loans. Many managed to survive thanks to their credit union which became the lender of last resort to struggling households.
How times have changed. Today people enjoy far higher disposable incomes, allowing access to credit to buy homes, finance new cars, holidays and other material things. People access credit from a myriad of providers, who offer cheap affordable credit at convenient terms.
The worker generation who borrowed in the 70’s & 80’s are now net savers. Their families have grown up and moved on. The generation who went to college are now solidly middle class along with their parents. They have no more need for credit union loans. They still save though. Credit unionism missed the opportunity to grow with these members who have long since forsaken their credit union.
The credit unionism catch cry of “banking the unbanked” echoes hollowly in a society in which millions have had access to basic banking accounts, mortgages, savings and loans for over a decade.
An entire generation has fuelled its individualism through credit on demand and jumped from Catholicism to Consumerism. Once vibrant local communities have declined as the new generations moved on to the newly constructed conurbations and a commuter lifestyle. Few if any credit unions have opened in these new middle class suburbs.
Modern secular individualistic Ireland has spawned a new phenomenon, the working poor. They have become a new class of underserved. Credit unionism has missed this development too. It and continues to provide chronically poor products and services.
US credit unions responded to their members needs in the early 70’s. Credit unionists fought for changes to laws that provided the catalyst for delivering a broader range of financial services. So too did movements in Australia, Canada and New Zealand. All have greatly expanded their products and services, leveraging off new technologies and rationalistion. They have achieved a credit union scale and scope where today they are vibrant main street alternatives to banks.
How did this happen. They were and are led by visionary leaders. Leaders who grasped the opportunity to position credit unions as a viable banking alternative for millions of ordinary people. These inspired others with a vision of credit unions as the bank for the ordinary citizen, owned by the ordinary citizen and governed by the ordinary citizen. They developed unique community finance credit unions and took on moneylenders. Tens of millions of Americans, Canadians and Australians use their credit unions for almost all of their banking needs.
Such visionary leadership has sadly been missing in Ireland. Irish credit unionism response to Celtic tiger phenomena utterly failed to deliver. Credit Unions missed enormous opportunities to remain relevant in people’s lives. The system is firmly stuck in an autistic discourse that lives in the past and refuses to change despite all the disconfirming information.
The more recent ILCU “Strategy for the Movement” exposed the fault lines and blind spots of Irish credit unionism. It sets out a purposeless vision for the 21st century. It fails the primary test of leadership – crafting a compelling vision and purpose that people are willing to follow.
It restates the credit union organisational form and claims credit unions will “continue to be a trusted provider of member driven financial services”. No explanation is given for what member driven means – it is not spelt out. Neither is "trusted provider".
Is it saying that it will continue to be irrelevant in one half of its business – lending. Or that it will continue for be driven by older retirees who dominate credit union boards pursuing a savers mandate with a complete lack of vision for the future.
Indeed looking closer at the document and it turns out that it is not a credit union strategy at all. It is a set of objectives for positioning the dominance of a trade body and embedding a failed organisational system. It is designed to carefully position the ILCU at the head of a centralist organisational system. It blindly ignores the systemic organisational problems that have held the credit unionism moribund for the past 20 years and will continue to do so.
On the one hand it promotes a US style CUSO model and on the other promotes federalism such as central data management, treasury, marketing, product development, risk management and IT. Giving birth to a federalist structure failed in the past. There is no evidence to suggest efforts will succeed this time out.
The business model grossly misrepresents current structures. For example, ECCU is positioned as a CUSO. Not what it is, a subsidiary of the ILCU. Similarly treasury and other corporate services are reserved for ILCU direct or subsidiary ownership and control. There is little left to credit unions save local marketing and some local services support.
For sure it is a grand generic plan for a credit union movement. But it is based on poor intelligence and assumption which reveals a huge blind spot. It is the blind spot of not having a clear vision and purpose for the future.
