Crunch time for credit unions, as they bid to avoid fading away
Some big decisions will have to be made by the people who run Irish credit unions in the next two months.
The movement is at a crossroads. Its problems are plentiful, and show little sign of easing.
Credit unions are essentially a one-trick pony - offering loans is the main way they have to earn a crust.
There are now just 335 active credit unions, as mergers are officially encouraged with the aim of creating scale and introducing a more professional approach to the running of them.
But despite the frenzy of mergers, the movement is still in difficulty.
Loan demand continues to collapse. Loans outstanding have fallen from €7bn in 2008, to just €4bn last year, according to the registrar of credit unions, Ann Marie McKernan.
She added that total interest income fell by 40pc, an extraordinary decrease.
There may be membership of almost three million people, but it is largely an ageing one. Credit unions are one of the strongest brands in the country in terms of being trusted by consumers - but younger people are not that interested in them.
High costs, miserable returns from the surplus cash they have, and loan arrears that Ms McKiernan says are "unacceptably high" at 13pc, are other issues that are plaguing the member-owned bodies.
The not-for-profit, largely voluntary, ethos of the credit union movement is its strength - but it is also a weakness.
Accusations that the Central Bank is no fan of credit unions, and does its best to stifle its development, were denied recently by Ms McKiernan.
But the fact is that credit unions, being owned and run separately, cannot harness the collective strength of the movement, as they operate in an atomised way.
That is why the proposals being put to a vote in April, and produced by management guru Eddie Molloy, could transform credit unions. He is proposing a federated system, with a strong central organisation. Funds would be pooled, IT systems streamlined, and a more professional approach put in place in a new central organisation. This would allow new products to be launched.
The aim is to see credit unions develop like former humble farmer co-operatives Kerry and Glanbia, which have been transformed into multinational businesses.
Although some will see the proposals as a betrayal of the founding principles of the movement, credit unions are in a do-or-die situation.
If they do not reform they will wither away. Giving up some local independence to avoid that is probably a small price to pay.
Sunday Indo Business