Your 'digital Credit Union': How young people are being offered loans through Facebook
Published 29/08/2016 | 02:30
A group of credit unions have come together in a bid to sign up millennials through Facebook.
The move by the 16 credit unions to offer loans through social media is set to be expanded as it has proved so successful.
The institutions are using Facebook to boost their lending by offering fast-approval loans to the tech savvy people in their 20s and 30s.
The initiative counters persistent criticism that credit unions have failed to move with the times, and are increasingly only used by older people.
Overall, credit union lending has fallen to such low levels it was recently described by a group that advises the Minister for Finance as "dismal".
Millennials - those who have reached adulthood since 2000 - are thought to be the least likely to engage with credit unions.
Now credit unions, including those in Tipperary; Dundrum, Co Dublin; Naas, Co Kildare; Tullamore, Co Offaly, and Co Galway, seem to have cracked how to attract much-sought-after millennials.
The 16 credit unions have some 800,000 members between them.
They are now calling their new foray into offering loans to millennials on social media their "digital branches".
Some of the credit unions that were the first to adopt the new approach are seeing digital lending accounting for 10pc of new loans.
Key aspects of the new digital lending involve 30-second qualifying assessments online, and prompt phone calls back from lending officers to those filling out the online forms at appointed times.
The project has been pioneered by the Solutions Centre, a voluntary grouping of credit unions aimed at developing new financial products for consumers in areas including investments, pensions, mortgages and financial protection.
Kevin Johnson of the Solutions Centre explained that credit unions taking part in the new digital loan plan have had to make radical changes to their own rules.
These include getting rid of the criteria that people have to be members of a credit union for three months before they qualify for a loan.
Mr Johnson said that research conducted for the Solutions Centre by iReach indicates that 57pc of people would prefer not to meet a bank or credit union employee when being assessed for a loan. He said strict lending assessments, required by regulators, still apply but much of the process can now be done online.
"The pilot project that was run earlier this year delivered very strong results and there are now 16 credit unions rolling out this service," said Mr Johnson, who is also chief executive of the Credit Union Development Association (CUDA).
Under the successful pilot project, close to half of those who took out a loan had never borrowed from a credit union before.