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Credit unions to finally take on banks with new current account

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RTÉ presenter Mary Kennedy at the launch of the new credit union current account yesterday. PHOTO: JULIEN BEHAL

RTÉ presenter Mary Kennedy at the launch of the new credit union current account yesterday. PHOTO: JULIEN BEHAL

RTÉ presenter Mary Kennedy at the launch of the new credit union current account yesterday. PHOTO: JULIEN BEHAL

Credit unions are to finally challenge the banks with the launch of current accounts.

The move has been years in the making as the sector has struggled to win approval from regulators for its attempts to offer consumers an alternative to the banks.

Now 30 of the largest credit unions have launched a new full-service current account.

This will mean they will be able to compete with banks for day-to-day banking services.

Approved by the Central Bank, the new move will see the lenders offering a Mastercard debit card, free point-of-sale and contactless payments, free standing orders and debit processing and mobile and internet banking.

There will be a monthly fee of €4. There will also be an overdraft facility. This is the first time credit unions have offered overdrafts.

An app is to be rolled out, something that has become standard for many people who have a current account.

Some credit unions have debit cards and limited current accounts, but the new move represents the first time they have come together to offer a Central Bank-approved comprehensive current account.

Although the new offering is not cheaper than the current accounts offered by banks, it is thought that the high levels of loyalty generated by credit unions will see many members deciding to do all their day-to-day banking with them.

Others who are disgusted by the activities of the mainstream banks since they were bailed out are likely to sign up.

Among the 30 credit unions are some of the largest in the country including St Canice's in Kilkenny, Drogheda, and Progressive in North Dublin. Industrial credit unions include Savvi, which has large numbers of ESB workers in it, St Paul's Garda Credit Union, and Health Services CU.

The foray into the wider banking sector by credit unions has long been mooted but has hit a number of stumbling blocks up to now.

Three years ago the Central Bank effectively blocked the launch of an alternative to bank current accounts by 11 credit unions, over fears the product did not meet all of its regulatory requirements.

Now the market for current accounts is intensely competitive with low-cost offerings from fintechs Revolut and N26 snapping up thousands of younger customers.

Credit unions have set up Creditunion.ie to fund the development of the new current account.

CEO of Currentaccount.ie Seamus Newcombe said the launch of a current account was an important milestone in the development of the credit union sector.

Daragh Cassidy, of price comparison website Bonkers.ie, said the new account offers little new and its pricing is not overly competitive.

"In fact, depending on how you use your current account, there are cheaper alternatives from the likes of KBC and Permanent TSB already. And in terms of online features, N26 and Revolut offer far more than any Irish bank or the credit union can at present."

But he said the charging structure for the credit union account is simple and straightforward and it will be clear to customers what they will have to pay each quarter.

Irish Independent