Thousands to switch their accounts from banks to credit unions
THOUSANDS of consumers are expected to ditch their expensive bank accounts and start using credit unions for their day-to-day banking instead.
It follows large numbers of credit unions putting in place electronic payments systems, allowing members to pay bills online and receive wages and pensions electronically into their credit union accounts.
And the next stage in the modernisation of the credit union movement is set to see them use a new debit card to take on the bank current accounts.
As part of the electronic payments move, a pilot project that will allow members to have direct debits paid out of their credit union accounts is to start in November.
A full roll-out of the direct debit service is expected from February, according to Kevin O'Donovan of the Credit Unions Services Organisation for Payments (CUSOP), a group of credit unions that have come together to provide electronic payments for the sector.
Mr O'Donovan said he expected that by the summer of 2015 up to 50,000 people will have closed their current accounts with banks and will do their day-to-day banking through their credit union instead. One in 10 of those with access to electronic payments through their credit union was likely to spurn their bank in favour of the member-owned lenders, he said.
Wexford Credit Union - which is one of the largest in the country with 36,000 members - is set to go live in the next three weeks with electronic payment options for its members.
It joins credit unions in Malahide, Tallaght, Rathfarnham, Dundalk, Sligo, Donegal town and Templemore, that are among 86 that have the facilities to offer payments online. Another 52 are set to go live by the end of this year, with up to 200 expected to be electronically enabled by the end of next year.
Mr O'Donovan said this would represent around half of all credit unions, taking in around two million members.
The expectation is that credit unions will then be able to offer basic bank accounts, loans, savings, car and home insurance, as well as travel and life insurance at lower costs than banks.
Basic bank accounts offered by credit unions will not be free, but are expected to be much cheaper than bank current accounts. Another 58 credit unions are already offering electronic payments through BNP Paribas.