Estonia's small, but growing, credit union movement is looking to partner with Virginia's credit unions on a technology infrastructure project designed to offer essential services and boost membership among the Baltic nation's 18 credit unions.
The Virginia League and credit unions throughout the Commonwealth hosted two representatives from a credit union serving Estonia's Tartu University and its surrounding community. Tartu Estonian Credit Union is a member of the Estonian Union of Credit Cooperatives which is partnered with the Virginia Credit Union league through World Council of Credit Unions' International Partnership Program.
In a meeting with members of the Virginia Credit Union League Board of Directors and the League's management team, Andro Roos, CEO of the Tartu University credit union, and Erki Pisuke, a member of the credit union's board of directors, offered an overview of Estonian credit unions' need for the technology to offer members online banking, card payment processing, ATM transactions and checking.
"Our struggle is competing with commercial banks," said Roos. "[Estonians] depend heavily on electronic access to their accounts, payment systems and on ATM access. We can grow to become competitive with commercial banks, but I believe that credit unions in Estonia will fade in as little as five years if we cannot develop a modern banking infrastructure that allows Estonian credit unions to offer more modern banking services."
Roos noted that Estonian credit unions are hobbled by technology that trails competitors by at least 15 years, with the nation's banking system being dominated by large Scandinavian banks.
Estonian credit unions' goal is to grow market share to 5% and 75,000 members in the next five years, said Roos, which will only be possible with a modern information technology infrastructure. At present, Estonian's credit unions hold $16 million (U.S. dollars) in shares, which is only one-tenth of 1% of the nation's deposits. Membership is about 3,000.
However, Erki Pisuke, said the hope is to model Estonian credit unions' growth on that of the cooperatives in neighboring Lithuania, which now number 59, boast more than 80,000 members and hold some $270 million (U.S. dollars) in assets.
"This first year of our partnership was really about sharing information and assessing needs," said Virginia Credit Union League President Rick Pillow. "We know well the necessity of offering products and services consumers consider essential, and the one great hurdle that we all see in Estonia is the lack of an information and payments system that would provide these credit unions with the technology platform to truly compete with banks."
During the coming months, the Virginia League and others will be evaluating the Estonian technology proposal, offering guidance on developing the system to manage today's needs and allow for future growth and adaptability.
"The leadership in the Estonian movement sees the opportunity the nation's credit cooperatives have in reaching consumers, but they also recognize the urgency of being competitive in the marketplace," said Juri Valdov, retired CEO of Northwest Federal Credit Union, who leads the League's Partnership Committee. "There's real passion in the Estonian movement, as evidenced by the progress we've seen during the past year. We're seeing a movement that's matured to the point that it's ready and willing to take that next step."
The Virginia League has been working closely with the Estonian movement on other key projects, including legislative and regulatory issues such as access to share insurance to protect deposits and a recognized chartering authority.
During their nine-day visit to the U.S., Roos and Pisuke also had the opportunity to visit credit unions in Northern Virginia, Lynchburg, Richmond and Charlottesville to view their operations and discuss specific product and service offerings.
Deposit and member growth has been a key area of concern and many of the meetings with individual credit unions focused on marketing issues. The Credit Union Marketing Council of Virginia also spent a half day with the representatives, offering marketing strategies and thoughts on developing marketing campaigns.
Virginia's credit unions also hosted Estonian delegations in April 2008, which marked the official signing of the partnership, and in May 2009. A delegation of Virginia League and credit union officials visited Estonia in August 2008.
Estonia has a proud credit union history, with the first financial cooperatives having been founded in 1902, pre-dating the American movement. At its height in 1939, the Estonian movement boasted 184 financial cooperatives and had a 52% market share. After the Soviets occupied the nation in 1940, credit unions were abolished. During Perestroika, credit unions were again legalized, and the first new Estonian credit union was formed in 1990.
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