WASHINGTON, D.C. — The worldwide economic crisis of the past two years may have changed the playing field on which financial institutions operate, but the global credit union movement still faces many of the same challenges that it did before. However, many of those challenges require greater urgency in response, according to discussions last week among World Council of Credit Unions (WOCCU) G-10 meeting participants.
The WOCCU G-10, comprised of the world's 10 largest credit union systems, meets annually to examine trends and conditions affecting financial services in general and credit unions in particular. This year's meeting on March 3-4 was held at the close of Credit Union National Association's Governmental Affairs Conference and was the first G-10 meeting to be held in Washington, D.C.
"WOCCU's G-10 is a credit union movement ‘think tank' designed to bring the largest players face to face with the most critical issues," said WOCCU Chair Barry Jolette, president and CEO of San Mateo Credit Union in Redwood City, Calif. "As credit unions, we have some challenges ahead of us, but we also have some opportunities to better serve our members."
Participants identified five "mega trends" currently affecting credit unions, as well as possible approaches and resolutions to meet the challenges. The five trends are:
1) A greater need for urbanization: In many countries, credit unions wield their greatest influence in rural areas providing services to the poor. The United Nations predicts that within 40 years 92% of the world's population will occupy urban areas, meaning credit unions will need to strengthen their urban presence in order for the movement to continue growing.
2) An increasing microfinance malaise: Despite good intentions, many microfinance providers, specifically microlenders, are finding their methodology questioned as to whether loans will provide the greatest benefit to the developing world. With their emphasis on savings programs, credit unions have demonstrated greater efficacy in addressing need, and more concentrated efforts must be made to inform and educate the public to the value that credit unions offer.
3) An uptick in transactional mobility: WOCCU has made great strides in using portable technology initiatives to reach the rural poor in Mexico and Kenya, with additional programs under development in other countries. Security and privacy issues are still a concern for many, so steps must be taken to help address those concerns as technology usage grows. As mobility grows in usage, credit unions need to consider what role, if any, their branches play the future.
4) A push for membership growth: Despite challenges to credit unions in many countries, membership worldwide continues to grow, but penetration among the 20-24 and 30-34 age groups is among the lowest. Increased effort to reach this demographic, which exhibits high levels of interest in cooperative enterprise, is key to the movement's future growth.
5) Fostering an emerging middle class: Countries with strong middle classes gain political and economic stability faster than those without, and credit unions have been especially successfully in helping foster middle-class growth. Credit unions also have benefitted from the growth of the middle class, pointing to a need to increase efforts to support this growth not only for the benefit of credit unions, but also of individuals, families, communities and countries worldwide.
"Credit unions can be extremely proud of their performance during the worst of the financial crisis, but that doesn't mean the challenges are over," said Pete Crear, WOCCU president and CEO. "We have a lot of work ahead of us, but credit unions' high levels of consumer satisfaction, greater capitalization levels and other advantages inherent to the cooperative model mean that we are well-positioned to take advantage of current opportunities and re-invent ourselves to meet evolving consumer finance demands."
In addition to Crear and Jolette, G-10 participants included: Mark Degotardi, Abacus Australian Mutuals; Garth Manness and David Phillips, Credit Union Central of Canada; Yvonne Ridguard Harris and Ralph Wharton, Caribbean Confederation of Credit Unions; Manuel Bolaños Sandoval and Guido Piedra Bermudez, Federación de Cooperativas de Ahorro y Credito de Costa Rica R.L.; George Ototo and Fidelis Kimutai, Kenya Union of Savings & Credit Co-operatives; WOCCU 1st Vice Chair Manuel Rabines Ripalda, Federación Nacional de Cooperativas de Ahorro y Crédito del Perú; WOCCU 2nd Vice Chair Grzegorz Bierecki, National Association of Co-operative Savings & Credit Unions, Poland; Bill Cheney and Harriet May, Credit Union National Association, United States; and WOCCU's Brian Branch, executive vice president and COO, and Dave Grace, senior vice president of association services.
Representatives from the Irish League of Credit Unions and Confederação Interestadual das Cooperativas Ligadas ao SICREDI in Brazil were unable to attend. Mark Sievewright, corporate vice president of strategic marketing for Fiserv, Inc., once again moderated the meeting.
World Council of Credit Unions is the global trade association and development agency for credit unions. World Council promotes the sustainable development of credit unions and other financial cooperatives around the world to empower people through access to high quality and affordable financial services. World Council advocates on behalf of the global credit union system before international organizations and works with national governments to improve legislation and regulation. Its technical assistance programs introduce new tools and technologies to strengthen credit unions' financial performance and increase their outreach.
World Council has implemented more than 290 technical assistance programs in 71 countries. Worldwide, 56,000 credit unions in 101 countries serve 200 million people. Learn more about World Council's impact around the world at www.woccu.org.