Rescheduling of loans, bespoke banking services for cocooners and express lodgements most in demand

Posted on: 06 Jul 2020

Credit union managers believe rescheduling of loans of greatest value to members in the period ahead

 
A new survey of credit union CEOs and managers across the Republic of Ireland has found that the three most in-demand services for credit unions have been the rescheduling of loans, the provision of bespoke services to “cocooning” members, and express lodgements. Connacht had the highest incidence of loan rescheduling requests.  
 
The research undertaken, on behalf of the Irish League of Credit Unions (ILCU) by i-Reach, surveyed credit union CEOs and managers about their operations and services during the Covid-19 pandemic and also their views on what challenges lie ahead in the reopening and recovery period for credit unions and their members.
 
The ILCU represents the majority of credit unions in Ireland with 226 affiliated credit unions in the Republic of Ireland. Over half of all ILCU affiliated credit unions (133) responded to this survey.
 
Credit unions during lockdown – key findings

• According to the survey, the three most in-demand services have been the rescheduling of loans, the provision of bespoke services to “cocooning” members, and express lodgements.

• 62% of credit unions (82% in Connacht) have introduced payment holidays, while 21% have been more flexible on underwriting.

• The lockdown has been difficult for many Irish communities and businesses; this has required credit unions to adapt quickly to changing member demands. Increased remote customer engagement, unsurprisingly, has been a strong feature of Covid-19 services provided by credit unions to members over recent months. Of the services provided by credit unions during Covid-19, online and telephone banking, at 72% and 59% respectively, had the greatest levels of engagement by members.

• The most significant operational challenges for credit unions during Covid-19, according to respondents, have been maintaining social distancing for employees at 55%, followed by setting up staff into separate teams at 53%, and maintaining physical distancing for members at 48%.

Credit unions in the economic reopening period ahead

• 80% of those surveyed believe that rescheduling loan repayments is the measure that can most assist credit union members in the period ahead, followed by community supports (46%) and back-to-business loans (43%). In Munster and Connacht, there was also strong support for working capital loans for members (51% and 48% respectively).

• The biggest challenges facing credit unions themselves during the months ahead were cited to be a lack of borrowing appetite amongst members (74%), operating costs including regulatory levies (68%), and a decline in income leading to viability issues for credit unions (61%).

• When credit union CEOs and managers were asked what measures were most important for the new Government to introduce to underpin the long-term sustainability of the credit union movement, the most dominant responses were changes to the capital reserving structure required of credit unions (87%) and expanding the capacity of credit unions to provide a larger volume of home loans (32%) and business loans (30%).

Commenting on the research findings ILCU President Gerry Thompson noted:
 
“This research provides a welcome snapshot into the work and demands on credit unions, from the perspective of those to the fore in delivering financial services to our members, during Covid-19.
 
“Credit unions throughout the pandemic have strived to ensure continuity of service for the 3.1 million members who use credit union services across the Republic of Ireland. This has included keeping our offices open throughout lockdown; expanding online and remote services; and, providing tailored financial services to those cocooning at home.
 
“Equally, our credit union CEOs and managers have directly experienced the impact of Covid-19 and its economic fall-out on our members, which has included a significant demand for payment holidays for members. Each individual credit union is working with our members on these issues and actively encouraging them to engage with their local credit unions to work through their financial difficulties at this unprecedented time.
 
“From the perspective of the long term viability of credit unions themselves, it is equally clear that Covid-19 and its effects such as a lower appetite for borrowing or the reserving requirements which must be met by credit unions will present challenges in the months ahead.
 
“However, a new Government provides the opportunity for it to now work with the credit union movement to implement constructive policies to safeguard the long-term future of credit unions across the Republic.
 
“In the coming days, the ILCU will publish a comprehensive policy document which sets out the key policy reform measures which the new Government must now introduce to ensure that credit unions, who have long provided a vital financial lifeline to families, communities and businesses, have the capacity to not only continue to do so but to become an even stronger force in community banking in Ireland”.
 
ENDS.
 
Note to editors: The i-Reach survey ran from the 11^th to the 23^rd of June, with 226 Credit Union CEOs and Managers invited to take part. 133 (59%) completed the survey.