Credit unions in two cities are making a difference to their communities by thinking and working co-operatively. Here’s what they’ve been doing, and what they think the future will hold…
Manchester Credit Union
In the early ’90s, Beswick was one of the areas of greatest social deprivation in the city of Manchester. It was here in 1991 that Manchester Credit Union (MCU) started life as a community-based organisation; in 2007 it became Manchester Credit Union and now covers the entire city, plus surrounding boroughs such as Trafford, Tameside, Bury, Rochdale and High Peak.
It now has 24,000 members, assets of £1m, £6m worth of savings and £6m in loans. Like many other credit unions, it has grown significantly in the past 12 months. Chief executive Christine Moore reports that since October 2017, nearly 1,000 new members have been joining a month.
“There has been a 50% growth in lending and we have doubled our business in the past year,” she says. “I don’t think there is any one reason, but welfare benefit changes have had a real impact and there are now a lot of members in work but on low incomes and zero hours contracts. To cope with the increase we have improved our systems dramatically, and developed our online offer.”
MCU held its first Credit Union Awareness week in October and is part of the new Sound Pound consortium of eight Greater Manchester credit unions. In October 2017 it featured on the BBC’s A Matter Of Life And Debt programme about the work of credit unions.
“Credit unions used to have an image as the ‘poor man’s bank’ but that’s not so much the case now,” says Ms Moore. “The TV programme was really helpful. We were worried it would reinforce a stereotype, but it was much better than that.”
In recent years MCU has seen a huge increase in online applications and that means less face-to-face contact, although that option is still there for those who prefer it. It has 18 staff and two years ago moved its main office into the city centre in a bid to expand its work. There is also outreach in places such as Rochdale.
“All our branches were in deprived areas and we wanted to attract a more diverse membership,” says Ms Moore. “The majority of our members probably still struggle but a lot of others are joining, too, because of the ethical way in which we work.”
In the coming period the credit union is aiming to expand its member base further.
Christine Moore has worked for the credit union for 17 years and was the first member of staff in the days when it had only 100 members.
She believes the Sound Pound network –comprising over 48,000 members and £24m in assets – will be help to grow the city’s credit unions.
“There were a lot of reasons we got together last year and a major one was the fact we had a new Greater Manchester Mayor coming on board who we knew would be supportive,” she explains.
“We are looking at lots of ways to work together collectively on issues such as responses to Universal Credit. The network will also act as one voice with the combined authority that brings. Because of the increase in digital, we are looking at ways to improve our technology, apps and websites.”
Sheffield Credit Union
Sheffield Credit Union covers the Sheffield City Region across South Yorkshire, offering loans from £100 to £10,000. It was established in 2004 in an amalgamation of a number of smaller credit unions to provide members with safe savings products and low-cost affordable loans.
In 2015 it won a Chamber of Commerce Business In The Community award; the following year it merged with Rothersave Credit Union to offer services in Sheffield and Rotherham. The credit union now employs around 16 staff who are supported by a similar number of volunteers, and has around 7,000 active members. It has £3.6m in savings, £2.3m in loans and £5m capital.
Chief executive Jacqueline Hallewell says: “We have relocated to a much more visible position, streamlined our systems, built membership and completely changed the way we do lending.”
A member of the Association of British Credit Unions (Abcul), SCU has developed a lending tool created by Experian and incorporated this into its systems to make decisions. It has developed strong relationships with the third sector on issues such as housing advice, and runs joint projects with the local authority.
Some 75% of the credit union’s business is now done online, but face-to-face contact is still valued as the best contact for some members.
“South Yorkshire is in a low wages pocket generally, where Universal Credit has not been rolled out fully, and we support organisations and individuals because there is a lot of anxiety about it,” says Ms Hallewell. “We continue to help people with budgeting accounts to help them pay rents – that is offered in partnership with housing associations and prevents evictions in many cases. Although our direct funding has stopped, we still work with the council on various projects and offer an employee payroll scheme.”
Although its main current project is supporting the introduction of Universal Credit and looking at how its products and services can support the transition, SCU is also looking at how it can retain members and respond to their needs.
New data protection legislation, which comes into force in May, is another challenge but Ms Hallewell says the overall picture is positive.
“We needed to change to spread the risk and stop the stigmatisation of credit unions as ‘poor people’s banks’,” she said. “We have improved the way we serve our members and diversified, increasing membership and improving the standing of credit unions. We are also starting to introduce more products suitable for people in work and homeowners, beating the banks for rates on loans and making sure our savings products are better. A lot of people want to invest with us because we are not-for-profit.
“By responding more quickly to what customers want, providing products which reward loyalty, and diversifying our work with partners while making sure our members are more financially included, we can ensure we do not lose our social aims while keeping our business growing.”
