Home' Connexus : Issue 46 Contents The large banks are also cleaning up in New
Zealand, with the four Australian-owned banks
collectively making about NZD$3.5 billion in proft
there last year, putting them on the list of the most
proftable banks in the world.
Henry Lynch, chief executive of Co-op Money NZ,
which represents 22 fnancial co-operatives with
more than 200,000 members, says it is a stunning
result for the banks during a period of low interest
rates and a restricted appetite for lending.
“It just shows you the margin that is being made,”
The situation is made even more diffcult for credit
unions because New Zealand doesn’t have
the culture of bank scrutiny that leads to change,
"Some of the politicians are concerned in terms
of competition, but mum and dad in the street don't
seem to worry.”
Innovative credit unions aren't giving in. In
Canada, for example, strong online communities
and ambassador programs are using social media
platforms to engage with a younger demographic.
Major Australian credit union CUA is also leading
the way on the marketing front with ad campaigns
that target progressive and aspirational families.
In Britain, some credit unions are even aligning
with the banking sector to ensure they can compete.
In an intriguing recent decision, high-street bank
Barclays handed British credit unions £1 million and
pledged to provide space in its branches for them,
along with the help of expert staff.
It is also giving credit unions free infrastructure
access to Pingit, Barclays’ mobile payments
technology, so they can operate in their communities
without needing to invest in technology.
World Council of Credit Unions president
Brian Branch says some clever strategies are
clearly paying off for customer-owned banking
organisations around the world.
For example, larger credit unions are offering
a full package of products and ser vices so that
customers can satisfy most of their demands with
“Customers are looking for quality and price,
but they also want one place that will provide them
with their home loan, their vehicle loan, their online
accounts and [payments options].
“They want online and mobile ser vices. And they
want to be able to do all those things virtually,” says
Smaller credit unions are highlighting their
community connections and values to reach out to
young adult customers with targeted marketing
campaigns that zero in on the ‘transition decisions’
they are making – including paying for an education,
starting a family and getting a mortgage.
“It’s about tailoring their products,” says Branch.
Britis ban ' l se gain reminder
The near collapse of The Co-operative
Bank in Britain serves as a reminder
to other customer-owned banking
institutions around the world to stay true
to their proven business model, says a
leading author on the sector.
Dr Johnston Birchall, professor of social
policy at the School of Applied Social
Sciences at the University of Stirling, in
Scotland, blames poor governance and
arrogant management for the bank's
dilemma. The co-op posted losses of
£2.5 billion last year and has come under
re for a botched takeover of Britannia
Building Society in 2009.
While the issue has the potential
to tar co-operatives, Birchall says
The Co-operative Bank's problems are
speci c to itself, just as the collapse of
entities such as Enron and the Royal
Bank of Scotland were the result of
"The good news is it's not contagious.
I don't think the loss of The Co-operative
Bank and the enormous loss of its Co-
operative Group are actually indicative of
very much outside the [business]."
Birchall, author of Finance in an Age of
Austerity: the power of customer-owned
banks, accuses the bank of "going for
broke" with the Britannia merger and a
"crazy deal" to buy 600 branches of Lloyds.
"It's not like the governance structure of
any other co-op. It's such an anomaly."
The case study underlines the
importance of customer-owned banks
sticking to proven strategies, rather than
adopting a "distorted business model",
"There is a lesson for all customer-
owned banks. That is, you mustn't
go outside your business model. The
patient accruing of assets and the
patient accruing of members and gradual
expansion is the thing."
Looking more broadly at the customer-
owned banking sector around the world,
Birchall says it is di cult to assess
its overall health, given di erences
from region to region. However, he is
encouraged that European Association
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