Irish credit unions urged to modernise to compete with banks

13 Oct 2011

Irish credit unions, which are to receive a €1bn bailout from the Government, have been urged to pool their resources and create a centralised system capable of issuing debit cards and providing online services if they want to survive and compete with banks.

An interim report of a commission examining Irish credit unions is due out tomorrow. Earlier in the week it emerged that the credit unions were to be recapitalised for between €500m and €1bn as a result of some reckless lending to property developers during the boom years.

Nevertheless, credit unions are considered a pillar of the local economy and community and their survival is vital.

IT modernisation is a testy subject in the Irish credit union world. An early attempt at investing jointly in a single IT system called ISIS crashed and burned a decade ago and is considered one of the great IT disasters in Ireland, costing the credit unions €34.4m.

An Irish technology company that is advising the Association of British Credit Unions on the delivery of an IT platform that will enable shared banking and payment card services for credit unions in the UK says Irish credit unions will need to go in the same direction if they want to be relevant to modern consumers.

“Credit unions in the UK are keen to be seen as alternatives to the high street banks and to do so it means providing flexible financial services outside of opening hours via payment cards, current accounts and internet services,” said BayBerry’s Paul Kennedy.

Business and consulting firm Bayberry earlier this year delivered a payments platform to the Department of Social Protection called Payments and Reconciliation Platform (PARP), which will automate the reconciliation of payments from the department and its agencies, including the Bank of Ireland and An Post.

In the UK, BayBerry was selected by the Association of British Credit Unions to deploy its back-office project, which will enable services, including a central savings, loan and accounting platform, an interface to national and international payment and EFT networks, shared branching, internet banking, credit control and the issuance and management of prepaid cards.

At a later stage, the project will deliver contact centre services for credit union members, marketing support and risk management support.

“The UK credit unions are looking to set up a central company and they’re going to operate services like cards centrally on behalf of all credit unions and allow their customers to also plug into the post office network to do credit union business,” Kennedy explained.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years