Credit unions target young adults with €2bn loan blitz
CREDIT unions have been encouraged to target young adults in a move that could see up to €2bn lent to them to buy cars and fund education.
And people between the ages of 18 and 34 have a high regard for the community-owned lenders.
Almost half of adults under the age of 34 would consider taking out a loan from their credit union, a conference in Dublin hosted by international insurer provider to the sector Cuna Mutual heard. Credit unions are seen by young adults as more understanding than banks.
But the movement needs to speed up the delivery of electronic payments, the conference heard.
Four out of 10 young adults are members of credit unions and half of this group would consider a loan of around €6,300, research conducted for the conference by Behaviour and Attitudes has found.
Most members of credit unions are savers rather than borrowers, a situation that meant many of the locally-owned lenders were struggling to make a profit, the Cuna-sponsored conference was told.
Chief executive of Cuna Mutual Paul Walsh said credit unions were seen by young people as more understanding than banks, easier to deal with and a great place for loans.
“According to recent Behaviour and Attitudes research, 47pc of 18 to 34-year-olds would consider the credit union for their loans, which they mainly need for education, holidays or to buy a car.
The survey commissioned by Cuna found that the majority of young people regard online banking and mobile banking as a prerequisite for joining credit unions.
There are 1.3 million people aged between 18 and 34 in Ireland and this group has unique loan needs.
“While there is less spare cash in Ireland, with discretionary income below 2001 levels, this demographic group has more disposable income as they have less financial pressures,” Mr Walsh said. If half the young adults take a loan from a credit union of around €6,500, it would amount to €2bn.
But younger people tend to question the ability of credit unions delivery electronic payments, he added.
By September, it is expected that 60 credit unions will be offering electronic payments services through a new process put in place by the movement.
And the locally-owned lenders are also about to apply to the Central Bank for approval to offer debit cards.
The combination of electronic payments and the ability to offer debit cards will see credit unions putting it up to the banks by offering an alternative to banks’ current accounts.
There are 390 credit unions across the State with 2.9 million members.