LOCAL banking is still very much alive in Scotland despite the closure of Airdrie Savings Bank and Clydesdale’s plans to axe 40 of their branches – and the Association of British Credit Unions Ltd (Abcul) has pointed to the thriving credit union sector as evidence.
These organisations are financial co-operatives which provide savings, loans and a range of other services to their members. They are owned by their users and not external shareholders or investors, and say their emphasis is always on providing the best service to members, instead of having to maximise profits.
Abcul chief executive Mark Lyonette said: “Across Scotland, almost 100 credit unions are providing savings accounts and affordable loans to more than 387,000 people.
“Last year, the sector’s deposits, lending and assets all grew by eight per cent, and Scotland has the fourth highest level of credit union membership in Europe.
“Of course, credit unions must keep pace with what consumers expect from their financial service providers, which increasingly means instant access and control of our money via mobile devices.
“For smaller players like credit unions, the infrastructure to deliver this is often out of reach unless we act together to achieve the required scale. That’s why a number of credit unions in Scotland and across Britain are working co-operatively to develop and deliver the products, services and access channels that modern consumers expect.”
He added: “This way, credit unions can ensure that a competitive, sustainable local banking option is always open to Scottish consumers as part of a healthy, diverse financial services sector.”
Lyonette’s comments came just days after the Lanarkshire-based Airdrie Savings Bank (ASB) announced that it did not have the necessary tools to compete in the modern world, and growing competition in the digital market. It was Britain’s last surviving independent savings bank and had been in business for 182 years.
ASB was founded in 1835 as part of the general “thrift” movement of the day. In 2010, the bank received investments of £1 million from Scottish business leaders such as Sir Brian Souter, Ann Gloag and Sir Tom Farmer to help it expand following the financial meltdown.
Souter said yesterday: “My heart goes out to all the people who are about to lose their jobs. It’s so sad that a bank founded on old-fashioned family values is having to close its doors.
“Along with a number of other Scottish business people, I believed Airdrie Savings Bank had a bright future serving the people of Scotland. Unfortunately, our efforts to encourage the growth of Airdrie Savings Bank were defeated due to the intransigence of the Prudential Regulation Authority (PRA). I believe that credit unions and other small financial businesses are unfortunately facing similar challenges.”
According to figures last year from the Bank of England, there are 99 credit unions in Scotland serving more than 387,000 people, a figure that includes 56,000 junior savers.
Credit union members have savings of £484m and are borrowing £296m, often at lower rates than for the same loan from other lenders.
The Scottish credit union sector’s assets are worth around £562m.
Scotland has the fourth highest level of credit union membership in Europe, after Ireland, Northern Ireland and Poland.
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