VitalSpark: Coalition Blog

Posted: 31 March 2010, in Blog

The Chancellor has announced that the government will force banks to offer everyone access to a basic bank account. But, bankers responded by pointing out that over 8m of these accounts already exist and efforts are in place to address the needs of 1.75m people still without an account. Some bankers argued that anyone who wants one of these accounts can already get one. So was this just a bit of spin?

Financial inclusion is complex and is not simply realised with the provision of a service if people are poor and thoroughly excluded from mainstream society. There are major issues connected to work, education and personal responsibility as well as fair financial services that need to be addressed.

So what is the social enterprise solution?

First of all, it should be morally unacceptable for anyone working in the public sector and the social economy not to have an active Credit Union account. CU membership should be a badge of honour especially if people earn their living from providing services for the public good, promoting civil society and/or trying to tackle exclusion in its myriad forms. It’s called putting your own money where your mouth is.

However, although some CUs are excellent, too many remain marginal to the communities they purport to serve. A financial service needs to be able to compete and ‘moral suasion’ is useless if services are unable to meet modern consumer and technological demands.  The size of the CU and the range of services offered – including bank accounts matter.

So, social entrepreneurs need to get more involved as active members to provide capital, income, leadership and a better business focus to the credit union sector. Inevitably, the issues of merger and economies of scale will surface. Some CUs have merged but many boards still resist this. Directors need to recognize the needs of (non) members and communities and the competitive pressures they face. By remaining small, CUs are guaranteeing their insignificance and Scotland has many people who could use competitive credit union services. The downfall of local unsustainable retail co-ops offers a perfect example of what not to do when faced with ‘change’.

Finally, credit union leaders should think big. The Labour Party has just announced manifesto plans for the revitalisation of the post office network and the creation of a Post Office Bank with partnerships with credit unions as part of the picture. This still requires credit union managers and leaders to make these partnerships work by becoming more competitive and efficient in their service delivery. If CUs can develop profitable business partnerships with local post offices a step change in their business success would be assured.