Credit union consolidation is a positive move   

If there is one thing that Barbadians desire, it is stability. With stability, people are better positioned to plan their futures, as sudden movements and changes are significantly diminished.

Stability in a country or economic sector also inspires confidence due to a measure of predictability. It engenders cohesion and allows for improved decision making when addressing matters such as resource allocation and investments.

Credit unions in Barbados have proudly served their members, providing stability even during some of the most turbulent times in recent history. As we battled the pandemic period, for example, average Barbadians placed more of their savings with credit unions than other financial institutions.  They did so as a result of the sector’s stability and the deep personal connections they have with these locally owned and operated financial institutions.

The credit union movement in Barbados has continued its growth trajectory, exceeding the $3 billion asset mark and increasing. But even with the successes that have been achieved, there are headwinds that the sector must confront fearlessly.

The sector’s prominence and growth are reasons why the BCCULL remains laser focused on securing deposit insurance for all credit union savers, just as is the case for depositors in commercial banks. It is an inequality that must be corrected with urgency.

Today, there are 23 credit unions operating in Barbados, many of which are small with assets under $15 million and some with less than even $4 million in assets.  The leadership of these financial cooperatives know their members individually, are aware of their personal circumstances and create solutions that attend to those specific needs.

In the last five to ten years, the regulatory and compliance environment for all financial institutions, including credit unions, has become increasingly complex, onerous, and costly.

As President of the  Barbados Cooperative & Credit Union League Limited (BCCULL), the apex body for credit unions on the island, we have witnessed how the increasing regulations, though necessary to protect the entire financial system, have simply become too costly and burdensome on small institutions that lack the structure, human and capital resources.

In addition, accounting standards such as the IFRS 9 have also had an impact on small financial cooperatives. These institutions also confront the increasing demands of members for more sophisticated products and services such as those offered by large credit unions and other institutions.

Simply put, the environment within which credit unions operate is evolving and members of small institutions must have frank discussions with their leadership about the way forward.

Even without any prodding, some small institutions have assessed their own situations and members have agreed that their futures will be much brighter if they joined forces with other credit unions.

We have seen that shift towards consolidation and BCCULL will facilitate and support such efforts. The power of the movement is not in the number of credit unions on the island, but in the strength and stability of the sector.

Interest in becoming a member of a credit union is not waning. Consolidation of credit unions will not diminish the sector’s role in the local financial architecture. What it will do is ensure that credit unions are more competitive, resilient, and better positioned to meet the service needs of members and the demands of regulators.

As we work together to achieve our goals as a sector, we at the League remain hopeful and excited about the New Year, solidly committed to a bright future for all credit union members.