Credit unions must make a difference for membership

A former president of one of the island’s largest credit unions is calling for those financial institutions to help their membership create wealth.

Maxine McClean, who once served as president and vice-president of the City of Bridgetown Cooperative Credit Union (COB), is suggesting that credit unions move to “stage two”.

Delivering the Astor B Watts DLP lunchtime lecture today at the George Street Auditorium, the former Foreign Affairs Minister said customers were practically paying commercial banks to keep their money.

She said despite low-interest rates and increased bank fees, the majority of Barbadians still kept their money in commercial banks with credit unions accounting for less than 12 per cent of domestic savings.

“If we say to people to take some of the money you have in the commercial banks and put it in an investment entity where we apply the principal accrual, we can immediately mobilize significant sums of money which can form the capital base for an investment strategy aimed at making a difference in the lives of average Barbadians,” McClean said.

She said in 2018 alone, COB mobilized over $419 million in savings while the Barbados Public Workers’ Co-Operative Credit Union, the country’s largest credit union, mobilized over $1 billion during the same period.

McClean called for credit unions to form other entities, which would be used to allow members to earn additional money.

“My recommendation is that credit unions need to move to what I call stage two of their development and that is to use the membership, more so than the institution itself, as a form of leverage, to create another institution or to utilize existing institutions related to the credit union movement to ensure that they are able to address the opportunities for wealth creation,” McClean said.

“So what we can do is to take that money that belongs to us to invest in an entity which would allow us to make life better for ourselves and certainly for young persons,” McClean said.

She however explained that while there had been suggestions that members move all their monies to their respective credit unions, that could prove to be problematic.

“If there is high liquidity in the banking system and you were to move your money to the credit union in the traditional form of deposits, what that would create is excess liquidity in the credit union system and thereby affect your interest rates both on savings and loans,” McClean explained.