Introduction and Objectives of Dissertation

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• Objectives of Dissertation

The overall objective of this dissertation is to look specifically at the strategic impact on Capital Credit Union of the introduction of the Credit Union Current Account (CUCA). Through research carried out with Capital’s existing members, as well as people who have chosen not to join, the author has gained an insight into:

• How existing members view the credit union, what financial services they currently use, and their desires and aspirations for future usage of products and services;
• The awareness, and importantly, the lack of awareness of credit unions, and in particular Capital Credit Union, by people that are not currently members, but who do have the ability to become members.

This research, together with the extensive knowledge of the author, who is employed in a senior position in the Credit Union, has produced the results contained in this dissertation.

This report covers the following areas:

• An overview of the British Credit Union movement and in particular how Capital Credit Union is placed within this movement;
• Research into the growth of other credit unions in other credit union movements that have introduced similar products;
• A set of recommendations on how the organisation might achieve its growth strategy as a result of the introduction of this product.

The report reaches the overall conclusion that the CUCA is a worthwhile investment and will help safeguard the Credit Union and its future through the delivery of more products and services to existing and to new members.

• Background and Description of the Credit Union Current Account

The background to the CUCA is that from 2004 until the end of 2007, nine leading credit unions, including Capital Credit Union, worked with the Association of British Credit Unions Limited (ABCUL) to find a partner to deliver full transaction banking to credit union members. ABCUL is the leading credit union trade association in Britain, which represents over 80% of the members and assets of credit unions.

Through a competitive tendering process in 2006 the Co-operative Bank was awarded the contract to provide the back-office services for the CUCA.  Capital was one of the leading credit unions developing this product and one of the first to pilot the current account.

The CUCA is very similar to a mainstream Current Account. It offers almost all of the same features such as:

• Debit card
• ATM card
• Accessibility to the Link and Visa Networks
• Direct Debits
• Standing Orders
• Bill Payment Services
• Monthly Statements

The most significant difference between the CUCA and a mainstream account is that the CUCA does not offer an overdraft facility.

However, a “line-of-credit” is offered by some Credit Unions, including Capital, which allows for a member to draw down funds from a loan account if they are unable to meet all of their financial commitments at any given time.

• Credit Union Strategy

At the Board strategic planning event in July 2006, the Directors recognised that the CUCA was possibly the most significant product ever developed by the Credit Union. The CUCA was identified as a possible platform for providing more services and products to existing members, as well as a means of attracting new members. From the planning seminar, the Board identified the following key objectives for growth that could be achieved through managing the portfolio and relationship with members. The question, however, was “how can the CUCA play a significant part in the delivery of these objectives”?

Key Objectives identified at the Annual Planning Seminar 2006 were:

• To increase membership;
• To provide basic bank accounts for people currently excluded from mainstream banking due to economic and social circumstances;
• To provide an ethical alternative to mainstream current accounts;
• To meet more of our members’ financial needs;
• To provide accessibility to a wider range of products for people currently suffering from financial exclusion, including savings, loans, insurance and mortgages;
• To attract more young people to Credit Union membership.

This dissertation helps identify how the strategy can be achieved through an assessment of the strengths and weaknesses of the organisation, as well as identifying the business opportunities as a result of introducing the CUCA.

The Credit Union has already stated it will achieve its corporate strategy of growth by adopting two different approaches to its business strategy due to its distinctive marketplace. This distinctiveness and the approach to business strategy will be explained in more detail later in the dissertation.

• Conclusion and Recommendations

The dissertation concludes with a set of recommendations, which, if implemented, would enable Capital Credit Union to achieve its strategy of growth. To enable the Credit Union Current Account to become the platform for growth, it is recommended that the Credit Union approach this under four distinct headings, which are explained fully in Chapter 7. They are:

• People
• Processes
• Systems
• Reputation

The recommendations are backed by both primary and secondary research, and also by academic theory. The conclusions and recommendations have been formulated as a result of taking into consideration the environmental factors that have affected Capital Credit Union and the credit union movement in Britain. Most significant of these factors, which have been identified through the use of a SWOT and PEST Analysis, are government policy, the current economic environment, particularly in Scotland, and the Credit Union’s strategic capability to deliver a greater range of services and products using the CUCA as the platform.