Credit unions unite to redefine sector’s future

18th December 2018

Five New Zealand credit unions have announced the signing of a conditional Heads of Agreement to merge, after their boards recommended a transfer of engagements into one single credit union.

The unification of NZCU South, NZCU Central, NZCU Steelsands, Aotearoa Credit Union and NZCU Baywide under one brand will create scale efficiencies that will allow the merged credit union to better serve its customers. It will have over $600M in assets, serve around 75,000 New Zealand member owners and almost 300 staff.

Upon completion of the transfer of engagements, the merged credit union will be positioned as a strong competitive alternative to mainstream banking in New Zealand.

Iain Taylor, Chair of NZCU Baywide and spokesperson of the merged entity, says the announcement is a significant development that is focused on creating a Credit Union for the future, and acknowledges the maturity and shared focus of his fellow credit unions in reaching a milestone decision.

“We have a collective vision to continue to develop a strong, competitive and sustainable sector that delivers on its purpose of ‘people helping people’ across New Zealand.

“The scale of the larger credit union will deliver efficiencies, better pricing for savings and lending rates, and reach across the combined nationwide branch network and online. It will bring more potential to invest in technology to improve services and wider access to capital for the benefit of member owners.

“Scale does matter in an increasingly competitive financial sector and we all believe our united approach will bring a competitive banking alternative that is 100% customer and Kiwi owned.

“The time has come for our sector to look to the future of our unique financial solutions for all New Zealanders. A transfer of engagements to one single entity offers scale, efficiencies, broader reach to member owners across the country and resources to grow our digital and customer centric approach to delivering financial services,” he says.

The proposed unification comes in the same year as all five launching a new core banking system. This modern operational platform is already in place and is on a par with the technology used by leading Tier One banks and will give the merged credit union greater flexibility to grow its customer base, as well as add many more services and systems in the future.

“This ensures we are able to deliver future digital banking services by leveraging the common IT platform. This is something that is not traditionally available on day one when entities merge. It’s an exciting opportunity for all,” Taylor adds.

While the formal process of obtaining member approval remains, the Chairs of the respective credit unions are confident each membership will appreciate the benefits available to them.

“This is about securing a sustainable future for all our membership bases. The benefits are significant for our member owners to enjoy better products, pricing and a sustainable financial service provider in the future.”

Taylor adds the formation of a larger credit union will increase opportunities to deliver improved products and services, and bring more choice:

“We all share a similar strategic focus and commitment to the co-operative principles underpinning the provision of important financial services to members. This step is very significant and will change the landscape of this small but important sector of New Zealand financial services. It’s going to be an exciting challenge to deliver,” he adds.

Credit Unions have been an important part of the financial services sector in New Zealand for over 50 years and are the original person-to-person financial service providers.

The merged credit union will combine services and specialise in NZ home loans, personal loans, savings and investments, everyday transaction accounts and insurance for vehicles, loan protection, funeral protection, home and contents.

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