The Abcul conference heard from three credit unions about their work to promote financial inclusion – and how it can lead to more radical social transformation

Representatives of three US credit unions shared their experience of working with high-risk, low-income customers who have been excluded from the financial system.

Speaking at a session of the Association of British Credit Unions (Abcul) conference in Manchester, they shared insights into maintaining a healthy business while serving poorer customers in a way that assists community development.

Armando Martinez is chief executive of Texas Community Federal Credit Union, which serves lower-income residents in a rural community near the border with Mexico. In 1998, the credit union set out to define its role in working with underserved customers.

“We had to decide, do we help them or try to market to a better niche,” he said. “We realised we needed to pay attention to market, to membership, and stay true to our belief in a non-profit, service ethos – that we were helping people.”

Serving low-income clients means financial risk, he added, which is means it is vital the credit union has the financial strength to build capital and satisfy regulators, and to have the resources to create a trained workforce and effective structure.

“We do risk-based pricing and risk-based lending,” said Mr Martinez. “Regulators don’t like it but this is the type of member that we service. More than 60% of our members are lower income, and high risk. But we have generated earnings and capital so we can serve them.”

Source: thenews.coop