Capital Credit Union eyes ‘enormous scope’ for growth

Picture: Justin Spittle
Picture: Justin Spittle
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EDINBURGH’S Capital Credit Union is gearing up for major expansion that will extend its reach as far north as Angus, adding hundreds of thousands of potential new customers to its catchment area.

Scotland’s third-largest ­credit union with assets of £26 million, Capital’s heartland covers the five local authorities of Edinburgh, the Lothians and the Borders. It is extending into Angus, Clackmannanshire, Falkirk and Fife, where it will officially launch its services in September. The move follows an approach last year by Angus Credit Union, which was looking to merge with a larger institution to strengthen its financial base.

Capital chief executive Marlene Shiels said the other local authority areas had to be added to the credit union’s remit as part of the deal.

Shiels said the expansion will take the population covered by Capital from roughly 900,000 to 1.4 million people. “The scope is enormous,” she said. “We are very much looking at a growth strategy.”

She said this expansion will not come at the expense of existing credit unions. Capital has had informal discussions with several local institutions to its north and will not market in areas that are well-served. However, Shiels said that the combined membership of all credit unions in the four new authority areas comes to just roughly 10,000 people. “There is a lot of scope to work with there without threatening a small, successful local credit union,” she said. “What we have said to them is that we are not coming as a threat – we want to work with you.”

Shiels believes Capital can ultimately reach par with Glasgow Credit Union, Scotland’s largest with 36,000 members and assets of more than £100m. Capital has 22,000 members, including 4,500 who would otherwise be “un-banked” – individuals whose income is so low that they struggle to afford formal financial services.

The Edinburgh credit union began recruiting un-banked members in 2008 as part of the three-year Growth Fund initiative backed by the ­Department for Work & Pensions. Capital had about 2,000 previously un-banked members by the end of that programme, and has continued working actively in this area.

With just 18 staff and an onus to keep running costs low, Capital will not rely on additional branches as part of its expansion. Rather, it will extend its partnerships with churches and schools, where trained volunteers provide services to the local community.­ “We are too small to have a physical presence in every town,” Shiels said. “That would be too expensive for us.”

The new regions are also covered by Capital’s roving relationship officer, who works as a kind of “pop-up shop” for the credit union. The system is based on Capital’s investment in back-end systems to create a “remote” organisation.

The £3m IT platform was put in place two years ago through a joint project with Scotwest Credit Union. Backed by grants and loans from the Scottish Investment Fund, Capital and Scotwest became the first British credit unions to host a tier one banking platform.

“The systems that we had couldn’t keep up with what we wanted to be able to offer our members,” Shiels said. “We now have all the features of a banking platform in terms of security, but the second and more important thing was to put our members in charge of their accounts through internet banking.”