World Council's COVID-19 Committee Confronts CU Challenges Ahead

The anticipated suspension of loan payment relief and government aid programs could put substantial pressure on credit unions across the globe in 2021, according to a World Council of Credit Unions committee that convened last week for the first time.

The COVID-19 Response Committee, which met Aug. 27, was focused on identifying coronavirus-era challenges and how best to manage them. “I will do my best to help the global credit union movement overcome COVID-19,” said committee chair Younsik Kim, a World Council board director and CEO of the National Credit Union Federation of Korea.

After the inaugural meeting, the committee offered a glimpse at how the novel coronavirus was affecting credit unions in countries and regions around the world.

In Canada, loan losses, while high, had not reached a level credit unions had anticipated, according to Martha Durdin, CEO of the Canadian Credit Union Association. CUNA Chief Engagement Officer Greg Michlig reported that loan levels in the U.S. were strong.

“But both Durdin and Michlig noted the earlier theme — that those dynamics will likely change in 2021, once government assistance programs end,” WOCCU reported.

Michlig said the spike in COVID-19 era digital services in the U.S. might be permanent, reflecting the broad effort by consumers to reduce the spread of the virus. WOCCU said “about 66% of normal credit union transactions have moved from in-person to digital in America, which could stay at that level going forward.”

On Sept. 17, the COVID-19 Response Committee is expected to hold the first in a series of bimonthly webinars. Presentations are set to include a global perspective on the pandemic, and a glimpse at present and future international work tied to the virus. The committee’s next meeting is scheduled for Oct. 14.

Two of the largest credit union markets in Europe — Poland and Ireland — reported stable conditions, according to WOCCU. “In Poland, government regulators have provided timely assistance to credit unions, but challenges remain — including low interest rate levels and a need for greater digital transformation to serve members remotely,” the council said.

In Latin America, Adrian Rodriguez, CEO of the Federation of Savings and Credit Cooperatives of Costa Rica, said credit unions in countries with strong regulatory supervision are faring better than those in markets with less oversight.

“While liquidity is high across Latin America currently, Rodriguez foresees a potential for a liquidity crisis next year, which could cause some smaller credit unions to close their doors,” the council reported.