Navigating the Future of Financial Inclusion: Scottish Credit Unions at a Strategic Crossroads
The recent Cross Parliamentary Group for Credit Unions meeting (10/09/25) at the Scottish Parliament highlighted both the critical importance of credit unions in Scotland's financial inclusion landscape and the complex challenges they face in adapting to an evolving economic environment. With Stephen Kerr MSP as convenor and contributions from sector leaders including David Ross from Glasgow Credit Union , the discussions revealed fundamental questions about the future direction of the movement. (My thanks to Robbie Mochrie for the invite)
Scotland presents a unique context for financial inclusion initiatives, facing the highest proportion of unbanked individuals across the UK whilst simultaneously grappling with elevated levels of unemployment and disability. Perhaps most significantly, many communities retain a reliance on cash transactions, creating a disconnect with the increasingly digital trajectory of mainstream financial services. This reality positions credit unions as essential infrastructure for financial inclusion, yet it also presents strategic dilemmas about how best to serve both current members and future generations.
The Vision and Strategy Debate
Sharon MacPherson's presentation of the Financial Inclusion for Scotland Strategy 2024-26 provided important context for understanding how credit unions fit within the broader ecosystem of financial inclusion organisations. The strategy brings together diverse partners including Social Investment Scotland, FinTech Scotland, StepChange Debt Charity, and Responsible Finance, amongst others. However, this collaborative approach also raises questions about how credit unions differentiate their offering and avoid duplication of effort across the sector.
The meeting revealed a wide range of perspectives across credit union representatives about their organisations' primary purpose and future direction. Some advocate for maintaining the traditional focus on serving the most financially vulnerable populations, emphasising the sector's roots in community mutual aid and financial inclusion for those excluded from mainstream banking. Others argue for a more expansive vision that embraces technological innovation and broader market appeal to ensure long-term sustainability and relevance.
The Innovation Imperative
Central to these discussions is the question of how Scottish credit unions can become more innovative, particularly in engaging younger potential members who have grown up with digital-first banking expectations. Credit unions must simultaneously serve populations who may be digitally excluded while developing the technological capabilities necessary to attract and retain members comfortable with app-based banking, contactless payments, and online financial management tools.
The reference to digital projects and innovation initiatives suggests that some credit unions are already grappling with this transition. However, the pace and scale of technological adoption vary significantly across the sector, creating potential disparities in service quality and member experience. For credit unions serving predominantly older or digitally excluded populations, the investment required for digital transformation must be balanced against the immediate needs of current members who may prefer traditional service delivery methods.
Unlocking Dormant Assets Funding
Perhaps one of the most tangible opportunities for Scottish credit unions lies in better utilising the Dormant Assets Fund, which operates at the UK level but remains underutilised by Scottish organisations. The fund represents a significant resource for driving innovation and expansion within the credit union sector, yet there appears to be scope for Scottish credit unions to be more strategic and collaborative in accessing these resources.
The challenge lies partly in the competitive landscape for dormant assets funding, where credit unions must articulate their unique value proposition alongside other financial inclusion organisations. Success requires demonstrating not just need, but also the capability to deliver measurable impact and innovation. This may necessitate stronger partnerships between credit unions and other organisations within the financial inclusion ecosystem, potentially including some of the strategic partners engaged in the Financial Innovation Scotland organisation.
Balancing Collaboration and Competition
The presence of multiple financial inclusion organisations within the strategy framework creates both opportunities and tensions. Organisations like Fair4All Finance, Responsible Finance, and various FinTech initiatives may have overlapping objectives with credit unions, but different approaches to achieving financial inclusion goals. Credit unions must navigate these relationships carefully, identifying where collaboration adds value whilst maintaining their distinct community-focused identity.
The debate around alignment between credit unions and Financial Inclusion Scotland reflects broader questions about sector coordination and strategic focus. Whilst partnership approaches can leverage collective resources and expertise, they also risk diluting the specific strengths that credit unions bring to financial inclusion work, particularly their deep community roots and member ownership model.
I have witnessed first-hand some of the opportunities presented through working with FinTech Scotland , where credit unions can facilitate the process of change by working with Fintech companies such as NestEgg.ai . There is a genuine desire to explore how Credit Unions can continue to work together to address shared problems.
Looking Forward
The discussions at the Cross Parliamentary Group meeting reflect credit unions at a strategic inflexion point. The sector's traditional strengths in serving financially excluded populations remain critically important, particularly given Scotland's demographic challenges. However, long-term sustainability requires adaptation to changing member expectations and technological capabilities.
Success will likely require credit unions to develop more sophisticated approaches to segmented service delivery, offering traditional face-to-face and cash-based services alongside digital platforms that can attract younger members. This may involve partnerships with FinTech organisations or investment in collaborative technology platforms that individual credit unions might struggle to develop independently.
The dormant assets funding opportunity provides a potential catalyst for this transformation, but only if Scottish credit unions can develop more coordinated and ambitious approaches to accessing these resources. This might involve sector-wide initiatives that demonstrate collective impact whilst allowing individual credit unions to maintain their community focus.
Ultimately, the future of Scottish credit unions depends on their ability to maintain their core mission of financial inclusion whilst adapting to serve the needs of evolving communities. The conversations at the Cross-Parliamentary Group suggest there is both recognition of these challenges and commitment to addressing them collaboratively. The question now is whether the sector can translate these discussions into concrete action that delivers meaningful change for the communities credit unions serve.
Crossroads
Cash flows through weathered fingers, branches built on trust and time, serving souls the system spurned, steadfast guardians of the vulnerable.
Community corners where conversations count, face-to-face foundations flourishing, members matter more than margins, mutual aid anchors all actions.
Digital divide deepens daily, younger voices yearn for yield, innovation's imperative intensifies, transformation tugs at tradition.
Scotland stands at the summit, unbanked numbers nudge upward, while technology's tide turns, pulling people toward progress.
Dormant dollars demand deployment, funding flows to future-focused partnerships promising potential, and collaboration calls credit unions.
Evolution's edge approaches, adapt or anchor? Bridges between old and bold, serving all souls seeking sanctuary.