Credit unions have outperformed banks and building societies over the last year for customer satisfaction and value for money, according to insights from more than 150,000 consumers.
The findings come from a study by Smart Money People, the UK’s most comprehensive financial services review site, in partnership with Fair4All Finance, the not-for-profit financial inclusion organisation, ahead of International Credit Union Day.
The global event has celebrated the history, achievements and social contributions of the credit union movement since 1948. This year’s event takes place on Thursday 17 October.
Smart Money People’s analysis reveals UK credit unions have achieved an average score of 4.91 out of 5 for overall customer satisfaction in the last 12 months, based on independent reviews.
As well as coming out on top for overall satisfaction, credit unions were also voted best on value for money (4.81 out of 5) and had a score of 4.84 out of 5 for customer service.
Fair treatment and strong loan propositions
An overwhelming 97% of credit union customers said they felt fairly treated, above banks (96%) and just behind building societies (98%).
On a product level, 97% of credit union customers felt they understood the details of the products on offer, improving their prospects of identifying a suitable solution for their needs.
Credit unions were also seen as enabling a clear understanding of loan products (98.1%) and scored best for value for money in this product area (4.83 vs. 4.77 for banks and 4.64 for other loan providers).
Growing scale and social contribution
Official Bank of England data on the credit union market shows that loans to members increased by 21% in 2023 to £2.3billion, the largest year-on-year change since records began in 2013.
Credit unions’ income also increased by record levels (28%), reaching £324.3 million, demonstrating the clear consumer demand for providers outside of mainstream banks and lenders. In 2023, total membership to credit unions reached 2.23 million.
A two-year study by Fair4All Finance found that 20.3 million adults are now living in financially vulnerable circumstances. More than one in five people in financially vulnerable circumstances (22%) have had an application for credit declined during the past twelve months. More than one in ten (11%) have increased their reliance on illegal borrowing or loan sharks in the last year, often due to failure to meet stringent entry requirements on mainstream lending and savings products.
The new Labour Government has pledged to double the size of the UK’s co-operative and mutuals sector, in a tacit endorsement of their positive social contribution and integral role in an inclusive financial services market. Currently there are over 9,000 mutual and co-operatives in the UK.
How credit unions stand out
When asked about their experience of credit unions, customers frequently highlighted the friendly and efficient service they receive. Many customers also praise the speed of assistance and the willingness of staff to go the extra mile.
When taking out loans or savings products, many customers highlight the simple application process, ease of managing their account, as well as the competitive loan terms.
Word of mouth continues to be one of the most successful tools to increase credit union membership and families all holding accounts with credit unions over significant periods of time is testament to this. Customers emphasise how their local credit union has helped them and their families through difficult times, both formally with the services they offer and informally with the guidance and reassurance they provide on financial resilience.
The result of positive experiences with credit unions is greater trust, continued loyalty and long-term membership. Customers expressed deep satisfaction with the services they have been provided with, and commended the consistent, high-quality service they can expect.
Diane Burridge, Director of Innovation & Development at Fair4All Finance, comments: “These findings showcase the overwhelmingly positive experiences of credit union customers. In many cases, customers are more likely to feel heard, listened to and provided with affordable products when saving or borrowing with a credit union.
“Credit unions bring financial services into the heart of local communities, and often offer a more personalised service to members at a time when high street banking facilities are increasingly endangered.
“Credit unions provide a safe and reliable place to save money as well as a place to access affordable loans. The UK needs a strong combination of credit unions, banks and building societies working in partnership to better respond to customers’ varied needs so that no-one is locked out or overlooked.
“For anyone with money worries or seeking a better way to manage their money, International Credit Union Day is a great reason to look up your local credit union and consider becoming a member.”
Jacqueline Dewey, CEO at Smart Money People, said, “Our data demonstrates the important role that Credit Unions play in the market. At the heart of communities, they’re delivering products that meet their customers’ needs, and service levels that are amongst the best in the industry as well as ensuring financial inclusivity.
“At Smart Money People we’ve seen significant growth in the number of reviews being left for Credit Unions in recent years. Customers really value the personal service, the encouragement to develop good financial habits, and the support offered which in many cases extends beyond the products offered. They are a vital part of the overall financial landscape and critical to the communities that they serve.”
