Credit unions are more than just financial institutions; they are a unique, member-owned organisations built on the principle of people helping people.
Unlike traditional banks, which prioritise investor profits, credit unions are dedicated to serving their members and the communities in which they operate.
A rich history rooted in community
The concept of credit unions originated in 19th-century Germany, emerging as cooperative financial institutions designed to provide affordable credit to working-class individuals. This revolutionary idea quickly spread across Europe, North America, and Australia, laying the foundation for a global financial force.
Over time, credit unions have evolved significantly, now serving millions worldwide with a comprehensive suite of financial services, including savings, loans, and more. Throughout this evolution, they have steadfastly maintained their core cooperative principles, ensuring members remain at the heart of their operations.
Credit unions in Australia
In Australia, credit unions carved out a vital niche by focusing on short-term personal loans, in contrast to building societies which primarily focused on home lending. At the time, many traditional banks required substantial savings to open an account, leaving some individuals vulnerable to exploitative usury from predatory finance companies and even illegal loan sharks.
These loan sharks were notorious for appearing at workplaces on payday to collect payments, often with exorbitant interest rates. Establishing a credit union offered hardworking Australians a crucial layer of protection, providing a legitimate alternative to these damaging practices.
Numerous examples highlight the empowering role of credit unions in Australia – for example, when traditional banks denied loans to single or separated female teachers, Bank First (then Victoria Teachers Credit Union) stepped in, recognising their financial needs and providing essential support. Similarly, denied credit by traditional banks, Mount Isa’s mine workers took matters into their own hands, establishing what would become Queensland Country Bank, which continues to provide vital financial services to hardworking Queenslanders today.
Credit unions today
Today, Australian credit unions have adapted to the evolving financial landscape, offering a wide array of modern services including online banking, mortgages, superannuation, and investment products.
Just like the major banks, credit unions are covered by the Australian Government’s Financial Claims Scheme (FCS), which provides protection to deposit-holders with all Australian incorporated banks, building societies and credit unions (known as authorised deposit-taking institutions or ADIs) in the unlikely event that one of these financial institutions fails.
While many credit unions have rebranded themselves as ‘mutual banks’, their fundamental mutual model and unwavering commitment to their members and communities remain at the core of their identity. This evolution ensures that customer-owned banks – which includes credit unions, mutual banks and building societies – continue to provide purpose-led banking for all Australians.
To find a credit union that aligns with your values, head to https://findabank.com.au/