Journal of Co-operative Studies, 56(2), 23-34
Understanding business models in the context of Irish credit union transformation
| Open access |  | Peer reviewed/Research article | Published online: June 2023 |
Understanding business models in the context of Irish credit union transformation
Nick Money, Olive McCarthy
, Paul A. Jones, and Noreen Byrne
Vol 56 No 2, pp. 23-34
https://doi.org/10.61869/FHFM1239
How to cite this article: Money, N., McCarthy, O., Jones, P.A., & Byrne, N. (2023). Understanding business models in the context of Irish credit union transformation. Journal of Co- operative Studies, 56(2), 23-34. https://doi.org/10.61869/FHFM1239
Abstract
Credit unions in the Republic of Ireland (Ireland) are important community institutions. Over the last decade, however, Irish regulators and government have commented on a strategically critical financial problem for the sector and called for a change to the ‘business model’, but there is no statement of what this business model means. This paper understands a business model as the way an organisation creates and delivers value for its customers and itself, so whether articulated or not, it is plainly vital to organisational success. This paper reviews credit union financial performance, engages with the literature on business models, conceptually and as applied to banking, co-operatives and credit unions. It then considers how it could support the transformation needed for the sector’s successful development. The paper connects the credit unions’ enduring financial performance problem with the problem of value creation for their members, concluding that there are business model frameworks that could help credit unions restate their proposition, while incorporating their social purpose. However, there is no consensus among academics or practitioners about what the Irish credit union business model is and therefore what should change. A further knowledge gap is identified in relation to credit unions’ own perspectives on the relevance of business models and change.
PDF
References
Ayadi, A., Bongini, P., Casu, B., & Cucinelli, D. (2021). Bank business model migrations in Europe: Determinants and effects. British Journal of Management, 32(4), 1007-1026. https://doi.org/10.1111/1467-8551.12437
Ayadi, R., Giannotti, C., & Pesic, V. (2020). Business models in finance: Risk and evolution. Economic Notes, 49(2), e12172. https://doi.org/10.1111/ecno.12172
Ayadi, R., Keoula, M., De Groen, W. P., Mathlouthi, W., & Sassi, I. (2017). Bank and credit union business models in the United States. Alphonse and Dorimène Desjardins International and Institute for Cooperatives and International Research Centre on Cooperative Finance. https://institutcoop.hec.ca/en/publications/banking-credit-union-business-models-united-states/
Baden-Fuller, C., & Morgan, M. S. (2010). Business models as models. Long-Range Planning, 43(2-3), 156-171. https://doi.org/10.1016/j.lrp.2010.02.005
Birchall, J. (2013). The potential of co-operatives during the current recession; Theorizing comparative advantage. Journal of Entrepreneurial Organisation and Diversity, 2(1), 1-22. https://doi.org/10.5947/jeod.2013.001
Birchall, J., & Hammond Ketilson, L. (2009). Resilience of the cooperative business model in times of crisis. International Labour Organisation. https://www.ilo.org/empent/Publications/WCMS_108416/lang--en/index.htm
Byrne, N., & McCarthy, O. (2005). An analysis of the credit union's use of Craig's commitment building measures. Journal of Co-operative Studies, 38(1), 20-27.
Byrne, N., & McCarthy, O. (2014). Value proposition preferences of credit union members and patronage activity. International Journal of Bank Marketing, 32(6), 567-589. https://doi.org/10.1108/IJBM-11-2013-0128
Byrne N., McCarthy, O., Ward, M., & McMurtry, J. J. (2012). Credit union restructuring: Don't forget the member! International Journal of Co-operative Management, 6(1), 33-41.
Casadesus-Masanell, R., & Ricart, J. E. (2010). From strategy to business models and onto tactics. Long Range Planning, 43(2-3), 195-215. https://doi.org/10.1016/j.lrp.2010.01.004
Central Bank of Ireland. (2013). Consultation on the introduction of a tiered regulatory approach for credit unions [Consultation Paper CP76]. https://www.centralbank.ie/publication/consultation-papers/cp76-consultation-on-the-introduction-of-a-tiered-regulatory-approach-for-credit-unions
Central Bank of Ireland. (2014). Credit union PRISM risk assessments: Supervisory commentary. Central Bank of Ireland. https://www.centralbank.ie/regulation/industry-market-sectors/credit-unions/communications
Central Bank of Ireland. (2017). Financial conditions of credit unions: 2011-2016, Issue 1. Central Bank of Ireland. https://www.centralbank.ie/regulation/industry-market-sectors/credit-unions/communications
Central Bank of Ireland. (2019a). Business model strategy: Guidance for credit unions. Central Bank of Ireland. https://www.centralbank.ie/regulation/industry-market-sectors/credit-unions/communications
Central Bank of Ireland. (2019b). Financial conditions of credit unions, 2019: II, Issue 6. Central Bank of Ireland. https://www.centralbank.ie/regulation/industry-market-sectors/credit-unions/communications
Central Bank of Ireland. (2021). Credit union investments. Central Bank of Ireland. https://www.centralbank.ie/regulation/industry-market-sectors/credit-unions/communications
Central Bank of Ireland. (2022). Quarterly bulletin, QB3 - July 2022. Central Bank of Ireland. https://www.centralbank.ie/publication/quarterly-bulletins/quarterly-bulletins-list
Central Bank of Ireland. (2023a). Table A.4.5.1, Loans to Irish households - purpose and maturity. Central Bank of Ireland. https://www.centralbank.ie/statistics/data-and-analysis/credit-and-bankingstatistics/bank-balance-sheets/bank-balance-sheets-data
Central Bank of Ireland. (2023b). Financial conditions of credit unions, 2022: I, Issue 9. Central Bank of Ireland. https://www.centralbank.ie/regulation/industry-market-sectors/credit-unions/communications
Commission on Credit Unions. (2012). Report of the Commission on Credit Unions. Commission on Credit Unions. Department of Finance. https://www.gov.ie/en/publication/84c15e-report-of-thecommission-on-credit-unions/
Credit Union Advisory Committee. (2016a). Viability of Irish credit unions [Discussion document DD No 16-001]. Credit Union Advisory Committee. https://www.gov.ie/en/publication/d88bc7-viabilty-of-irishcredit-unions/
Credit Union Advisory Committee. (2016b). A survey of Irish credit unions [Discussion document DD No16-002]. Credit Union Advisory Committee. https://www.gov.ie/en/publication/32b1bb-a-survey-of-irishcredit-unions/
Credit Union Advisory Committee. (2016c). Review of implementation of the recommendations in the Commission on Credit Unions Report. Credit Union Advisory Committee. https://www.gov.ie/en/publication/ee48d7-review-of-implementation-of-the-recommendations-in-the-commission-on/
Culloty, A. T. (1990). Nora Herlihy: Irish credit union pioneer. Irish League of Credit Unions.
De Meo, E., De Nicola, A., Lusignani, G., Orsini, F., & Zicchino, L. (2017). European banks in the XXI century: Are their business models profitable? SSRN.
https://doi.org/10.2139/ssrn.3200891
Donovan, D., & Murphy, A. E. (2013). The fall of the Celtic Tiger: Ireland and the euro debt crisis. Oxford University Press.
https://doi.org/10.1093/acprof:oso/9780199663958.001.0001
Ertürk, I. (2022). Credit union vulnerabilities in the financial system: An analysis, and how to respond. Swoboda Research Centre. https://swobodacentre.org/research/#publications
Hobbs, B. (2017, November 7). Business model - Responsive risk-based transformation [Presentation]. Central Bank of Ireland. https://www.centralbank.ie/regulation/industry-market-sectors/credit-unions/communications
Hobbs, B. (2018, September 24). Business model strategy [Presentation]. Central Bank of Ireland. https://www.centralbank.ie/regulation/industry-market-sectors/credit-unions/communications
Houses of the Oireachtas. (2017, October). Report on the Review of the Credit Union Sector with specific reference to the Credit Union Advisory Committee Review of Implementation of the Recommendations in the Commission on Credit Unions Report (June 2016).[Joint committee on Finance, PublicExpenditure and Reform, and Taoiseach, 32-FPERT-007]. https://opac.oireachtas.ie/
International Credit Union Regulators' Network. (2015). Central Bank of Ireland peer review report: Central Bank performance of its regulatory functions in relation to credit unions. Central Bank of Ireland. https://www.centralbank.ie/regulation/industry-market-sectors/credit-unions/communications
International Credit Union Regulators' Network. (2019). Peer review report: Central Bank of Ireland's performance of its regulatory functions in relation to credit unions. Central Bank of Ireland. https://ww.centralbank.ie/regulation/industry-market-sectors/credit-unions/communications
Irish League of Credit Unions. (2002). Movement statistics. Irish League of Credit Unions.
Jones, P. A., Money, N., & Swoboda, R. (2017). The Irish credit union business model: Is it still fit for purpose? Centre for Community Finance Europe. https://swobodacentre.org/research/#publications
Jones, P. A., & Money, N. (2021). The maximisation of savings in Irish and British credit unions: Success, opportunity or risk? Centre for Community Finance Europe. https://swobodacentre.org/research/#publications
Krasnova, I., Lavreniuk, V., & Nikitin, A. (2022). Identification of risks of the bank business model. VUZF Review, 7(1), 43-54. https://doi.org/10.38188/2534-9228.22.1.05
Kusuma, S. E., Sumarwan, A., & Kusumajati, T. O. (2022). The role of integrative approach for enhancing credit union sustainability: A reflection on the Indonesian credit union movement. Jurnal Ekonomi Pembangunan: Kajian Masalah Ekonomi dan Pembangunan, 23(1), 31-42. https://doi.org/10.23917/jep.v23i1.17851
Lass, J. (2011a). Is the CU business model built to last? Credit Union Magazine, 77(1), 44-48.
Lass, J. (2011b). The CU business model: Growth strategies. Credit Union Magazine, 77(1), 58-62.
Lass, J. (2011c). The CU business model: Prospects for growth. Credit Union Magazine, 77(2), 30-36.
MacPherson, I. (1999). Hands around the globe: A history of the international credit union movement and the role and development of World Council of Credit Unions Inc. Horsdal & Shubart/WOCCU.
Magretta, J. (2002, May). Why business models matter. Harvard Business Review Magazine, 86-92.https://hbr.org/2002/05/why-business-models-matter
Mazzarol, T., Clark, D., Reboud, S., & Mamouni Limnios, E. (2018). Developing a conceptual framework for the co-operative and mutual enterprise business model. Journal of Management & Organisation, 24(4), 551-581. https://doi.org/10.1017/jmo.2018.29
McCarthy, O., Farrell, S., & Hewson, D. (2016). The financial co-operative system in Ireland. In S. Karafolas (Ed.), Credit co-operative institutions in European countries (pp. 127-147). Springer.
https://doi.org/10.1007/978-3-319-28784-3_7
McKillop, D., Goth P., & Hyndman, N. (2006). Credit unions in Ireland: Structure, performance and governance. Institute of Chartered Accountants in Ireland.
McKillop, D. G., & Quinn, B. (2017). Irish credit unions: Differential regulation based on business model complexity. The British Accounting Review, 49(2), 230-241. https://doi.org/10.1016/j.bar.2016.07.001
McKillop, D., French, D., Quinn, B., Sobiech, A. L., & Wilson, J. O. S. (2020). Cooperative financial institutions: A review of the literature. International Review of Financial Analysis, 71, 101520. https://doi.org/10.1016/j.irfa.2020.101520
Messer, R. (2014). Five critical issues facing community banks. The RMA Journal:The Journal of Enterprise Risk, 96(9), 56-63.
Murray, S., Greville, L., & Ahern, M. (2021). Regulatory capital for Irish credit unions: Time for change? Credit Union CEO Business Model Development Forum. https://cuceoforum.ie/
Nelms, T. C., & Rea, S. C. (2018). The credit union of the twenty-first century [Report number 459]. Filene Research Institute. https://filene.org/learn-something/reports/the-credit-union-of-the-twenty-firstcentury
Niles, N. J. (2008). A new definition of a business model. Journal of Business & Economics Research, 6(12), 69-77. https://doi.org/10.19030/jber.v6i12.2504
Osterwalder, A., & Pigneur, Y. (2010). Business model generation: A handbook for visionaries, game changers, and challengers. John Wiley & Sons.
Osterwalder, A., Pigneur, Y., & Tucci, C. L. (2005). Clarifying business models: Origins, present, and future of the concept. Communications of the Association for Information Systems, 16, 1-25. https://doi.org/10.17705/1CAIS.01601
Prescott, J. E., & Filatotchev, I. (2021). The business model phenomenon: Towards theoretical relevance. Journal of Management Studies, 58(2), 517-527. https://doi.org/10.1111/joms.12610
Quinn, A. P. (1999). Credit unions in Ireland. Oak Tree Press.
Roengpitya, R., Tarashev, N., Tsatsaronis, K., & Villegas, A. (2017). Bank business models: Popularity and performance [BIS Working Papers No 682]. Bank for International Settlements.
Stowe, D. L., & Stowe, J. D. (2018). Credit union business models. Financial Markets, Institutions & Instruments, 27(5), 169-186. https://doi.org/10.1111/fmii.12102
The CX Company. (2022). CXi Ireland customer experience report 2022. The CX Company.
World Council of Credit Unions. (2022). Statistical report 2021. World Council of Credit Unions.
World Council of Credit Unions. (2023). The PEARLS methodology (V6). World Council of Credit Unions.
Yunus, M., Moingeon, B., & Lehmann-Ortega, L. (2010). Building social business models: Lessons from the Grameen experience. Long Range Planning, 43(2-3), 308-325. https://doi.org/10.1016/j.lrp.2009.12.005
Zott, C., Amit, R., & Massa, L. (2011). The business model: Recent developments and future research. Journal of Management, 37(4), 109-1042. https://doi.org/10.1177/0149206311406265
