Credit unions are built on a simple idea: members save together so that members can borrow together. Yet many UK credit unions lend out only around half of what their members save. This paper looks at how that gap can be narrowed responsibly, turning more member savings into affordable credit that makes a real difference to people's lives.
The paper models a credit union that grows its membership by 10% a year and gradually raises the share of member savings supporting loans from 50% to 70% over five years. The 50% starting point is an illustrative assumption, not a sector-wide figure. Each board is encouraged to set its own target based on liquidity, capital, risk appetite and genuine member demand.
For every £100 members save, the aim is for £70, not £50, to be working for members as affordable credit, with affordability and underwriting standards unchanged.
Stronger lending income is not the goal in itself. It gives boards more room to choose: lower loan rates, better returns for savers, investment in services, stronger reserves, or reaching communities that mainstream lenders leave behind.
Credit union leaders, boards and lending teams looking for a measured, evidence-based route to responsible lending growth.