LYNCHBURG, Va. (7/15/14)--A delegation of credit union representatives from Virginia spent a week in Estonia recently as part of the Virginia Credit Union League's partnership with the Estonian Union of Credit Cooperatives.
Rick Pillow, league president/CEO, led the delegation, which celebrated the launch of a software platform for clearing transactions and providing access for Estonia's small, but growing system of credit cooperatives to the central banking system in Eastern Europe. This has been the signature project of the partnership between credit unions in Virginia, credit cooperatives in Estonia and the World Council of Credit Unions.
During a visit to Estonia, representatives from the Virginia Credit Union League attended an Estonian Union of Credit Cooperatives board meeting. (Virginia Credit Union League Photo)
The project was spearheaded by Baltic Shared Services, a company formed in 2010 to establish the clearing system. With such access, Estonia's credit cooperatives are better positioned to offer ATM and card services, and eventually expand into online banking. The Virginia league's service corporation is a majority stockholder in Baltic Shared Services.
"As cooperatives, we see it as our duty to ensure the credit union movement grows and prospers, and Virginia's credit union system is proud to partner with the World Council of Credit Unions in helping reestablish cooperative financial institutions in Estonia," said Pillow.
The delegation, which included representatives from $1.3 billion-asset BayPort CU, Newport News; $2.6 billion-asset Northwest FCU, Herndon; and $676 million-asset University of Virginia Community CU, Charlottesville, also participated in a regional credit union meeting in Tallinn, Estonia, that drew representatives from Lithuania, Latvia, Poland, Moldova and Macedonia. Key topics during the two-day conference included the regulatory environment for Eastern European credit unions, shared branching and payment systems.
"The Estonian movement is at something of a crossroads," said Victor Corro, vice president of the World Council's Worldwide Foundation for Credit Unions. "The platform is in place to link Estonia's credit cooperatives to the central banking system, and now it's a matter of marketing that platform to the credit cooperatives. This represents their best chance at moving beyond the 'pencil and paper' way of running a credit cooperative and toward the services most likely to attract Estonia's tech-savvy population, including online banking and card services."
Corro said this also could lead to increased consumer deposits at Estonia's credit cooperatives, in turn, spurring lending and economic growth.
While in Estonia, the delegation also visited the Jarva-Jaani Credit Cooperative, which was celebrating its 15th anniversary, and which has the distinction of having tested Baltic Shared Service's transaction clearing platform and being the first to adopt the system.
A nation of 1.3 million people, Estonia had a thriving system of credit cooperatives prior to the Soviet occupation of 1940. At its height in 1939, the Estonian movement boasted 184 financial cooperatives and had a 52% market share. Credit cooperatives were again legalized once Estonia regained independence in 1991 after the collapse of the USSR. The first new Estonian credit cooperative was formed that same year.