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CU, League Reps Visit Estonia; Participate in Regional Credit Union Meetings

Jul 11, 2014 by Lewis Wood

A delegation of credit union representatives from Virginia spent a week in Estonia recently as part of the Virginia League's partnership with its counterpart, the Estonian Union of Credit Cooperatives. League President Rick Pillow 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 (WOCCU).

CONTACT:
Lewis Wood
Vice President of Public Relations and Communication
800.768.3344 ext. 629
lwood@vacul.org 

A delegation of credit union representatives from Virginia spent a week in Estonia recently as part of the Virginia League's partnership with its counterpart, the Estonian Union of Credit Cooperatives.

League President Rick Pillow 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 (WOCCU).

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 League President Rick Pillow.

The delegation, which included representatives from BayPort Credit Union, Northwest Federal Credit Union and UVA Community Credit Union, 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 WOCCU'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. We would also hope this leads to increased consumer deposits at Estonia's credit cooperatives, which in turn can spur lending and economic growth."

While in Estonia, the delegation also had the opportunity to visit Jarva-Jaani Credit Cooperative, which was celebrating its 15th anniversary, and which also 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 percent 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.

Most of Estonia's "true" credit cooperatives – those adhering to the cooperative structure and philosophy most closely associated with credit unions - are generally small institutions focused on agricultural loans. The Estonian marketplace is dominated by large Scandinavian banks and the credit cooperatives understand that, in order to compete, they'll need to offer more modern services.

"Virginia's credit unions can be proud of the efforts we've made to aid Estonia's movement," said Pillow. "Through Baltic Shared Services and the good work of the Estonian Union of Credit Cooperatives, credit cooperatives in the tiny Baltic republic have ready access to a clearing system that will serve as their stepping stone to more modern banking services. This truly is a milestone in our partnership and we're excited to see where this leads for Estonia's credit cooperatives and their members."

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