9th November 2026
Britain has a banking system dominated by large commercial banks, building societies and increasingly expensive forms of consumer credit. But there is another financial model which has become a major part of everyday life in countries such as Ireland and the United States. It is the credit union, a member-owned financial organisation offering savings and loans for the benefit of its members rather than outside shareholders.
The difference between countries is remarkable. In the Republic of Ireland, credit union memberships amount to around 64% of the population. In the United States, the figure is approximately 43%. In Northern Ireland it is around 40%.
In Great Britain, however, credit union membership is equivalent to only about 2% of the population. Scotland has a stronger tradition than much of England, but it has still not achieved anything approaching the Irish experience.
These figures come from comparative research published by the House of Commons Library. They count memberships rather than necessarily unique individuals, but the contrast is still striking.
So why has Ireland embraced credit unions while Scotland has struggled to make them a much bigger part of its financial system?
Ireland built a movement, not simply a lending service
Ireland's success is rooted in its history. Credit unions began expanding rapidly during the late 1950s and 1960s, often through local communities, churches, workplaces and voluntary organisations.
The principle was straightforward. Members saved regularly, creating a common pool of money from which other members could borrow at reasonable rates.
This was particularly important in communities where conventional banking services were less accessible and affordable credit was difficult to obtain.
Over time, credit union membership became an ordinary part of family financial life. It was not simply somewhere to go when a bank refused a loan. People joined because they believed in saving locally and having access to a cooperative financial institution.
The movement has since developed into a substantial financial sector. According to the Central Bank of Ireland, credit union assets reached €22.5 billion in September 2025.
America took a different route
The American credit union movement developed partly in response to the financial difficulties of the Great Depression.
President Roosevelt signed the Federal Credit Union Act in 1934, establishing a national framework for their development.
Employers, trade unions, government departments and the armed forces subsequently helped establish credit unions for their employees and members.
Some have grown into enormous financial institutions, serving millions of members. They offer savings, personal loans, mortgages, vehicle finance and other banking services.
The American experience demonstrates that credit unions do not have to remain small community organisations. With the right structure, technology and membership base, they can compete with commercial banks in many areas.
Why Scotland has lagged behind
There are several possible explanations.
Britain already had a well-established commercial banking system, together with building societies and widespread access to personal credit. Credit unions therefore had to compete with institutions that people already knew and trusted.
There was also a tendency to associate credit unions with financial hardship. They were sometimes viewed as places for people who could not obtain loans elsewhere, rather than as organisations which could benefit ordinary households across the income range.
That perception matters. In Ireland, joining a credit union became a normal financial decision. In Britain, membership never achieved the same level of acceptance.
Another problem was scale. Many British credit unions developed as relatively small organisations, sometimes dependent on volunteers. Modern financial services require technology, professional management, regulatory compliance and investment. These costs can be particularly difficult for smaller organisations to absorb.
The regulatory framework also imposed restrictions on membership and lending which have gradually been relaxed, but which limited development in earlier years.
There is now an opportunity to address some of these difficulties.
HI-Scot: An opportunity for the Highlands and Islands
One particularly interesting Scottish example is HI-Scot Credit Union, which has developed from its original base in the Western Isles into an organisation serving the whole of the Highlands and Islands.
Established in 2006 as Western Isles Credit Union, it changed its name to HI-Scot in 2010 to reflect its expanding geographical coverage. It subsequently merged with Highland Communities Credit Union in January 2021, creating a larger organisation with almost 4,000 members.
Its base remains in Stornoway, but its membership is open to anyone who lives or works in the Highlands and Islands, including Caithness, Orkney, Shetland and communities throughout the mainland Highlands.
That geographical reach is important.
People in rural communities often face a different set of financial challenges from those living in larger towns and cities. Bank branches have disappeared from many smaller settlements. Travelling to obtain financial services can involve considerable distances, while the cost of maintaining a conventional branch network makes it difficult to replace what has been lost.
HI-Scot offers a different approach. Membership can be arranged online, and its mobile app allows members to check balances, arrange transfers, obtain statements and apply for loans.
Savings can be paid in by standing order, bank transfer, payroll deduction or through Post Offices and PayPoint outlets. Members do not have to live near Stornoway or visit a branch to participate.
This makes it particularly relevant to people in Caithness and Sutherland, where a locally accessible financial service can be difficult to find.
What could membership mean for an ordinary household?
The first opportunity is saving.
Rather than leaving all savings in a conventional bank account, people can become members of a cooperative financial organisation which exists to serve its members.
Regular saving does not have to involve large sums. A household putting aside £10 or £20 a week would accumulate £520 or £1,040 respectively over a year, before any dividend.
That could provide a useful reserve for an unexpected household bill, car repair, replacement appliance or other expense.
HI-Scot offers ordinary savings as well as a Christmas Saver account, allowing members to spread the cost of an expensive time of year rather than relying on credit cards or borrowing.
It also offers junior savings. This could be particularly useful for parents and grandparents wanting to introduce children to saving and help them develop good financial habits.
The second opportunity is borrowing.
There are times when even a financially responsible household needs to borrow. A car may need replacing, a boiler may fail, essential home improvements may be required or an unexpected expense may arrive at an inconvenient time.
HI-Scot offers loans from £100 to £15,000, subject to its lending criteria.
Its published Freedom Loan covers borrowing from £100 to £3,000 at 2% a month, equivalent to 26.8% APR. Its larger Loyalty Loans have lower rates depending on the amount borrowed, ranging from 8.1% to 23.1% APR in the published loan bands. The Loyalty Loan requires £250 in savings to be held as security.
These rates are not necessarily cheaper than the best bank personal loans, so borrowers should compare the total cost of credit before committing themselves.
However, HI-Scot offers a different approach. Applications are assessed on income, expenditure and the ability to repay. It does not simply rely on a computer-generated credit score.
There are no transaction fees, interest is calculated daily on the outstanding balance, and members can repay loans early without a penalty.
That can be valuable for someone who wants to borrow a relatively modest amount and repay it in a manageable way.
Importantly, HI-Scot says that its aim is to prevent members taking on unmanageable debt. It is not simply trying to increase the amount of money it lends.
Evidence that HI-Scot is already making a difference
The organisation is not just an idea waiting to be developed.
An industry report published in January 2024 recorded almost 4,000 members across the Highlands and Islands. Since its establishment, members had saved more than £21 million and borrowed over £11 million.
More recent evidence of its activity can be found in the Outer Hebrides Anti-Poverty Strategy 2024–26.
The report records that HI-Scot approved 151 loan applications from the HS1–HS9 postcode areas during 2024–25, issuing a total of £880,572.
That was an increase of 11% in the number of approved loans and 4% in the amount lent compared with the previous year.
The same report records that 36 applications, totalling approximately £234,291, were declined.
This is an important distinction. A responsible credit union cannot simply approve every application. Its purpose is to provide affordable and manageable finance, not to encourage people to borrow beyond their means.
The figures demonstrate that HI-Scot is already providing a useful service in the Western Isles, while also showing that there is room for its reach and membership to develop elsewhere.
Why more people joining could make a difference
A credit union is different from an ordinary bank because its members own the organisation collectively.
There are no external shareholders expecting dividends from the business. Any surplus is retained to strengthen the organisation, support its services or, where financial circumstances permit, returned to members through a dividend.
That creates an interesting opportunity for the Highlands and Islands.
If more households joined HI-Scot and established regular savings, the organisation could develop a larger membership base and strengthen its capacity to provide loans.
It could also invest further in technology, customer services and financial education.
There is a potential virtuous circle here. More members create opportunities for greater activity, while a wider range of services can make membership more attractive to others.
However, growth needs to be properly managed. Savings cannot simply be lent out without regard to liquidity, reserves, lending risks and regulatory requirements.
An opportunity for local employers and councils
There is also a role for organisations beyond individual households.
Local employers could encourage staff to join through workplace savings schemes. Employees could arrange for a small amount of their wages to be transferred regularly into their credit union account.
This would make saving easier and could help people build a financial reserve without having to remember to transfer money themselves.
Councils, housing associations, community organisations and trade unions could also promote awareness of the service.
For example, a housing association could provide information about credit union savings and responsible borrowing to tenants. That might help some households avoid expensive short-term borrowing when faced with an unexpected bill.
Schools and colleges could introduce young people to the idea of saving through a credit union, helping them develop financial habits before they enter employment or university.
For employers, this could become part of a wider employee financial wellbeing programme.
There is no need for public bodies to run a credit union themselves. They could simply help people discover an existing regional service.
Could HI-Scot become a stronger regional financial institution?
There is an interesting longer-term possibility.
HI-Scot already covers an enormous geographical area, but its membership remains small compared with the population of the Highlands and Islands.
It could potentially become a much more familiar financial institution across the region.
That might mean greater use of online services, more employer partnerships, stronger links with local councils and community organisations, and increased awareness of its savings and lending facilities.
It could also explore whether additional services would be viable as it grows, subject to the necessary regulatory permissions and financial safeguards.
The important point is that people do not necessarily need another bank branch in every town. They need accessible, trustworthy financial services which understand their circumstances.
HI-Scot offers one way of providing that.
More information about membership, savings and borrowing is available at www.hi-scot.com.
The Bank of England is now looking at the sector
There is an interesting development which could help determine the future.
On 3 November 2026, the Prudential Regulation Authority and Financial Conduct Authority published a joint discussion paper examining how credit unions could grow and become more competitive.
The regulators are considering whether some administrative and regulatory requirements could be simplified for smaller organisations, while larger credit unions might benefit from a framework better suited to their size and activities.
They are also examining opportunities for credit unions to share technology and services, reduce costs and expand the products they can offer.
No changes have yet been agreed, but the discussion is an important recognition that credit unions could play a larger role in Britain's financial system.
Could Scotland learn from Ireland?
There is no reason why Scotland should simply accept that credit unions will remain a relatively small part of its financial system.
Councils, employers, housing associations and trade unions could all play a role in encouraging membership. Payroll savings schemes could make regular contributions easier, while larger organisations could share administrative and technology costs.
For the Highlands and Islands, HI-Scot provides an existing organisation around which a stronger regional movement could develop.
Its success does not depend entirely on government funding or a major new financial institution being created. It also depends on people recognising that membership is open to them and deciding to participate.
Ireland has demonstrated what can be achieved when credit unions become a normal part of everyday financial life.
Scotland has some good examples of its own, but there is considerable room for development.
Perhaps the question is not whether credit unions can survive alongside the major banks, but whether Britain should be doing considerably more to help them grow.
And for people in the Highlands and Islands, perhaps a more immediate question is whether they are making full use of a financial organisation which already exists to serve their region.
About Hi-Scot Credit Union
Hi Scot Loans
Join Hi-Scot Credit Union
3 November 2026
Supporting sustainable growth and resilience - Bank of England
Note
Hi-Scot celebrates it 20th birthday on 20th November 2026.
The difference in numbers is striking
A House of Commons Library briefing published in 2026 gives a useful comparison.
Country Credit union membership as share of population
Republic of Ireland 64%
United States 43%
Northern Ireland 40%
Canada 27%
Scotland 7.8%
England 1.7%
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