The province’s credit unions are growing but keeping niche focus

In 1996, there were around 100 credit unions operating in British Columbia. Today, that number is 42. It’s not a sign that the sector is ...
B.C. credit unions have  cultivated distinct brands as they have expanded
In 1996, there were around 100 credit unions operating in British Columbia.

Today, that number has dropped below 40.

It’s not a sign that the sector is failing, said Chris Catliff, CEO of BlueShore Financial – it’s that credit unions are changing and getting bigger as the trend toward mergers continues.

Prospera Credit Union and Westminster Savings are the latest credit unions to announce they are in talks to merge. In 2014, B.C.’s third-largest credit union, First West, merged with Island Savings.

Mergers are happening for several reasons, said Catliff.

Being bigger reduces the cost of complying with regulatory requirements, which have grown in recent years.

“A lot of the small credit unions are saying, ‘We just can’t keep up with all the new rules and regulations that are going on, not just from our provincial regulator but from the federal regulator and internationally,’” Catliff said.

Because of changes introduced in the 2013 federal budget, many credit unions are now facing a higher income tax bill.

Merging also allows credit unions to have access to more capital and can mean better service for members at more competitive prices, said Shawn Neumann, the board chairman of First West Credit Union.

Catliff’s credit union chose to grow not by merging, but by rebranding and focusing on a niche market particular to West Vancouver and North Vancouver.

The credit union was known as North Shore Credit Union prior to the name change in 2013.

BlueShore Financial got its start providing banking services and loans to shipbuilders and fishermen, but the credit union is now focused on a radically different demographic that reflects how the area has changed over time.

“We’re focusing on people who have more complex needs around financial planning,” Catliff said.

“We specialize in ski chalet mortgages, waterfront home mortgages, second-home mortgages and larger houses. That’s a very distinct market.”

He noted that Vancity has branded itself as an ethical investor, while Coast Capital Savings has focused on offering “value for service.”

While credit unions once focused on serving a particular ethnic, religious or labour group that had been underserved, the easy availability of credit means that they now have to emphasize how they can serve their clients differently than a big bank.

“That’s made credit unions really rethink who they’re really focused on,” Catliff said.

“They need to pick a niche or segment to focus on and serve them better than the banks. Canada’s big banks tended to have to be everything to everybody.”

When credit unions choose to merge, they need to consider whether the corporate culture of two organizations is a good fit, Neumann said.

First West has kept the brands of several credit unions that it has merged with.

Island Savings, Valley First and Enderby and District Financial operate as divisions of First West.

“They remain really connected to the community,” Neumann said.

Neumann noted that credit unions don’t need to merge in order to work together.

Credit unions regularly co-operate to provide services, such as a syndicated loan to a business member.

Credit unions are no longer tied as tightly to a specific geography as they once were, Catliff said, but their locally based nature is still important.

“People tend to use credit unions when they think their interests are not served by big, Toronto-based banks,” he said.

In the future, credit unions will continue to merge to become not huge financial institutions, but medium-sized alternatives to big banks, Catliff said.

“I see them continuing to thrive, but with less focus on geography and more focus on a segment of members and branding to that very effectively.”

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