VANCOUVER, B.C. — Canada’s credit union system is undergoing a wave of consolidation as institutions face mounting pressure to modernize, merge or risk extinction, according to a new report by The Logic.
From more than 1,400 credit unions in 1989, the number has fallen to just 184 as of last year, even as total assets have surged from $31.1 billion to $315 billion, data from independent consultant Doug Macdonald shows.
According to The Logic analysis, the situation in Canada will sound familiar to many in the U.S., as it notes small credit unions that once served tight-knit communities or niche markets are now struggling to remain competitive as consumer expectations and technology demands grow.
‘Flurry of Activity’
“There’s going to be a flurry of activity,” Geoff Rush, national industry leader for financial services at KPMG Canada, told The Logic. “It’s inherently harder [for credit unions], given their scale, to keep pace with [technology] investments.”
Mergers are already underway. As the CU Daily reported, Saskatchewan’s Conexus, Cornerstone, and Synergy credit unions are expected to finalize their merger in January. British Columbia-based Vancity and First Credit Union are in talks, and Integris and Coastal Community Credit Union announced merger discussions in April.
Vancity, one of the country’s largest credit unions, has not pursued a merger in more than 15 years but has recently shifted strategy due to rising pressures and community needs.
‘In Jeopardy’
“Some communities have their last financial institution in jeopardy,” Vancity CEO Wellington Holbrook told The Logic. “They may be looking for a larger entity to bring in capital, new products and technology.”
Holbrook told The Logic Vancity intends to take a more collaborative approach in future mergers, offering small credit unions technology and services—such as digital account openings and instant credit approvals—while still allowing them to serve their local communities.
“We’re not trying to hoover up small credit unions,” he told The Logic.
‘Passport Model’
Jeff Guthrie, CEO of the Canadian Credit Union Association (CCUA), said federal regulations restricting credit unions to operate only in their home provinces are also driving the need for reform. The CCUA is lobbying for a “passport” model that would allow mergers across provinces while preserving provincial oversight, according to the Logic.
“Let credit unions follow retirees if they move from one province to the next,” Guthrie told the publication. “It’s a good opportunity to modernize the sector.”
