OTTAWA, Canada—Credit unions in four Atlantic provinces of Canada are in the midst of a significant self-evaluation that could change they way they operate.
Michael Leonard, president and CEO of Atlantic Central and League Savings and Mortgage, said the changes are being driven by recognition there is little choice if the credit unions want to survive. The four provinces have 57 CUs that are struggling to grow as the population of the market shrinks and so does credit union membership. He told the World CU Conference here, for instance, that many of the biggest banks’ branches represent between $200 million and $300 million each in assets, while the CU branches are typically 10% of that figure. Beyond the six major banks in Canada, there is also competition from new players such as Google and PayPal.
Cooperation isn’t new to the CUs in the Atlantic provinces of Labrador, Prince Edward island, Newfoundland and New Brunswick, as those CUs use a common brand and marketing programs, common technology platform, and a common look and feel in branches. But Leonard said more needs to be done to reduce operating costs. “Our current model is not sustainable.”
With the formation of a common central CU, Atlantic Central, the next step has been to hire Deloitte to consult on how else it can restructure the model, he said. It has broken the system model into component pieces of channel delivery, governance/decision-making, and backoffice operations, and representatives, including Leonard, have been criss-crossing Canada looking at other cooperative models. One goal: to get to a 70% efficiency ratio.
“We want to enhance strategic partnerships to acquire new products faster, bring more consistency to our system, and effectively invest in member-focused technology and innovation,” said Leonard.
But he stressed the new model will not be a bank, as Atlantic Central and he personally are committed to remaining credit unions.
