What Americans Can Learn From Canada's Credit Unions
MADISON, Wis.-Credit unions in the U.S. could learn a thing or two from their counterparts North of the Border, according to one American credit unionist who has worked in Canada.
CUNA Mutual's Larry Blanchard told The Credit Union Journal that he came away from his experience in Canada with a deep affection for the country and its credit union system. And the American system can learn something from the differences between the two, particularly by watching how CUs there manage to stay a step ahead of banks in customer service by being willing to innovate more quickly, he suggested.
Of course, Blanchard isn't the only person at CUNA Mutual who has spent time in Canada, CEO Mike Kitchen hails from Canada, although he's now a naturalized U.S. citizen.
"Mike knew CUNA Mutual well and came to America with a deep appreciation of the American system," Blanchard said.
Blanchard said the loyalty Canadians feel for their CUs is enviable. It seems to come with less effort than most U.S. credit unions must apply.
That may be because CU history is more well known and understood in Canada, Blanchard noted, adding that they did have a bit of a head start, too.
"They began 15 years before we did," he said, 'but our philosophy and cooperative principles are virtually identical."
One major difference is that in Canada, there are fewer than six national banks (see related story). Blanchard offered that because Canada has only a handful of national banks that the government was rightfully concerned with the concentration of assets and power held by them.
"The Canadians are very wary of that concentration, so they wanted to help credit unions grow," he related. "It was of prime importance that Canadian citizens have access to affordable financial services, so they encouraged credit union formation."
He also finds it interesting that most CUs in Canada are community based: "That's how we started out, too," but the American system later morphed into the employer-based common bond structure and now is rediscovering the community charter.
The products and services offered have also come full circle: America's system was also centered on small business loans early on.
"Our first loans were to farmers and dairies and other such small operations," Blanchard commented. "But the Canadians stuck with it and we didn't. Credit unions in Canada are the leading suppliers of business loans."
The other major difference of note between American credit unions and their Canadian counterparts is that Canadian CUs pay taxes. "They get no favorable treatment and pay taxes by asset size, and while some say it hasn't hurt them, those 15-30 basis points have to come from somewhere."
Taxing credit unions helped prompt a major consolidation in credit unions (mergers mostly, just like in the U.S.) and Blanchard is concerned with the dwindling number of credit unions on both sides of the border.