Meridian has increased its adviser count by more than 40 per cent in recent years, and this spring it launched its largest advertising campaign to date, focused largely on wealth management. Part of the rationale for the campaign is to raise awareness among Ontarians that credit unions don’t just offer the basics when it comes to financial services.
North America’s first credit union actually began in Levis, Quebec, in 1900 when Alphonse Desjardins established the first caisse populaire, which would go on to become the Desjardins Group. Credit unions grew to become a major force in Quebec, where the Desjardins network now controls more than 40 per cent of the retail financial services market, according to Moody’s Investors Service. Credit unions have also made considerable progress over the decades in Saskatchewan, Manitoba, Prince Edward Island, British Columbia and New Brunswick. But while nationally they held about 16 per cent of retail bank deposits and 19 per cent of residential mortgages in 2010, credit unions across Canada continue to live in the big banks’ shadows - especially when it comes to less traditional products.
In its 2010 budget, the federal government said that it would allow credit unions to incorporate federally, rather than just provincially, enabling them to operate across the nation. That has prompted Moody’s to make the following prediction: “given the size and significance of the credit union segment in Canadian personal and commercial banking, we believe that a smaller number of centralized credit unions could pose a longer-term strategic challenge for the Canadian banks in the domestic market,” the credit-rating agency said in a report.
Ralph Luimes, chief executive officer of Hald-Nor Credit Union in Ontario said that credit unions are gaining as they take advantage of their new ability to consolidate and become larger.
But Mr. Luimes, who has been active in a group of credit union professionals from across Canada who discuss how best to serve small businesses (a group that was formed more than five years ago), argues that credit unions have always been strong in the small business space. What’s changing now, he says, is the public realization of that.
“We consider the credit union group to be a very natural fit with small business and with people in this type of an economy because of the fact that we operate and still deal with our people at the kitchen table or at their office or at our own office desks,” said Mr. Luimes, who operates in rural and small-town Ontario.
Banks, too, are making their advisers more mobile and going to new lengths to form lasting relationships with their customers. They are also placing more muscle into the small business space.
Credit unions, meanwhile, are trying to walk a fine line between expanding and yet maintaining the more personal touch that has traditionally been their main advantage in attracting customers.
Mr. Catliff suggests that it’s possible to become more like a bank in terms of product offerings and services while retaining that small-institution feel. And he argues that because credit unions like North Shore aren’t manufacturing investment products such as mutual funds, but are selling products made by other companies, advisers gain a higher degree of trust.
“We have the full product universe, but we don’t push our own products,” he said. “When you go into banks, especially at the level of $100,000 to $500,000 of investable assets, they push a lot of their own products.”
Doce Tomic, the CEO of Credential Financial Inc., which provides credit unions with wealth management services, says “credit unions have a huge opportunity in the wealth management space.”
Even with the market pullback, Credential’s assets have grown by roughly $3-billion to more than $11.5-billion in the last three years, he said.
“The crisis created a shift in consumer behaviour, and I really think it created a strategic advantage for the credit unions,” Mr. Tomic said.
It’s this potential advantage, and the desire to drive it further, that is spurring North Shore Credit Union to spend tens of millions of dollars on new branches that Mr. Catliff describes as more closely resembling a Four Seasons hotel lobby than a bank branch.
Many Canadians, he said, think of financial planning the same way they think of going to the dentist.
“They’d walk in and be told that they haven’t been saving enough and lectured for putting balances on a credit card when they had a line of credit, sort of like being told they haven’t been flossing and now are going to have a drill in their mouth,” he said. “It would engender a gag response. So we came up with this metaphor of the financial spa, because when you go into a spa, with all of the things that are in place, you feel comfortable disrobing and having people poke and prod at you.”