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Growing Pains

Less than two years since its creation, CCUA, the credit union system's national trade association is a work in progress.

In business, as in the rest of life, it’s often the small, odd problems that wind up filling our time and defining us. It’s that small task—mowing the lawn, cleaning off our desk — that somehow overtakes our day.

Take, for example, when work was under way to form the Canadian Credit Union Association (CCUA) as a national trade association two years ago. Back then, the issue of using the words “bank” or “banking” to describe credit union activities was not on anyone’s radar as a problem that CCUA would worry about. The question had been raised in the past but was dormant. The Office of the Superintendent of Financial Institutions (OSFI) had pointed out that legislation restricted use of the terms to federally regulated banks. However, no one was making an issue of it and what else would credit unions call what they do?

Now, about 18 months into its new life, CCUA finds the issue a warm one that risks getting hot. And it’s one of many that highlight why an effective national trade association can help to protect credit unions’ interests.

CCUA’s CEO Martha Durdin says that, until last November, the “banking” issue was dormant but a change of thought at OSFI has put it back on the front burner. “We know this issue is important to credit unions,” Durdin said during Central1’s Momentum 2017 conference in Vancouver this
past April. “We don’t want to pretend we’re banks but we want to use today’s common vernacular and we don’t want to confuse customers.”

With change and adaptation as the norm across the credit union system today, CCUA will be expected to stickhandle a growing number of issues like this for the collective interests of its members.

Trajectory toward consolidation

CCUA was created as a key step to reduce duplication of services provided by several centrals and to
improve and increase services, with a focus on four key areas: advocacy and government relations, national regulatory and network compliance, professional development and education and national awareness building. Some, like Stephen Bolton, chair of CCUA’s board and CEO of Libro Credit Union (103,000 members, $3.4 billion in assets), based in London. Ont., says he hopes the movement toward consolidation will continue so that eventually there is one national trade association and one national wholesale finance services organization, both owned directly by credit unions. “There is a sense of urgency to bring things together and be transformational — that’s why CCUA was created. But there is always the question of how fast is too fast, or do we go through it quickly and normalize afterwards,” Bolton says. “I’m not sure what the right answer is.”

“CCUA should be able to focus on offering more reasonably priced trade services to smaller credit unions as they will not have the demand of the payments business.” – Beth Bruesch

Based on his experience merging operations at Libro, Bolton adds, it takes time to meld cultures and bring teams together.

Michael Leonard, CEO of Atlantic Central, agrees: “We believe that the evolution to a national trade association and the consolidation of the government relations functions across the country is the first and necessary step in the evolution of the second tier. More consolidation is required but we are encouraged by the progress made by CCUA.”

There has been progress on several fronts. The government relations staff at Central 1 in Ontario and British Columbia have been seconded to the CCUA team until the end of this year. SaskCentral has permanently moved some staff there and CCUA has added a person to handle government relations in the Atlantic region. All are working together with CCUA’s team in Ottawa. In terms of numbers, the biggest movement has been on the marketing side. Martin Reed, former head of Central 1’s marketing and research department, is now vice-president of CCUA’s marketing division. The 28 staff from Central 1’s team are working for CCUA on secondment this year and will transition to full-time CCUA employees in 2018.

Branding challenges

One of the major tasks CCUA has undertaken was a national research study into how credit unions are perceived and how they should go about raising their profile and attracting more members. Details of the research were unveiled at CCUA’s May conference in Halifax. Durdin notes that the research shows that credit unions face a branding challenge since there is no consistency in naming or messaging. “We need consistent branding that explains what we are,” Durdin says. “Awareness with non-members is low but there is a lot of potential if we can find it in our hearts to work together.”

Not all the research will sit well with credit unions, since it strongly suggests credit unions should use those words in their names and branding and refer to members as members, not owners. Many credit unions large and small don’t currently follow either of those suggestions.

Bolton says the research is valuable but notes Libro usually refers to its members as owners and says when he’s talking publicly he often refers to owners/ members/customers interchangeably. “It’s better to understand the current state of where we’re at, which the report did, so we can make informed decisions about how to move forward so that the credit union industry is viewed as strong and powerful and not just by our members but by all Canadians.”

“Awareness with non-members is low but there is a lot of potential if we can find it in our hearts to work together.” – Martha Durdin

Suzanne Peters, assistant vice-president, communications and member relations at CCUA, adds that the “research points to tremendous opportunities for individual credit unions and the system as a whole.” Over the coming months, CCUA and the National Marketing Advisory Committee will be looking at next steps to take advantage of the knowledge gained.

Potential for cost savings

One of the issues lurking not far below the surface in any discussion about CCUA and consolidation at the second tier is cost and the potential for cost savings by ending duplication. For its first five years, CCUA is being funded by the centrals, as Credit Union Central of Canada was previously, but it will eventually be required to survive on payments directly from credit unions.

In his address to the Halifax conference, Bolton mentioned many areas where CCUA is already involved: the “banks/banking issue,” dealing with OSFI, the effect of federal credit unions, to list just a few. He asked system leaders: who would represent their interests if not CCUA? “In three and a half years, CCUA will be a voluntary-dues model and as such the CCUA’s value needs to be understood,” Bolton says. “At the CCUA AGM I highlighted what a world without a national trade association might look like.”

Beth Bruesch has a unique perspective on the needs of smaller credit unions and how CCUA can meet them. For several years as CEO of Peterborough Community Credit Union she was leader
of a council of small Ontario credit unions. But now she’s president of Peterborough Community Savings, a division of Alterna Savings & Credit Union (134,000 members, $3.8 billion in assets). “For smaller credit unions in Ontario, I believe the hope is that some of the trade services that are relied on to keep expenses under control can be offered in a more consistent and cost effective way if they are centralized,” Bruesch says. “CCUA should be able to focus on offering more reasonably priced trade services to smaller credit unions as they will not have the demands of the payments business. The downside is they won’t have the revenue from that business either.”

For its 2017 budget, CCUA sought an increase of $1.2 million to cover the costs of the individuals who have already fully transitioned from other centrals. Durdin points out the trade association assessment has been flat for several years. Bruesch mentions one of the main financial hurdles: “In my opinion, the challenge for CCUA will be to find a revenue model that will support the staffing needed to offer additional services. Audit and compliance services are getting to be a big issue for smaller credit unions that do not have the option for in-house solutions. Every time we turn around there are new regulatory changes and updates that challenge even the largest credit unions, so smaller credit unions must rely on trade associations for help.”

If further consolidation does occur, Bruesch sees a potential danger. “I believe the majority of credit unions will continue to be provincially regulated, so CCUA is going to have to closely coordinate with the provincial centrals and regulators to ensure there is consistent messaging and communication in each jurisdiction.”

Bolton adds that “we need to find a way that we don’t have duplication in the system, because at the end of the day it is paid for by our collective ownership. The 5.5 million credit union members have to pay for these services.”

It is clear that, at this stage, there are many wrinkles left to iron out at the CCUA. However, it is also evident that it is being shaped and moulded by a host of dedicated, knowledgeable and thoughtful credit unionists. ◊