Credit Union Mergers in Manitoba
Over the last five years, the number of credit unions in Manitoba has decreased. In fact, there were 65 credit unions in Manitoba in the year 2000.
As of July 2023, there are 16 credit unions in Manitoba: five in Winnipeg and 11 in the surrounding areas.
This trend of amalgamating credit unions continues both in Manitoba and across Canada. Credit unions have been merging to remain strong for the future.
Did you know?
If a credit union Access represents 90% or more of the total assets of the proposed (new) organization, per The Credit Unions and Caisses Populaires Act (the “Act”) (clause 121(5)), that credit union Board may approve the Amalgamation Agreement by resolution.
Why should, and why do, credit unions continue to merge in Manitoba?
Open Banking & Payments Modernization
There are two changes coming that we expect will have a tremendous impact on our members over the short term:
- Open Banking—or as it is called in Canada now “Consumer-Directed Finance”; and
- Payments Modernization.
Consumer-directed Finance (CDF) is just that – financial transactions authorized and directed by consumers. With CDF, the consumer controls what personal information is shared with which service providers, regardless of whether there is an existing financial relationship.
The federal government is mandating the implementation of robust security framework to support consumer choice and financial transaction integrity, expected to be in place by January 2023. Internal analysis indicates that implementation of this requirement will be a significant cost.
Payments modernization is another government mandate we expect over the next couple of years.
Though the Canadian payments infrastructure is widely recognized as one of the most secure in the world, it is becoming increasingly outdated while other countries build faster and timelier payment systems.
In Canada, it can take several days to process a bill payment through the system, but the end vision of Payments Modernization is to make that payment instantaneous.
We are excited by those possibilities and have already invested in the infrastructure to make that possible from your home with our new online banking platform, however, the back-end systems for every financial institution across Canada now need to see the same upgrades.
These mandatory changes come with a significant cost that every credit union and bank will have to find a way to manage.
In addition to these approaching changes, there are requirements we are already facing today that have impacted our credit union and its operations. These include, but are not limited to, regulatory requirements with FINTRAC, increased taxation, and new technology.
A larger credit union is positioned far better to not only tackle these changes, but also to reduce the impact to the members and to maintain the important priorities like competitive rates and fees, patronage, and community investment.
We see amalgamations as a way to distribute those costs across a larger organization and to ensure that the legacies of the originating organizations are sustainable over the long term.
We are faced with ever-increasing expectations from existing and future members for innovative, well-priced products and services. Our competitors continue to evolve to meet the increasing demand, and we must do the same.
The increased competition is not only from the big banks but from other organizations like fintechs, Apple, Google or Amazon and many virtual companies who have been offering financial services.
Benefits of Mergers
Better for Credit Union Members
Credit unions become stronger when they merge. They will achieve greater efficiencies and long-term financial resilience by eliminating duplicated costs and taking advantage of more economies of scale. This will allow for:
- Continued investments in technology
- Enhanced service experiences
- Competitive rates
- The potential for a strong patronage program
Members then would enjoy the added convenience of a larger branch network, access to the expertise and knowledge of a combined workforce, along with enhanced products, services, and technological solutions.
Better for Credit Union Staff
As a result of credit union mergers, employees are valued. They are provided with access to even greater opportunities for career advancement thanks to an increased variety of positions and more specialized roles.
In addition, merged entities typically offer increased capacity for ongoing learning and development with strong investments in training, tools, and resources to ensure employees are provided every opportunity to be successful and satisfied in their careers.
Better for Communities
Merged organizations would be financially stronger than individual, smaller credit unions and would have the ability to support communities with new services and resources, such as enhanced online and mobile services, and the resources and capacity to serve larger businesses than is possible today. This would allow members (and potential members!) to have more of their financial services needs met by their local credit union, with added convenience and accessibility.
The purpose of a credit union goes beyond just making a profit; we are about people and we are about relationships. We always have been and know we always will be, as that commitment would remain a priority.
And, maybe most importantly, merged credit unions would not only continue the community involvement and support the organizations it’s known to, but, also broaden the impact and do (even more) good together.