We have two different kinds of credit unions in Canada.  This is ‘bifurcation’, as a consultant termed it. They have different profiles, different definitions of success, and different needs from second tier organizations.

‘Consolidation’ was the word that Martha Durdin, CEO of the Canadian Credit Union Association chose to feature in part of her report to members at the association AGM.  She reported that 20 credit unions had been lost in the last four months.  The number of credit union s had dropped from 272 to 252.  Bifurcation follows from consolidation.

The growing gap between very large credit unions and the traditional local and regional credit unions is putting the second group in jeopardy.  In part, because their success is no longer in the best interest of the growth-oriented credit unions.

The tensions between these two groups have unfolded at the provincial level so that provincial centrals now provide much less in the way of developmental and back office supports to smaller credit unions; supports that larger credit unions no longer need.

What happened at the provincial level will now happen at the CCUA.  Ms. Durdin assured all credit unions that the CCUA was championing the best interests of all credit unions, but avoided speaking to the two distinct groups and there differing interests.  In the end, the large will prevail.  This outcome is assured through the control structure which grants large credit unions proportionately more influence.  It is also rooted in the embedded interests of the management and staff at the CCUA who need their biggest members/customers.

The original pursued ‘strategy’ was to turn CCUA into a trade association for all credit unions in Canada.  Centrals would be financial services wholesalers.  That is the strategy now being implemented.  But there is little critical discussion of differences in the trade association services that the two bifurcated groups need.

The large credit unions have brought many services in house as their scale enabled it; HR, compliance, government relations, market research, etc..

Small credit unions are squeezed.  They likely do not constitute a market of sufficient size to ensure CCUA will serve them well.  I expect they will be given assurances, but the cards are stacked against them.  In due course, smaller credit unions will be obliged to seek external expertise or build regional CUSOs.  OR accept being merged.

Paradoxically, the CCUA presentations at the CCUA event continue to reference concepts like ‘local control’, and ‘know your members’, but with consolidation these characteristics are being left behind.

The recent CCUA ‘shared vision’ survey indicated that a preponderance of system leaders foresaw ‘gradual decline’.  This was, in my opinion, a recognition that the path of consolidation, bifurcation, and then the migration of many credit unions to become independent co-operative banks.  This course will dismantle the co-operative network that we now know.

Can we develop a different idea of success?  I think there is still a body of smaller credit unions who could choose a ‘co-operative’ future.  I would welcome conversations with other local and regional credit unions about how we might define an alternative future that sustains true community-based financial institutions.

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