Through 2016, building and testing a vision for a future state of the second tier of Canada’s credit union system was a significant focus of Central 1’s time and attention.
Many of you will have read the discussion papers on the future state of the credit union system’s second tier. Some of you will have already participated in roundtable groups. We are at a critical time in the history and evolution of our network, and have an enormous opportunity to begin defining a future state for the second tier designed to meet the needs of our organizations, and ultimately our members, going forward.
This has begun with a coordinated, critical, thoughtful, and collective system discussion. We would like to sincerely thank all of our members and network partners for their keen observations and participation in consultation sessions throughout the year.
The pressures on the credit union business model have intensified in recent years. There is a developing consensus that we need to consider a different approach if we are going to maintain and enhance our contributions to Canadians’ financial well-being. We look forward to the discussion ahead.
When credit union leaders know what Central 1 is and how it supports their success, relationships are born and opportunities arise.
Beginning in 2016, when any new CEO is appointed, the Member Relations team invites him or her to spend a day “onboarding” at the Mississauga, Toronto or Vancouver office through informative meetings and relationship building with business leaders.
Central 1 hosted new CEOs in Vancouver in June and September. In Ontario, Central 1 hosted CEO onboarding in September and again recently in February. They had an opportunity to develop new relationships with their peers, share issues and advice, and better understand how Central 1 can support them and how they can support each other.
Georg and Greg Sol, general manager of Osoyoos Credit Union, were together for the onboarding process and learned they had a lot in common. In fact, their credit unions are now working together on a website project and saving money as a result.
With roughly 30 per cent of CEOs retiring over the next three years, this experience will help ensure member credit unions are aware of and have access to tools and resources from Central 1. Through efforts like this, Central 1 is building stronger connections with its members and powering progress for Canadian credit unions.
In 2016, Central 1 staff played soccer at the Kick for Kids tournament, donated blood, assembled B.C. Children’s Hospital patient care kits, collected and wrapped items for the Shoebox Project, amassed donations for Operation Cozy Christmas and Vancouver Rape Relief and Women’s Shelter, and raised nearly $70,000 for United Way Lower Mainland and Ontario Peel Region. Central 1 employees in Ontario have started 2017 off by volunteering on a Habitat for Humanity build. Employees have one day each year to volunteer, and many support their communities during their personal time.
Recently, Central 1 joined Volinspire, a tool that matches volunteers with opportunities that mean something to them through detailed profiles and event listings. Many initial users of Volinspire are credit unions – already so involved in their communities – and the potential of this helpful tool for the network of credit unions is exciting.
The sessions were created after credit union leaders in B.C. and the Central 1 Advisory Committee expressed a desire to have Central 1 support forums for learning and knowledge sharing.
The first Peer2Peer meeting was a full-day, in-person workshop held before Central 1’s annual conference.
Jody Burk, CEO of East Kootenay Community Credit Union, presented an informative case study on how to establish and structure a collaborative credit union service organization (CUSO) to provide cost-effective services to several credit unions. He outlined the challenging business environment credit unions now face and how collaboration can help credit unions survive and thrive.
In October, the second session – a webinar – created a forum for leaders in sales and service. Three credit unions outlined their training and organizational design programs: First West Credit Union, Ontario Provincial Police Association Credit Union and Westminster Savings.
“The Peer2Peer session for Sales & Service in October was developed in response to individuals in various credit unions who are responsible for this area and believed they could benefit from learning from their peers in a more organized fashion,” says Julie Langham, Vice President, Sales and Service, Salmon Arm Savings and Credit Union.
“The session contributed to my knowledge through sharing of practical applications of ideas among my peers. Having a common platform (discussion forum) to continue to ask questions of each other has been a great follow up to the presentations, and I look forward to ongoing collaboration with this group.”
In 2017 Central 1 plans to facilitate three Peer2Peer collaboration sessions, the first on April 25 in Vancouver, just before the annual conference. Two others will be held in Ontario, dates and locations to be confirmed.
Taking inspiration from popular accounting apps such as Square, Central 1 developed the Integrated Invoicing Solution, allowing small business owners to issue invoices from their online banking platform and reconcile accounts as payments come back. First West, Prospera and Newfoundland and Labrador credit unions piloted the solution with several business members over the fall and winter. Stretching feedback over three monthly sessions facilitated a unique relationship between designers and members; business owners could make suggestions in one round, adding shipping costs, for example, and by the next feedback sessions see the idea manifest on the banking platform.
“What I found most surprising was how enthusiastic they were once they logged on and used it – it actually threw me off a little,” says Pharell. “Whatever uneasiness they had immediately went away once they walked through the service. Even the account managers were excited when they saw the member’s response.”
He believes the solution will be a particular draw for entrepreneurs that, by necessity, wear many hats in their businesses, from sales rep to bookkeeper. Since the product is genuinely fresh in the business arena, he anticipates an easy time generating buzz in time for general release in summer 2017. “This is a real differentiating factor between credit unions and banks,” adds Pharrell. “I want to be known in our market for having creative solutions.”
savings for B.C. children
The BC Young Leaders program supports the future of British Columbia’s credit unions by enriching, engaging, and inspiring today’s young leaders. They work together to develop and deliver successful initiatives at both national and local levels. Launched with seed funding from Central 1, the goal of the program is to create impactful, career-enhancing leadership experiences that equip the next generation to lead Canada’s credit unions into the future.
“The conference brought together young leaders from many credit unions with common interests and curiosity to learn about the credit union system, revitalizing in us the cooperative principles we all know and value,” says conference attendee Ashley Roder, Community Investment Portfolio Manager for Vancity. “The speakers and content expressed many ideas for understanding the next generation of teams and how to pull out the best leaders and leadership skills in peers.”
Roder added that she was pleasantly surprised by the practical takeaways she learned and can put in practice right away. She has encouraged several colleagues to join the BC Young Leaders program to reap similar rewards.
Central 1 was the first financial institution in Canada to implement branch capture and image exchange for cheque processing to save credit unions time and money.
In the past physical cheques were sent to a central processing centre and for credit unions in remote communities that meant expensive courier charges every day.
The new process allows branches to scan up to 100 cheques at a time. Deposits are balanced and the images are streamed to Central 1’s data centre. “The benefit was getting rid of exchanges that happened by courier,” says Belinda Perkins, Business Analyst, Product Management at Central 1, a move that saved time and money with an added ecological benefit.
For institutions such as Smiths Falls Credit Union in Ontario, which was the first to implement the new process, the savings are significant. “Anytime you courier an item, there are risks,” Pearson says. “It could be environmental delays, theft of items, planes get grounded. Plus the credit union must hold a float on that amount.”
In October Conexus Credit Union, Saskatchewan’s largest credit union, was the first to launch the enhanced Open Anywhere™ product.
Open Anywhere™ now includes full core banking system integration for a streamlined back-end workflow, digital signature capture, real-time account funding via Interac® e-Transfer, compliance with the latest regulatory changes, and more.
Open Anywhere™ launched in early 2015 with First West Credit Union acting as a pilot. Since then, more than 10 Canadian credit unions, including Westminster Savings, have turned to it to increase membership. Westminster Savings saw its volume of completed online applications triple after launching Open Anywhere™.
Developed by Central 1’s FinTech experts in Digital & Payments, Open Anywhere™ is part of a suite of products that enable credit unions to offer a seamless customer experience across channels: in-branch, online, and mobile. This includes Borrow Anywhere™, an online lending product currently in development.
As part of its leadership position in the FinTech space, Central 1 joined with Coast Capital Savings, FICANEX Services and Paypal to support the B.C. FinTech program, facilitated by B.C. Tech Association (BC Tech), which is the first of its kind in Western Canada.
Part of the B.C. FinTech Program is a series of FinTech Days hosted by BC Tech and featuring each of the four founding partners. In September 2016, Central 1 hosted a FinTech day called ‘Who’s who in the Financial and Regulatory Ecosystem’ as part of Vancouver Startup Week, which included a workshop on Regulatory and Financial basics for startups and a presentation covering the basics of the Canadian Financial System.
In fact, Risk Engine has been so useful that CUMIS, the credit unions’ biggest insurer, has started offering discounts to credit unions using this product.
“The ability to detect and respond to fraud in real time, or near real time, is our most effective option,” explains Sean Corner, Risk Management and Loss Prevention Specialist, CUMIS General Insurance Company. “This proactive tool has already saved the entire system so much money that CUMIS is offering premium rating discounts to encourage more adoption.”
Risk Engine’s current territory is limited to login behaviour. 2017 will see the algorithm expand to evaluate even more actions, including changing personal information, transferring funds and adding transfer recipients.
Working cooperatively, Canadian credit unions and centrals formed a national group of volunteer representatives to explore options for credit unions to ensure compliance with International Financial Reporting Standards 9 (IFRS 9). One of the new requirements related to impairment asks financial institutions to estimate future loan losses based on assessment of the impact of future events on borrowers.
Central 1 was selected by the National Initiative’s Impairment Working Group to provide an Expected Credit Loss model, which will address the many different potential future impacts to borrowers regardless of their location in Canada. Developed in 2016 and launching in 2017, Central 1’s IFRS 9 Reporting & Analytics Platform was designed to allow flexible data modelling, …
Central 1 partnered with Servus Credit Union, Libro Credit Union and Estonian Credit Union not only to build the model, but also to develop a platform with additional value beyond financial reporting compliance. These champions are a huge part of the process, providing sample data and feedback, and testing the initial solution.
“The ability to model various potential outcomes will be of great value to our finance team,” says Kathleen Grogan, VP Finance of Libro Credit Union. “Combining real-world external analysis with our internal lending data will allow us to be as compliant as possible. The additional benefit is that we will be able to model financial data. This will help us make more informed decisions to better serve our Owners and communities in southwestern Ontario.”
Libro Credit Union put the member acquisition process under the microscope in 2016, in alignment with its strategic focus on driving value for members. “It was a huge project with many departments involved to get everyone’s feedback,” says Connie Wighton, Manager, Value Creation. “We’re hoping all staff start looking for improvements.”
2016 Financial Targets Achieved
Central 1 reported strong financial performance for 2016. Profit for the year increased 8.8 per cent over last year, and return on equity exceeded financial objectives. We continue to work to meet our strategic priorities to be a liquid, well-capitalized, financial institution that generates a return for the benefit of our members. Increased use of our innovative digital banking products also benefits our member credit unions, which in turn helps them advance investment in their communities.