THE OPPORTUNITIES FOR CREDIT UNIONS IN TODAY’S DIGITAL BANKING WORLD
Financial services globally are at an inflexion point, with digital disruption outside and within banking driving this change. This presents huge opportunities and challenges for the full ecosystem of financial services providers, and not exempt from this are credit unions. Remaining competitive and relevant against the larger players in the market is becoming more important than ever, and working in a cooperative system, Canadian credit unions are facing a decisive time in banking. Ready to kickstart this journey of transformation and support credit unions in their development of services are Central 1 Credit Union (Central 1). To discuss how they attempt to ride the wave of this revolution, Mark Blucher met with RFi Group’s Sarah Hollinshead in one of his first interviews since being appointed CEO in January.
“Canada is right on the cusp of a significant disruption in financial services, and with that disruption, there will be winners and losers across the financial services landscape. This is a huge opportunity for credit unions to become even stronger and more competitive than they are today, by taking advantage of what the shift is going to be.”
At the core of this opportunity is business digitisation, and Central 1 sees their role as enabling innovation for its members and clients, to ensure they can maximise their responses to changes within the industry. The power that credit unions have, Blucher, argues, is in their cooperative nature.
"Canada is right on the cusp of a significant disruption in financial services, and with that disruption, there will be winners and losers across the financial services landscape."
“Being part of a cooperative network, credit unions can leverage capabilities built out by a central supplier, such as Central 1. Being able to build a standardised digital banking capability and distribute many times across the network is a huge advantage. Even better, we aid our users with a compelling offer, and then can funnel any revenue back into their business, member advantage and community”
Blucher highlights the significant role of branding and perceptions around credit unions in Canada as another advantage. As the world becomes more data-driven, being a trusted entity is more integral than ever before.
“The credit union brand as trustworthy, socially conscious and community-based is very compelling across the financial services market. With aggregated services and products built on top of this, the credit union model has such strength.”
And whilst digital services are growing significantly around the world, customers are increasingly expecting more choice in how they engage with their financial services provider.
“The ability to switch between channels seamlessly on a common digital platform is something we hear consistently from our clients as being central to their strategy.”
Blucher is known for being a transformational leader, both at an industry and organisational level. He started his career at ANZ Bank in New Zealand, witnessing several acquisitions across his 18 years there and playing a key role in growing the bank to become the largest mortgage lender in the country; ANZ is now one of the big 4 banks across Australasia. Blucher then joined Suncorp, which at the time was a very modestly sized insurance company and regional bank. After 12 years as an Executive in a number of key roles of leadership, Suncorp is now the largest insurance company in Australasia. During this time, Blucher also worked with Australian credit unions, collaborating to take on the major banks in areas such as payments. Furthermore, Australia began digital banking investment far sooner than the rest of the world, the transformation was happening around Blucher at an industry level, as well as him driving it within.
"The ability to switch between channels seamlessly on a common digital platform is something we hear consistently from our clients as being central to their strategy."
As well as digitization of the masses, regulation is playing a key role in transforming financial services. European markets have begun opening up their systems, and Canadian regulators have hinted that open banking is on its way to Canada. Blucher believes that this is only a good thing for credit unions.
“Credit unions have a fairly close relationship with the individual customer, I would argue much closer than many other larger financial institutions. People feel as though they are not a number in a huge system, they are a person and are given an individualised service. This is not just a perception, I believe this is the essence of the value that they bring.”
“People really want to be able to deal with an institution, even if they have products and services elsewhere; they will want a place to access and view everything. In an open banking world, I think credit unions are well placed to be the provider of that. Indeed, there is a need for the best digital platform enablement to support this, to ensure the end to end digital experiences etc. Overall, there is an element of risk in such changes, but also a huge opportunity for businesses who will stand up and make it easier for their customers.”
"Credit unions have a fairly close relationship with the individual customer, I would argue much closer than many other larger financial institutions."
Blucher is certainly excited for times ahead, in a developing industry and an evolving organisation. Central 1 have embarked on a new vision, announced at their recent Members Forum, in which they aim to be the national banking partner of choice for digital banking and payments, with a national focus (Central 1 are currently more concentrated in the British Columbia and Ontario regions), and also exploring clients outside the credit union system.
“Central 1 has to be good enough to compete openly in a very competitive market outside the credit union system. That will make us a better company and a better partner for our credit union services.”
As the keynote speaker at Central 1’s recent Members Forum stated, Canadian credit unions are facing their “Kodak moment”. Blucher does not see credit unions succumbing to the same fate as Kodak however, and aims to play a role in ensuring that these financial institutions are leading the path of innovation in Canada.