Credit unions beginning to embrace fintech
Financial institutions partner with tech firms or build their own hubs
Like Canada’s big banks, credit unions are beginning to embrace “fintech” — financial technology — to protect key consumer and lending businesses from upstart online challengers that use a combination of data and technology to entice customers.
British Columbia’s First West Credit Union and Vancouver-based Grow announced Wednesday they have formed a partnership targeting B.C. residents. On Tuesday, Northern Credit Union, based in Sault Ste. Marie, Ont., unveiled plans to build its own fintech lending business with an account-opening tool that will provide Ontario-based small businesses accounts with unsecured lines of credit up to $250,000.
Whether they are buying or building the capability, the financial services firms appear to agree that the demand for the type of innovations offered by fintech firms is here to stay.
“The way Canadians access and use financial services is rapidly changing,” says Launi Skinner, First West Credit Union’s chief executive, who served previous stints in senior executive positions at Starbucks and 1-800- Got-Junk.
“Grow has built a great product,” she said of the fintech firm’s 24hour online lending service that can fund approved loans in as little as a few hours, compared with days or weeks at a traditional lender.
“We’re really looking forward to working more closely with them and exploring the next wave of financial-service delivery,” Skinner said.
Grow chief executive Kevin Sandhu, whose firm was launched last year under the name Grouplend, said joining forces with First West will provide the first opportunity for B.C. residents to access “on-demand and fully digitized online lending through a Canadian credit union or bank.”
He said the arrangement with the credit union includes a revenuesharing arrangement, though he would not disclose the terms.
“We are interested in more than a simple referral fee or commission structure for loans that are generated as a result of the partnership,” he said in an email, noting other such deals are in the works.
First West Credit Union has
The way Canadians access and use financial services is rapidly changing.
more than $10 billion in assets under administration, 240,000 members and 1,700 employees.
A report published by EY last month suggested adoption of fintech products by Canadians could triple over the next year.
Financial institutions such as Bank of Nova Scotia and TorontoDominion Bank are developing their own technology hubs, while others, such as the Canadian Imperial Bank of Commerce, are taking tentative steps to team up with the same fintech firms challenging their traditional businesses.