Coast Capital making bid to go national
Coast Capital Savings is making a bid to take its operations national, billing it as a chance to get ahead of the technological curve in an increasingly competitive financial-services sector.
It is something the Surreybased credit union has been mulling over for a couple of years, said CEO Don Coulter.
Between Monday and Nov. 28, the credit union is asking members to vote on whether they want to proceed with registration as a federal credit union.
“[In banking] two, three, four years from now, there is going to be such change and we, on the management team and board, have decided this is the best way to make sure the organization is healthy, strong, sustainable,” Coulter said.
Coast Capital has 532,000 members — including 72,700 in Greater Victoria and 110,500 on the Island. With $17 billion in total assets, Coast Capital is one of Canada’s biggest credit unions, but Coulter said the ability to expand nationally will help give it the strength to develop the online and mobile services that millennial and next-generation customers will take as a given.
“They’re not going to be understanding geographic constraints to doing business,” Coulter said.
If Coast Capital goes ahead, it would become the second credit union to go federal, said Don Wright, CEO of Central 1 Credit Union, which offers centralized services for credit unions in B.C. and Alberta.
Wright said one other credit union in Saskatchewan has also stated it is interested in pursuing a federal registration and he knows there is interest among other institutions.
Credit unions are experiencing growth in membership and assets, Wright said — there are 42 in B.C. with $71 billion under their management — but also face a competitive threat from the online options of bigger rivals and the new services of so-called financial technology [fintech] firms.
“I think everyone is quite attentive to the potential disruption that fintech-type companies could do,” Wright said. “In [this] environment, having a branch in the neighbourhood is less important and having a good online platform is more important.”
Building online platforms, however, can be expensive unless an institution can exploit the economy of scale provided by a large customer base, which Central 1 tries to do with its services.
Coast Capital is proceeding under amended regulations of the federal Banking Act put in force in 2012, which allow credit unions to register federally under the regulation of the Office of the Superintendent of Financial Institutions. Up until now, credit unions, which operate as memberowned co-operatives, are registered and regulated provincially.
If members approve the initiative, Coulter said Coast Capital will proceed with an application to OSFI, which, if successful, will need to be approved by B.C.’s Financial Institutions Commission. The earliest it would start operating nationally is 2018.