Credit Union Central of Manitoba's core purpose is to provide leadership and high-value solutions to credit unions in order to support them in meeting their strategic and operational business needs.
Credit unions have a rich and very successful history in our province. For over 80 years, they have supported individuals, families, small business, large business and community organizations. As cooperatives, credit unions exist for the purpose of serving members’ financial needs, helping them fulfill their goals by providing financial advice, support and guidance. In the process, they help build strong communities and an economically strong province.
These credit unions own Credit Union Central of Manitoba (CUCM) and look to CUCM to provide services and to act as their trade association. The success of CUCM is defined by the success of its member credit unions. In 2019, CUCM focused on four strategic themes.
Financial institutions find themselves in an environment where pending government regulations are likely to lead to dramatic changes in how Canadian consumers obtain their financial services. Most of these are coming at the federal level, as the Government of Canada contemplates changes that will improve Canada’s competitive economic position internationally. This is already occurring in payments; but Ottawa is also contemplating changes in consumer-directed finance — in response to advancements in digital technology that will allow individuals to receive more immediate, personalized service from multiple service providers — through a concept known as ‘open banking’.
Advocacy in this environment requires the development of a deep understanding of the effect of proposed changes on the financial services industry in general and credit unions specifically. Once this understanding develops, it takes the form of working with credit unions to determine the specific characteristics of legislation and regulations that need to be advocated for in order to ensure competitive positioning for credit unions. Advocacy on federal matters is led by the Canadian Credit Union Association (CCUA, the national trade association) with support from CUCM. In 2019, CUCM attended sessions sponsored by CCUA, and by experts in the field. CUCM also brought in experts to provincial business meetings with credit unions to outline the competitive and service environment that is developing in jurisdictions where open banking is being adopted.
Other CCUA activities that CUCM worked on in 2019, on behalf of Manitoba credit unions, included the development of a Market Conduct Code for credit unions and a pre-election strategy for the federal election in October.
CUCM also worked with credit unions to develop and implement a pre-election strategy for the September provincial election. The strategy focused primarily on the economic impact and community value credit unions contribute to this province, and on the desire and need for a strong partnership with government. Over the course of the campaign, senior CUCM and credit union representatives met with incumbents and candidates, including five cabinet ministers, in 20 key constituencies.
Other efforts included advocating to expand the types of investment opportunities for credit unions that are eligible under CUCM bylaws, legislative amendments to broaden the ability of credit unions to strengthen their governance frameworks, and negotiations with the Bank of Canada to provide a framework for liquidity assistance should a liquidity crisis occur.
CUCM continues to provide primary and secondary research to credit unions in support of their strategic planning activities. Much of this research is shared with credit unions in presentations at annual management and directors forums, but it is also provided to individual boards and management at their own planning sessions. With this research, CUCM provides consulting support to credit unions as they consider the best strategies to employ to ensure their members continue to receive the financial services they need. In some circumstances, this includes support for credit unions considering or undertaking discussions to gain member support on amalgamation proposals (CUCM also provides project management support on post-merger activities and requirements).
For years, CUCM has contracted with consultants to provide annual economic outlooks to member credit unions. In 2019, Craig Alexander, Chief Economist at Deloitte Canada and former Chief Economist at the Conference Board of Canada, the CD Howe Institute and TD Bank, along with Jerry Buckland, Professor of International Development Studies at the University of Winnipeg’s Menno Simons College, provided an excellent overview of international, national and provincial political and economic conditions that affect financial institutions.
They joined Eric Olsen, Farm Management Consultant at MNP, who for a number of years has provided CUCM and credit unions with perspectives on agricultural economics.
CUCM provides key services to credit unions in support of their core operations.
In 2019, Consulting & People Services completed its biannual national survey on credit union compensation. The department also conducted 55 separate consulting engagements with credit unions, advising them on key matters related to human resources, and continued to deliver a comprehensive suite of HR, payroll and benefits services to Celero Solutions, Everlink Payment Services and CUCM.
Lending Services provides loan adjudication services to credit unions. In 2019, it saw the continuation of a trend toward fewer and larger loans, consistent with the move to fewer and larger credit unions. The department augmented its services in 2019 by offering a business lender course with CuSource and Dalhousie University, a commercial lending symposium, and an agricultural lending symposium. These courses and symposia were well attended and received very positive feedback. Similar offerings are slated for 2020.
CUCM provides support to credit unions in addressing compliance and risk issues. The Legislative Compliance Working Group met four times in 2019, addressing issues such as Proceeds of Crime and Anti-Terrorist Financing regulation changes, Common Reporting Standards, FATCA, and Fintrac guidance changes. In addition, Compliance & Risk delivered webinars, workshops and symposia to keep credit union staff informed of important developments in compliance and risk.
In 2019, CUCM continued to provide credit unions with strong financial returns on liquidity investments with financial margin, while at the same time enhancing the use of Quantum, the new treasury management system recently implemented by CUCM.
CUCM provides management and administrative support to CU CUMIS Wealth Holdings (Holdings), the company that holds the credit unions’ and Co-operator’s equity interest in Aviso Wealth. The main function of Holdings is to manage the profit distributions to credit unions on the C and D units.
CUCM has been working with credit unions on collaboration opportunities with a view to creating efficiencies. Although a fair amount of work has been completed — including the contracting of a consulting firm to estimate the cost of evaluating credit union collaborative efforts on back office services — the needs of credit unions appear to be changing. Although credit unions continue to look for scale opportunities and efficiencies, their needs are no longer sufficiently aligned to gain value from traditional types of collaborative efforts.
The biggest collaborative news of 2019 was the culmination of the work of the Prairie Payments Strategy, which represents a new direction in payments. As CUCM Board Chair Paul Holden outlined in his report, a strategy committee consisting of the CEOs of the Prairie centrals and the CEOs of the seven largest Prairie credit unions has been working for close to three years on developing a strategy to respond to Payments Canada’s modernization of the national payments framework. The strategy committee was ably supported by Wilson Griffiths, SVP of Member Solutions at CUCM, Michael Devlin, Payments Leader at CUPS, and Criterium Consulting Group. The committee investigated a number of options to ensure that Prairie credit unions were well positioned to meet the Payments Canada timeframes for changes to the payments system, and benefit from innovations in payments that are becoming available to consumers and businesses. The work resulted in a decision to contract with IBM to provide Payments as a Service (PaaS) to Prairie credit unions through a joint venture created by the Prairie centrals.
I would like to thank CUCM employees for another excellent year at CUCM. We have again received outstanding results in our Member/Customer satisfaction surveys, indicating that member credit unions are pleased with the services we offer. I would also like to thank Paul Holden and CUCM’s board for providing leadership and support to CUCM as we work towards meeting the ever-changing needs of our member credit unions.