Associations Banking Civil and Municipal July 2024

The Canadian Credit Union Association – Ottawa, Ontario

July 29, 2024

The Canadian Credit Union Association

Banking With the Community at its Heart

Putting banking back in the hands of its valued members

Credit unions distinguish themselves from other financial institutions through their steadfast dedication to cooperative principles and community engagement. Since their inception, these institutions have been driven by a mission to enrich the communities that sustain them.

The formation of the credit union movement

The credit union movement in North America began with Father Georges-Antoine Belcourt of St. Augustine’s Parish of Rustico in Prince Edward Island. Belcourt’s establishment of the Farmers’ Bank of Rustico served the economic needs of a small rural population who were in danger of losing their property and were being evicted from their farms. For thirty years, he taught community members financial knowledge including how to invest and open savings and showed them how to operate the institution. Regarded as Champion of the People, Father Belcourt inspired the formation of the credit union movement.

Building off the example set by the Farmers’ Bank, Alphonse Desjardins introduced the first caisse populaire in Quebec in 1900 to offer affordable credit to working-class families. This foundational spirit of community aid has carried through to today, driving credit unions to continually invest in local initiatives that benefit members, employees, and the broader community.

Since then, credit unions have been a steady source of support for their members and communities.

“The essence of the credit union movement is rooted in community, cooperation and conscientious banking,” explains Jeff Guthrie, President and CEO of the Canadian Credit Union Association (CCUA), a national trade association for Canada’s credit unions and caisses populaires outside Quebec.

The Credit Union Ethos

After founding the first caisse populaire in Quebec, Alphonse Desjardins rapidly expanded the network, establishing 148 caisses populaires across Ontario and Quebec within 14 years. Today, Canada’s 197 credit unions serve over 10 million members nationwide, firmly establishing themselves as trusted financial institutions.

Credit unions are committed to the seven cooperative principles, central to which is a profound concern for community welfare. Their success is measured not by profit alone but by the tangible benefits they deliver to the communities they serve. Through various social and economic initiatives, credit unions significantly impact their members, communities, and employees, consistently prioritizing community welfare in their operations.

A strong community presence

Driving down a rural, northern Canadian town, one doesn’t find much in the way of a wide array of financial institutions to pick from, but credit unions see this as an opportunity. Establishing a strong community presence, especially in underserved areas is one of the first key standout factors that define credit unions.

In 2021, there were 2,214 credit union locations, including rural areas where, in 380 communities, credit unions were the only financial institutions operating. The most recent example of credit unions’ dedication to providing support to remote areas is Atlantic Edge Credit Union (AECU), which is finalizing its plans to offer banking services and open a branch for residents living in the Eastern Canadian community of Fogo Island in Newfoundland and Labrador.

“Credit unions are passionate about serving all communities, especially members in rural or marginalized communities that do not have the same level of access to banking services as those in well-served areas, which includes Indigenous peoples, visible minorities, lower income Canadians and more,” says Bolu Omidiji, Manager, Community Impact and ESG at CCUA.

“This is why, for credit unions, breaking those barriers to provide a multitude of products and services, such as home ownership solutions, digital banking, loans, and financial literacy programs, is so crucial.”

Helping all Canadians realize their home ownership dreams

Many Canadians have removed the prospect of homeownership off their lists due to unaffordability and overall high cost of living. However, credit unions are proving the dream of home ownership can be a reality. In 2022, credit unions provided $146.7 billion in residential mortgages to members and were recognized for being among the largest lenders to homeowners, accounting for a total of 16.5%.

While home ownership may be regarded as unachievable to many young Canadians, newcomers and marginalized communities, credit unions have made it their mission to offer assistance and support those looking to fulfill their homeownership dreams as well as newcomers and rural and Indigenous communities where members do not have access to affordable housing.

One example of this is Kindred Credit Union, which has made strides in helping their members work towards attaining affordable housing. The credit union partnered with Waterloo Region Community Foundation (WRCF) to pilot an Affordable Housing GIC and Loan. This GIC allows depositors to invest their money knowing the funds are matched with a lending solution for long-term and permanent affordable housing.

Assiniboine Credit Union’s (ACU) has also proved that homeownership can be attainable. Its partnership with the Manitoba Real Estate Association (MREA) and local leaders through the Manitoba Tipi Mitawa (MTM) homeownership program has helped 25 First Nations families in buying their first homes and experiencing financial stability.

Building a better future for all Canadians

Credit unions’ support extends beyond homeownership, helping all community members access resources that enable them to achieve their goals. With small businesses accounting for 98% of all businesses in Canada, only half of these businesses have made it more than five years due to lack of capital. Credit unions have helped small and medium-sized business owners cross these obstacles and have thus been regarded for being among the largest lenders to small and medium-sized businesses in Canada.

Northern Credit Union is one of many Canadian credit unions to have implemented programs that have helped small business owners get started. Its program, Small Business Rocks Line of Credit, helps small businesses just starting out borrow up to $75,000 and access their account anywhere and at any time.

The commitment of all credit unions to help small businesses doesn’t go unnoticed. A recent study conducted by the Canadian Federation of Independent Business (CFIB) surveyed over 11,000 small businesses across the country on their satisfaction with their financial institutions within the areas of financing, fees, account manager, and service. Credit unions achieved the highest overall score, as well as attaining high scores in each area of evaluation.

Credit unions are committed to assisting small and medium-sized businesses across various industries, with a particular focus on agriculture, forestry, and fishing. This sector remains a top priority due to credit unions’ recognition of agriculture’s vital role. Their support extends equally to both male and female farmers, underscoring a deep commitment to the agricultural community.

Credit unions in Alberta, for example, have taken significant steps to ensure female farmers are getting the support they need to grow their agricultural businesses. Recognizing the challenges women face, such as insufficient access to capital and financing, Credit Unions of Alberta offers its Ag Grant. This grant allows Alberta-based women working in or planning to enter the agriculture industry to apply for funding, with the winning candidate receiving a $10,000 grant to get started.

“Female recognition, especially in an industry dominated by men, is so crucial,” Omidiji says.

“Providing these resources to help women thrive and give them these opportunities to succeed is just one of the many ways credit unions stand out as top financial institutions on both social and economic levels.”

Providing key financial knowledge to all Canadians

Credit unions are dedicated to helping members overcome obstacles to their financial goals, including the often-overlooked challenge of limited access to financial literacy resources. They are actively working to address this by providing essential financial education.

“Credit unions’ primary focus is to be transparent with their members and establish a relationship with healthy dialogue, enabling the member to communicate about any concern with their finances, their long and short-term goals, and answer questions they may be hesitant to ask other financial institutions,” Guthrie says.

A recent poll carried out by CCUA also concluded that credit union members were less likely to worry about their finances compared to their financial counterparts, felt more comfortable with their personal debt levels, and had enough saved for six months in case of emergency.

The Each One Teach One Financial Literacy Program is a prime example of the work Canada’s credit unions do in sharing their knowledge with members who are keen on improving their financial literacy without being tied to a product or service.

“There are members who do not come from a financial background or were not educated in finance management, which is why having volunteer credit union staff meet and work with thousands of members from coast-to-coast to help them increase their financial knowledge, skills and confidence is so important,” Guthrie says.

By providing accessible resources to members struggling with lack of financial literacy, credit unions have been successful in ensuring financial mistakes are resolved, leading to overall optimal financial wellbeing for members and communities.

The credit union mission

Credit unions are dedicated to enhancing the prosperity of all their members and the broader community. This commitment manifests through targeted support for diverse groups including small business owners, female entrepreneurs, future homeowners, newcomers, Indigenous peoples, and other underrepresented groups. Driven by a deep-seated ethos of equity and inclusion, credit unions continuously strive to pay it forward, reinforcing their foundational principles and making a tangible difference in the communities they serve.