Credit unions can’t merge, but they can combine IT

Two credit unions wary of the anti-merger environment facing Canada’s financial services industry are going ahead with efforts to integrate their organizations as much as possible, starting with their IT.

According to Gord Huston, president and CEO of Envision Financial in British Columbia, his company and First Calgary Savings in Alberta will soon be ramping up their inter-provincial credit union partnership by running a common banking platform provided by Fincentric. While Envision Financial has been running Fincentric’s Wealthview Banking system for a few years, First Calgary Savings only recently agreed to adopt the solution, which will be rolled out next year.

The two credit unions announced their intentions to skirt around current merger restrictions by forming a close partnership last December. The resulting Pathways Project was designed to create a financially strong, member-focused partnership for Western Canadians. And a common banking system platform was deemed necessary to realizing this goal.

“We cannot merge because of legislation today,” said Huston, stressing the two credit unions are working with their respective provincial governments to lobby for change. “We’re only allowed to do business in our own provinces. We saw Pathways as a way to bridge the provincial gap and also offer some greater value to our membership. If legislation was not such that we couldn’t merge, we would be entertaining a merger of both organizations.” 

The credit unions will integrate their organizations as much of possible short of a merger, said Huston, and the hope is that the roll out by First Calgary Savings in 2006 will enable both organizations to have a common set of products and processes.

Jeff Connery, chief information officer at both First Calgary Savings and Envision Financial, said the two organizations will take advantage of common areas, such as IT systems, services and staff. While the partnership is still in its early stages, he continued, there are real benefits ahead.

“Envision Financial has a significant amount of experience with the Fincentric product,” said Connery. “And if First Calgary were to do this in-house, they would have to add somewhere in the neighbourhood of 15 to 20 staff to make this happen. They would wind up doubling their IT staff.

“The Envision Financial IT staff already has 15 people working on the Fincentric Wealthview Banking product…We still need to add some staff into the Calgary operation for business analysis and hands-on running of the equipment, but in this case we’ll only be (needing) four or five (more) people.”

Once the common banking system is in place, he said, the organizations will start aligning more and more of their services. This will involve making choices about a loan origination system, a CRM offering and public Web sites. Connery said that effectively coordinating all of this activity in a way that maintains service levels for both of the parent credit unions will be a key challenge.

Commenting on the rigorous evaluation process First Calgary Savings put in place before ultimately choosing the Wealthview Banking system, Jack Allison, senior vice-president of sales and business development at Fincentric in British Columbia, said the solution will allow the credit unions to be more responsive from a customer service standpoint. He also said that other organizations will likely follow the lead of Envision Financial and First Calgary Savings.

“I think our win at First Calgary and Envision, and our ability to support that business model and strategy for them, certainly will help attract other credit unions to us as they increasingly come to market,” he said.

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Jim Love, Chief Content Officer, IT World Canada

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