B.C.'s First West Credit Union preparing to submit reincorporate federally | General financial discussion | Discussion forum

Loonie said
While we're on nomenclature, why do all these CUs call themselves XYZ Financial rather than XYZ Credit Union?
If I saw a sign for XYZ Financial, and I wasn't already familiar with it, I would assume it was along the lines of Investors Group or some other wealth management company, and I would ignore it.

Thanks for looking into this one, Doug.  

No problem, Loonie.

It's an interesting question...actually, North Shore Credit Union got themselves into some regulatory "hot water" a few years ago with FICOM for this issue. They had been operating as "Blueshore Financial" even though their legal name was still North Shore Credit Union. They did disclose, in fine print, at the bottom of their webpages their legal name, but I guess FICOM didn't like that and they ultimately ended up reaching an agreement that saw them initiate a formal process to change their legal name to Blueshore Financial Credit Union (note that it combines the words financial and credit union). Somehow, First West Credit Union has managed to avoid this problem, perhaps because they have an interstitial at the top of their branded regional websites that says, plainly and in fairly large font, that "name of division is a division of First West Credit Union".

I would speculate they include the words "financial" in their name because they want to appear to be more "bank like" without actually incorporating a bank or trust company subsidiary (i.e., Hubert Financial, Implicity Financial, Achieva Financial, Outlook Financial, etc., which are owned by credit unions, and Simplii Financial and Motive Financial, which are essentially online bank branches of chartered banks).

Cheers,
Doug

For those interested, PDF pages 6-7 (numbered pages 5-6) of First West Credit Union's Outlook & Strategy portion of their Management Discussion & Analysis PDF document provides further confirmation beyond Maxine DeHart's column and Marek Buryska's LinkedIn profile on their federal continuance enquiry. Notably, they expect to put to a member vote, in 2020 possibly at its 2020 AGM in the spring or a special general meeting in the fall, for approval to move forward with federal continuance. Given that Coast Capital approved that in their fall 2017 special general meeting, that would likely put federal continuance for First West in the fall of 2021, at the earliest.

Also, I note the following from their PDF document:

In moving to federal regulatory oversight, First West is focused on remaining true to our values and business model. As a result, we are looking to apply our federal license to extend First West’s local credit union approach in three ways:
1 | Going and growing with our members. Many of our existing members have needs that extend beyond the Rockies. Whether this is helping their children with post-secondary education in another province, expanding a successful B.C. small business outside B.C. or enabling a community organization to positively impact more Canadians, there is opportunity for First West to meet those needs more fully than can be achieved under provincial regulation.
2 | Creating a digital financial co-operative. There is a significant segment of Canadians who are either underserved by lack of bricks-and-mortar banking services or who would prefer to bank online. We seek to enter the digital space with the co-operative principles that distinguish First West from its competitors.
3 | Inviting likeminded credit unions to be part of our multi-brand success. Over the past nine years, First West’s multi-brand model has demonstrated that we can be local in our service delivery, branding and decision-making, while also leveraging our size and stability to offer lower-cost products and
services to members (such as the Simply Free Account® and Unlimited Chequing for Business®) and technology-based banking options. We intend to extend our business reach by aggregating with select Canadian credit unions who are member-centred and well-managed.

Note that third point. That likely means they're going to, rather aggressively, look at merger options. Once they've continued federally, it becomes much easier to amalgamate with a provincial credit union as that provincial credit union need only seek approval of their provincial regulator and the OSFI approval becomes that much simpler, too, in terms of looking at the effect on its capital adequacy (if any).

On bullet point # 2, since they operate with a multi-brand model, will they create a digital only branded "branch" for digitally-sourced customers outside of one of their established geographic regions? Will they, perhaps, have "First West" be an operating name for digital-first customers? Or, will let their branded divisions compete for digital customers? There could be some cannibalization with the latter strategy, though, as you'd have a situation where people may digitally "shop" for their preferred brand. Do they prefer to bank with Envision Financial, with Valley First, with Island Savings, or, unlikely, with Enderby & District Financial?

Also, on bullet point # 2, they will face intense and stiff competition from the likes of both other federal credit unions (i.e., Innovation Federal Credit Union, when that happens, and Coast Capital Savings Federal Credit Union), banks owned by provincially-regulated credit unions (i.e., Motus Bank and Alterna Bank), banks which behave much like credit unions (i.e., Canadian Western Bank) that operate virtual banking branches (i.e., Motive Financial), virtual bank competitors (i.e., Tangerine and CIBC's Simplii Financial), and even provincially-regulated credit unions allowed to operate passively outside their provincial boundaries (i.e., Meridian Credit Union, and various virtual branches of Manitoba-based credit unions).

Cheers,
Doug