1. Adam R. Holmes, MBA, PMP
514 - 2205 Lower Mall, Vancouver, BC V6T 1Z4
adamholmes@outlook.com | (780) 289-8254 | linkedin.com/in/aholmes
February 2004
Dave Mowat
Chief Executive Officer
VanCity Credit Union
Vancouver, BC Canada
Dear Mr. Mowat,
On behalf of our team, thank you for meeting with us to discuss our proposed strategic-direction for
Vancouver City Savings Credit Union (VanCity). In follow-up, we would like to provide you with further
details on our analysis and recommendations - specific to VanCity’s long-term sustainability.
The competitive landscape has shifted rapidly beneath VanCity’s long-standing competitive footings;
jeopardizing what has been a fruitful niche for all credit unions. Differentiation between credit unions
and chartered banks has been narrowing and customer perceptions of “high service” have evolved to
require enhanced levels of convenience and ease of use, where credit unions are at a significant
disadvantage to chartered banks. These trends, in combination with the dramatic migration to ebanking, have created an urgent need for VanCity to keep pace with the industry’s transformation.
VanCity can no longer ignore its competitive disadvantages and structural impediments to its future
success. VanCity is not alone; credit unions across the country share the mutual challenge of adapting
to new industry norms, and could equally benefit from structural reforms. Due to cultural and
administrative complexities, mergers and acquisitions in the short-term could prove to be debilitating
for VanCity. However, we recommend developing closer-ties and partnerships with other Canadian
credit unions to pool risk and resources, build united support of structural reform, and smooth the
transition of future mergers and acquisitions.
By pooling risk and resources, VanCity can immediately begin mitigating its competitive disadvantages
relative to chartered banks. With increasing price competition, controlling costs will be of increasing
importance. For instance, no sole credit union could compete technologically with the chartered banks’
e-banking services, but by pooling resources, credit unions could invest sufficient capital to build
comparable service offerings. Further, partnerships can facilitate improvements to member services in
ways the chartered banks would be unlikely to imitate. For instance, sharing infrastructure (i.e. ATMs,
branches) would be a low cost way of improving convenience levels.
VanCity should promote a united front for structural reform, and leverage the Credit Union Central of
Canada, to lobby the provincial and federal governments for revisions to the Co-operative Credit
Associations Act. Financial Services has become a global industry, and remaining within provincial
boundaries threatens the long-term viability of credit unions. With increasing price competition, credit
unions are at a structural disadvantage that limits their economies of scale. While “People before
Profits” is a core value of VanCity, the board must recognize that they are not mutually exclusive and
profit must be protected to ensure sustainable benefits for its members, employees, and local
community.
Challenge.Focus.Connect
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2. Over the long-term, further consolidation of credit unions will be necessary to improve cost efficiency.
Consolidating beyond provincial boundaries would allow us to fully integrate and leverage Citizen’s
Bank, while increasing our competitive clout and services to our members. Further, given risks inherent
to the financial services sector, this will improve the stability of the country’s financial services sector
and the safety of member deposits. With over 50% of our revenues coming from residential
mortgages, VanCity and the majority of credit unions are vulnerable to financial crises and credit
crunches.
Thank you, again, for the opportunity to present our recommendations. If you have any questions,
please do not hesitate to contact me directly at the number below.
Regards,
Adam R. Holmes, 2015 MBA Candidate
Sauder School of Business
Tel: 780-289-8254
Email: adamholmes@outlook.com
ca.linkedin.com/in/aholmes
Challenge.Focus.Connect
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