Tag Archives: credit unions

Black groups seek to launch credit union

Adaoma Patterson, president of the Jamaican Canadian Association, one of three entities behind the new bid to bring back a Black-owned financial institution.

Black groups seek to launch credit union

Toronto’s Black population could once again have its own financial institution if a trio of African Canadian organizations can muster enough community support to get the proposed Pan-African Credit Union off the ground.

Although the proposed institution is not exclusive to people of colour, the goal is to provide an alternate banking organization that better serves the Black community in the Greater Toronto Area, and eventually, the rest of the country, said Adaoma Patterson, president of the Jamaican Canadian Association, one of three entities behind the project.

“It’s a lofty goal,” Patterson said. “Well overdue, though.

The group has set an ambitious target for the credit union to open within two years.

“We hope that we can get through all of the stages to launch by the summer of 2021,” she said.

The main aim is to provide financial services to Blacks who have been traditionally under-served or un-banked, she said.

“People have been asking for it for a while,” she said. “This piece was the next logical step.”

While families will be the core of the credit union’s membership, making investments in Black-owned businesses is also key, she said.

 

“The community has always talked about economic empowerment,” Patterson said. “It enables all of the other conversations when you have that economic ownership.”

Running a credit union isn’t unfamiliar turf for the JCA, which operated one, that puttered along before it folded in the mid-1990s.

The Star reported on the demise of the organization in 1995.

Prompted by concerns for members, the Deposit Insurance Corporation of Ontario, which insured individual deposits up to $60,000, assumed control of the Caribbean Canadian African (Ontario) Credit Union on Aug. 31, 1995. Continuing operating losses were cited by the Ministry of Finance, according to Bill Foster, an insurance corporation vice-president, who replaced the board as administrator of the organization.

“This credit union has no reserves and is in a deficit position. Its liabilities exceed its assets,” said Foster at the time.

A lawyer for the former board members said, in early August, 1995, that the only problem was the credit union had spent money anticipating $750,000 in funding from the government and had only received $370,000 of it.

Plans to revive the credit union started to regain some life in 2016, after Patterson assumed the presidency of the JCA.

“We were tackling a lot of other things, but it seemed like the financial institution piece was missing,” she said.

Patterson soon discovered that the JCA wasn’t alone in championing the return of a black-focused financial institution. The Lions Circle African Mens’ Association, also had an interest in establishing a credit union of its own.

It made sense to join forces, she said.

The idea started gaining steam, after the Canadian Black Chamber of Commerce, which launched in 2019, joined the partnership. A steering committee, including people from financial backgrounds, has been meeting weekly, in recent months.

Andria Barrett, president of the Black Chamber of Commerce, said she often fields complaints from small business owners about difficulties in accessing financing from traditional banks.

“I’ve heard countless stories from Black business owners, who have made some money, but can’t get a business credit card or a loan, so we have to create our own,” she said.

Still in its infancy, the group is gathering feedback, via an online survey, to test the community’s appetite for the kind of financial institution they want.

Once the survey closes in March, there will be a clearer indication of whether the concept has enough backing to move forward.

“We have been working towards getting regulatory approval,” Barrett said. The chamber is hosting Rod Phillips, Minister of Finance, next week Thursday, to talk about this and other economic issues.

“We’ve been going to different locations and actually promoting the survey,” she said. “The response has been good overall.”

Patterson said early research revealed a daunting road ahead, as “not many cultural credit unions are being approved in Ontario.”

Provincial regulators must be convinced that a sufficient cohort of people will put their money into such a scheme.

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It’s one of the very reasons the former credit union failed in the 1990s.

“You have to show that people are actually willing to put some money into this as a startup,” she said.

In addition to providing financial services, the new credit union will offer financial education on topics from budgeting to wealth-building, Patterson said.

Entrepreneur and philanthropist, Denham Jolly, is already hailing the potential advent of a credit union as a way to break the financial chains holding back the next wave of entrepreneurs.

“It’s not easy for a Black person to get financing of any nature,” said Jolly, renowned for starting Canada’s first Black-owned radio station FLOW 93.5.

He said Black people have long struggled to walk into a bank and “be taken seriously.”

The former credit union, which went under in the 1990s, had a business plan that required it to hold $5 million in assets by 1997, wrote Cecil Foster, a journalist, author and scholar, in an opinion piece, printed in the Star, in 1995.

Jolly bemoans the missteps that led to the demise of the former credit union, but said that’s water under the bridge.

“I would like to be on the board of governors,” Jolly said about lending a hand on a new credit union.

Foster wrote about efforts by the Black Business and Professional Association and the JCA to to save the old credit union, including a membership drive to get more Black groups and individuals to open accounts.

Barrett said the past will help to guide the current application.

“We see the need and we learn from history,” she said.

Oana Branzei, associate professor at Western University’s Ivey School of Business, said there is a persistent disadvantage minorities, especially those of colour, face, and it holds them back from things such as business startups.

“It is not as severe as the U.K or U.S, but it’s certainly a problem,” she said.

Branzei said specialized credit unions are a catalyst for people of colour to bank in a dignified way.

“When this is a movement from within the community, it feels right,” she said.

Branzei said rejecting a community-driven effort, given the discrimination that has taken place, will be politically hard to do.

Source: Thu., Feb. 20, 2020
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10 reasons why credit unions are worth a look

There are pros and cons to using a credit union.

Credit unions offer a good alternative to the banks, but along with fewer fees are fewer branches and ATMs.

It`s your money, so why does it seem to cost so much every time you touch it, move it or invest it?

Many consumers are asking that question, and transaction fee fatigue is prompting them to join the more than 1.7 million people in the province who use credit union to bank, get loans and mortgages, and other financial services. Credit unions have been serving Canadians for more than 100 years —Ontario’s first one was founded in Ottawa in 1908. Carefully regulated, credit unions combine the attentive service of a  cooperative with the financial safeguards of the Canadian banking system. Credit unions offer fewer branches and ATMS, and overall service that might or might not be better than a big bank’s. But many people are giving them a look; here are some of the reasons.

1. Competitive rates

Credit unions typically have low lending rates and pay higher deposit interest. They are owned by members, not shareholders, so they can shave off costs and pass savings along. For example, Meridian Credit Union, the largest group in Ontario with 44 branches and eight commercial business centres, offers a “better than market rate” against any other financial institution on a five-year fixed-rate mortgage.

2 Fewer fees

While a credit union needs to make a profit to be sustainable, it can afford to give its members a break on such things as transaction fees and other account service charges that can really add up credit card options and chequing or savings accounts. “Some credit unions offer lower fees because their members don’t expect them to make large profits or large investments in infrastructure. Others use these types of subsidies to expand services,” said Kimberley Ney, senior vice-president of marketing and corporate social responsibility for credit union Alterna Savings. “It really depends on what is important to the collective.”

3. On your side

Run by the members through a board of directors, a credit union doesn’t have to answer to corporate shareholders. Members of the credit union (you must buy a share which can cost from $25 to $150 when you open an account) may earn a dividend. Each member can vote and participate in decisions such as charitable donations. In a new Forrester Research study, credit unions had the highest customer advocacy ratings — a belief by customers that their interest is served before profits. Four of the five chartered banks received below-average scores.

4 Keep the profits in your community

Credit unions across Canada donated $37.5 million to charitable causes in their own areas last year. The credit unions make the point that many of the options such as scholarships can directly benefit local families

5. Support business start-up dreams When you have a business idea but no capital to get started, it is almost impossible to get credit from major lenders. Alterna Credit Union’s Community Micro-loan Program has been bridging that gap for more than 10 years. A recent study by Carleton University’s Carleton Centre for Community Innovation pointed out that 60 per cent of the potential entrepreneurs who applied to Alterna had been turned down for loans by at least one other banking institution. But the program has been successful with a repayment rate of more than 90 per cent. The program also has long-lasting benefits for the community. “It goes beyond writing the cheques,” said Susan Henry, manager of corporate social responsibility at Alterna. “We do business development training and life skills as well. There is a lot of support.”

6. Small Business Heroes

Fees and financing costs can make a dent in a small business bottom line. A recent survey by the Canadian Federation of Independent Business (CFIB) gave credit unions top marks in these categories from more than 12,000 small business owners (running companies with less than 50 employees).

7. Convenient locations The big banks still have the most branches, but with close to 500 credit union branches in Ontario credit unions are still a major presence. In smaller towns the credit union sometimes may be the only financial institution. To locate a branch go tohttp://locator.cucentral.com/

Credit Union members have access to free ATM transactions through The Exchange Network, To find a banking machine one near you, go to www.the-exchange.ca .

8. Tailor-made services Credit unions reflect the members’ collective personality. In 2009, the Creative Arts Savings and Credit Union was formed by a group of Canadian actors to provide banking services geared to people in an industry where paycheques are not as regular as for those with a steady office job. Some credit unions offer special language services. The Finnish Credit Union features a Finnish-English website and office staff who are of Finnish heritage. DUCA was started in 1954 by the Dutch community and now has 12 branches with 35,000 members in Southern Ontario.

9. Services. Credit union users are members of the organization. In its best-banking awards study, research firm Synovate ranked credit unions first for branch service and overall excellence. They also tied for first for telephone banking and financial planning.

10. Flexible

Some of the most popular consumer banking services, such as no-fee chequing accounts, ATMs, internet banking, debit cards and cheque imaging, were initiated by credit unions.

Ontario credit unions claim to be more friendly and flexible to small buisiness. “We meet with each small business owner and determine what products and services they most need and create a banking package accordingly,” said Scott Windsor, vice-president of communications at Meridian, one of the largest credit unions in Ontario. “Some small business may have high transactions volume, so we would create a package with free/low transaction fees, but a higher loan rate. It’s about finding the services that are right for them.”

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4 things credit unions do that make banking with them better

On a scale of one to 10, how much do you like financial advisors?

Be honest…

Unsurprisingly, you’re not the only one. It turns out a lot of millennials have a” negative perception of financial advisers,” according to a millennials and wealth management report by Deloitte.

It also points out that word-of-mouth and personal recommendations significantly influence around 50% of millennials. Yep, they’re more likely to “consult peers and media” instead of using a financial adviser and those who do use an advisor are likely to cross-check the facts using external sources.

So you could say that there’s a sense of distrust felt by youth in Canada when it comes to banking. If you have to question your bank that much, maybe it’s not the one for you. Banking should be easy because you don’t need any unnecessary stress factors in your life.

Luckily, you have another option (no, not carrying cash on you 24/7) – banking with a credit union. These financial institutions act in the interest of their members and work to make things better in your local community (without the drab financial advisor spiel).

With that in mind, we’ve compiled a list of four lovely things credit unions do.

They’re involved with the community

Credit unions understand that most young families in Ontario are dealing with large amounts of debt ranging from credit cards to student loans, and mortgages. Understanding the impact of heavy debt loads on the future of young people, credit unions want to step in and help any way they can. Aside from helping with debt management, they’re also involved in grassroots programs in their communities. Credit union staff members volunteer thousands of hours each year to help local non-profits and community initiatives. And they also help their communities thrive by hiring locally, keeping their members’ dollars local, and reinvesting their profits back in the local area. 

They’re environmentally friendly

Given the very nature of their cooperative model, it should come as no surprise that over the years, many credit unions have been recognized as Canada’s Greenest Employers. In fact, Ontario’s credit unions have made environmental performance a key part of their growth strategy, and are engaged in a full spectrum of operational improvements. But it doesn’t end there, they also have social and environmental finance innovations aimed at improving every aspect of their operation – from carbon neutrality and paperless banking to responsible investing, assistance for green start-ups, and social enterprise.

They help individuals, local businesses, and charities

The act of charity is centered around helping people in need. And since credit unions strongly believe in helping people, it’s only natural that they’re involved in a variety of charitable endeavours. From local sponsorships, to grants, bursaries, and even financial literacy blogs, credit unions are pretty much dedicated to helping everyone. They also support local community events and non-profit organizations through donations. When several provinces were suffering from floods earlier this year, multiple credit unions across Canada rallied to donate $150,000 to the Red Cross at a moment’s notice.

They offer tailored financial advice

Credit union staff ensure products are tailored to the specific financial needs of each customer. This means you’re not going to hear about investment portfolio options when you simply want to set up a savings account (unless you want to). Irrespective of your current financial situation, credit unions can help you tackle debt, save for a large purchase, or plan for a stress-free retirement. With the expertise to provide financial guidance to help their members build a strong foundation for their future, it’s no wonder that more and more Canadians are switching to credit unions. Will you?

Source: DailyHive.com – Daily Hive Custom ContentDec 11, 2017 

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An alternative to banking with the Big Five: Join a credit union

loonies

CALGARY — Jeremy Bird was fed up with his bank, so he decided to take his business elsewhere.

Tired of the fees and eager to see his financial institution invest more into his community, Bird made the switch to a credit union about a year ago. And he has no regrets.

“I found the credit union is incredibly friendly. They remember my name when I go in there,” he said.

Like many who gravitate toward credit unions, Bird considers himself a community-oriented person. He’s involved in a cycling advisory group in London, Ont., and is active in local politics.

“When I signed up for the credit union, they gave a $50 donation to a local youth charity, right off the hop,” he said. “Their profits go to community organizations, supporting where I live.”

Credit unions offer many of the same products that major banks do: chequing accounts and mortgages, for example. Bank cards can be used at any credit union ATM across the country — not just the one to which a customer belongs — without charges.

What differs is that credit unions are co-operative. Members get involved by buying shares and becoming owners. For example, to join Vancity Credit Union, members must hold at least five shares with a total value of $5. Members also have the opportunity to get a share of profits.

“Their objective is to serve their members. They’re not driven by shareholders and they’re not driven by strictly a profit motive for shareholders. They’re service driven,” said Martha Durdin, president CEO of the trade group Credit Union Central of Canada.

There are some 700 different credit unions — or caisses populaires, in Quebec — across the country.

The democratic element is a big draw for many members, said Ian Glassford, chief financial officer at Edmonton-based Servus Credit Union, which has more than 100 branches across Alberta.

“It is one member, one vote. I don’t care how much money you have with the credit union,” he said.

Those with social issues on their mind may also be drawn to credit unions.

“Each one picks a part of the world where they want to make a difference, and the fun with a credit union is that you can find the one that best aligns with your values as well,” said Glassford.

But credit unions have a lot to offer from a dollars-and-cents standpoint as well, said David McVay, a financial services industry consultant in Toronto.

“Where an increasing number of credit unions are gaining advantage is offering better value. On that dimension, one of the emerging trend is toward free chequing,” he said.

“The other big differentiator on the value side for many, but not all, is very competitive and transparent pricing on mortgages.”

Yet, it’s been a challenge to snatch market share from the big banks, which are more centralized and able to launch big national advertising campaigns.

That’s changing, though. Big players like Vancity in B.C. or Meridian in Ontario are “taking on the big banks head-on, and quite successfully,” McVay said. The trend is toward consolidation among the smaller players, he added.

“If you haven’t heard about credit unions, stay tuned, because as these mergers happen, there will be powerful brands emerging that you’ll hear more and more about.”

Louise Wallace, who has belonged to a credit union for 15 years, said she’s worried the local flavour is being lost as credit unions vie for business with the big banks. She laments that she may have to switch to a different institution when her mortgage comes up for renewal.

Her small marketing firm in Salmon Arm, B.C., used to provide services to her local credit union, but now those functions and others have become centralized, she said.

Wallace says she doesn’t harbour hard feelings toward her former client, noting the 2008 financial crisis was hard on everyone in the financial sector.

“We love them because they’re small. But they can’t compete small,” she said. “My sad realization is, they’re just like everyone else.”

 

Source: Lauren Krugel, The Canadian Press
Published Thursday, October 2, 2014 11:28 AM  

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