Credit unions in Canada are financial institutions based on community values and member-focused services. They play a significant role in the Canadian banking landscape, offering a non-profit alternative to traditional banks.

These unions prioritize the financial well-being of their members over maximizing profits, fostering ethical and community-focused banking. With a rich history dating back over a century, credit unions in Canada have evolved to become trusted financial partners for individuals, families, and businesses across the country.

Banks vs. Credit Unions: What’s the Difference?

While both banks and credit unions offer financial services, their difference lies in their structure and focus. Banks operate for profits and are owned by shareholders. As such, they have higher fees and rates designed to maximize profits.

Credit unions, on the other hand, are not-for-profit cooperatives owned by their members. This allows them to focus more on customer service and member benefits rather than profits. As a result, members of credit unions typically enjoy lower fees and better interest rates. Additionally, credit unions often have a strong community focus and invest profits back into local initiatives.

Credit unions in Canada are guided by the seven cooperative principles. These are:

  • Voluntary and open membership
  • Member economic participation
  • Democratic member control
  • Autonomy and independence
  • Education, training, and information
  • Cooperation among cooperatives
  • Concern for community
How are Credit Unions Pioneering Community-focused Banking in Canada?

Credit Unions in Canada are leading the way in community-focused banking by immersing themselves deeply within the local areas they serve. Here’s how:

1. Local Investment and Economic Growth

Credit Unions in Canada support community development through strategic local investments. By reinvesting profits into the community, they help small businesses and start-ups thrive, creating more jobs and boosting the local economy.

In 2021 alone, credit unions in Canada donated over $40 million to charity and their staff volunteered more than 77,694 hours. This not only helps the community financially but also builds a strong bond between the credit union and its members.

2. Community Decision Making

Community involvement is at the heart of credit unions. They hold regular meetings, allowing members to vote on important decisions and ensuring their operations reflect the community’s needs and values. This democratic approach empowers members to have more control over how the credit union is run.

3. Supporting Local Initiatives

Credit unions often engage in activities that support local initiatives and enhance community well-being. This includes funding educational programs, health services, and local sports teams, as well as investing in community infrastructure projects like parks and libraries. Their commitment to community welfare goes beyond financial services, fostering stronger and more connected communities.

4. Promoting Financial Literacy

Credit unions prioritize educating their communities on financial matters. They frequently organize workshops, seminars, and courses on essential financial topics such as saving, investing, and smart spending. These programs aim to equip individuals with the skills needed to manage their finances effectively, reducing financial illiteracy and promoting economic stability within the community.

5. Each One, Teach One (EOTO)

The EOTO initiative is a hallmark of credit union community engagement, focusing on one-on-one financial education. Under this initiative, volunteers from the credit union community reach out to teach basic financial skills to those with limited access to formal financial education.

The program was started by Vancity in BC, and then in 2017, CCUA partnered with the credit union to expand the program across the country. Since 2017, credit unions across Canada, delivered over 1,654 EOTO financial literacy workshops, reaching nearly 23,413 Canadians.

6. Climate Change Initiatives

In a bid to address global environmental concerns, credit unions actively support sustainability through various eco-friendly projects. They provide financing for renewable energy projects and green businesses and offer incentives for members to make environmentally conscious choices, such as lower rates on green cars or energy-efficient home improvements.

In 2021, more than half of credit unions (55%) implemented programs to decrease their paper waste, while 38% of them provided eco-loans and/or socially responsible investment options. Additionally, 21% of credit unions extended loans to social enterprises, cooperatives, or businesses with a clear mission to tackle social and/or environmental challenges.

7. Excellent Customer Service

Credit unions are renowned for their customer-centric approach. They provide a personal touch, ensuring all members feel valued.

In fact, in the Ipsos Financial Service Excellence Awards of 2023, credit unions of Canada won the Customer Service Excellence award for the nineteenth year in a row, beating the country’s big five banks.

8. Community Feel

The essence of a credit union is its community feel. Members are treated as co-owners and have a say in how things are run through voting and community meetings. This sense of inclusiveness fosters a strong sense of community and belonging, encouraging active participation and long-term engagement with the credit union.

To Wrap Up

Credit unions in Canada focus on helping their communities with banking needs. By prioritizing member benefits over profits, they not only foster financial inclusivity but also contribute to local development.

For credit unions looking to enhance their technological capabilities, Intellect Canada’s Cloud  offers robust credit union software solutions. This software supports the members’ lifecycle journey from Acquisition to Engagement through to Retention and Delight by offering innovative, prepackaged solutions that can redefine the boundaries of the members’ experience.