Andy Poprawa, president/CEO of the Deposit Insurance Corporation of Toronto, said sustainability of the credit union business model is a global issue.
Credit unions across the globe are struggling to survive on the traditional margin between member loans and deposits, and are attempting to make up the difference just like U.S. financial cooperatives, by minimizing costs and looking for additional sources of revenue. Poprawa said wealth management services are providing "reasonable returns;" and, although it goes against traditional credit union philosophy, service charges are another solution gaining in popularity.
"Some people in the credit union movement will say we are looking like banks and moving away from the credit union philosophy, but frankly, I don't think we have much choice," Poprawa said. "We can't say we live in a different world; credit union members are consumers, and they will shop around for the best deal."
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Toronto's top credit union regulator said his peers were also critical of mergers as a profitability solution, explaining that unless two credit unions have well-matched fields of membership, oftentimes in reality, mergers don't improve profitability or benefit members.
Regulators also discussed risk management, the consolidation of financial services regulatory bodies, and how credit unions will conform to international accounting standards during WOCCU's recent conference.
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