REGINA, Saskatchewan–Canada’s credit unions have been losing market share to fintechs, and have now taken several steps to respond, including an acquisition.
According to data compiled by Concentra, a cooperative organization that provides wholesale banking and trust services to Canadian credit unions, the country’s credit unions have seen their market share in consumer lending decline from 7.8% in 2003 to 6.0% in 2014.
In response, Concentra has acquired TD Bank Group’s indirect home improvement financing assets for $339 million.
“The acquisition will accelerate Concentra’s business strategy to seek growth within the consumer lending market and diversify its wholesale business,” Concentra said in released statement.
The acquisition represents the value of the home improvement loan portfolio of TD Bank and builds on an earlier deal Concentra made in April with a fintech company that provides the technology to facilitate financing at the point of sale.
“Initially, we see (the acquisition) as a source of loans for credit unions. But longer-term, we see it as a partnership with one of these (fintech) companies that can help credit unions become more competitive,” said a Concentra executive. “It’s a game changer for credit unions.”
Earlier, Concentra announced an initial $100-million partnership with the fintech company Financeit, which positions credit unions to become a larger player in the financial markets. That $339-million deal is also the largest and most complex transaction in the Canadian fintech industry to-date, according to Concentra.
“As a longer-term trend, youth are less likely to utilize banking institutions — the actual bricks and mortar. They’re much more comfortable on their mobile phone,” the Concentra executive said.