TORONTO–Canada’s credit unions are increasingly joining forces with financial technology startups to offer new consumer-focused products to clients.
“Most of the larger credit unions have entered into partnerships or are actively exploring them right now,” Doug Macdonald, a consulting partner in the financial practice of MNP, a national professional services firm, told The Globe & Mail. “It’s a symbiotic relationship. The credit unions provide members, they provide capital and a tradition of customer service, while the fintechs bring advanced analytics, plug-and-play functionality and faster time to market.”
For fintech startups, though, the biggest advantage might be legitimacy, the Globe & Mail reported.
Many Canadians are still wary of doing business with new, online-only, financial services providers, Kevin Sandhu, the co-founder and chief executive officer of Grow Financial, which offers personal loans, told the Globe and Mail.
It has partnered with First West Credit Union in a British Columbia and Conexus, the largest credit union in Saskatchewan. Those partnerships gave the company access to consumers it wouldn’t have been able to reach on its own.
“Knowing that this is being offered in partnership with a tried, trusted credit union or financial institution brand and knowing that that brand, that credit union, has done the diligence,” Sandhu told the Globe & Mail, which allows some credit union members to feel comfortable doing business with a company like Grow.
Earlier this year in Canada, Financeit formed a partnership with Concentra, a co-operative that offers wholesale financial services to more than 300 credit unions.
For Concentra, the partnership model allows the company to focus on its main lines of business, rather than becoming a software developer, and can help bring products to market faster, according to the Globe & Mail.