How are credit unions different from banks?

Cambrian Credit Union Head Office

More Manitobans belong to credit unions than any other financial institution, yet many would be hard pressed to explain the difference between a credit union and a bank. A closer look at two key characteristics of credit unions helps explain why these institutions are so popular in Manitoba.

#1: Credit Unions are locally owned

The biggest difference between a credit union and a bank is the ownership structure. While banks are corporations geared towards making profits for their shareholders who may be located all around the world, credit unions are financial co-operatives and as such are owned and controlled by the people they serve. To join a credit union you must purchase a membership share which gives you a vote in how the credit union is run as well as a share in the profits earned by the institution.

Credit unions are provincially regulated, meaning that they cannot operate branches outside of their province of origin. While a number of credit unions operate in multiple locations across the province, all can trace their roots to local Manitoba communities where their members still live and work today. Credit unions have always been proud of these local roots and understand that focusing on a healthy and strong community benefits everyone – credit unions and their members included.

This community focus takes many forms, including donated employee volunteer time, local sponsorships, scholarships and more. In 2015 the 33 credit unions serving Manitoba paid 3.4 million in sponsorships and donations and awarded over $165,000.00 in scholarships.

Manitoban credit unions also employ over 3,300 employees, positively impacting many families in our communities.

#2: People Before Profit

To be clear, this doesn’t mean credit unions are not profitable, it just means that their goals have a different focus. Remember that credit unions are owned by their members, so profits are not paid out to shareholders but go back to the membership directly in a number of ways, and are allocated for the benefit of the membership overall.

Some of the benefits to members are financial. Most credit unions offer their members preferential rates on loans and deposits, which are usually more competitive than those offered by the chartered banks. Others offer options for their members to reduce or eliminate the service fees they pay monthly. As an example, Cambrian Credit Union has refunded over $25 million in service fees to its members since 2011 with the Unfee, with over $4.9 million refunded in 2016 alone.

Other benefits to members come in the form of improved access or services from the institution. Profits are reinvested back into the credit union to help develop ways to make banking more convenient for the membership, such as new branches or improvements in technology. These investments haven’t gone unnoticed. According to the 2016 Ipsos’ Best Banking Awards, credit unions ranked first overall in Customer Service Excellence and Branch Service Excellence for the 12th consecutive year.  “In branch, online or on their mobile device, credit unions strive to serve their members with the highest level of customer service, regardless of the channel,” explains Martha Durdin, president and CEO, Canadian Credit Union Association.

So what does this mean for me?

Credit unions have always been a little different from the banks, but if you ask most of their membership, they’ll say it’s in a good way. As a member of a credit union, you are more than just a customer, you are an owner and are treated accordingly.

So why is the credit union system is so popular in Manitoba? Visit a credit union today and you’ll find out.